Exhibit 99.1

Altair Announces First Quarter 2018 Financial Results

First Quarter Software Product Revenue Increased 26% Year-over-Year

TROY, Mich. – May 14, 2018 – Altair (Nasdaq:ALTR) released its financial results for the first quarter ended March 31, 2018.

“Altair started 2018 with a strong financial performance highlighted by software product revenue growth of 26% and profitability that exceeded expectations,” said James Scapa, Founder, Chairman and CEO. “Our performance in the first quarter reflects good execution, improving market dynamics and the positive impact of the investments we have made to strengthen our product portfolio and go-to-market team.”

Scapa continued, “We have further enhanced our solution set with the recent acquisitions of CANDI, which extends our capabilities around edge gateway computing and the Internet of Things, and FluiDyna, a developer of GPU-based fluid dynamics and numerical simulation technologies. These are exciting technologies that increase the value Altair can deliver for customers and exemplify our expanding number of opportunities for future growth.”

First Quarter 2018 Financial Highlights

 

    Software product revenue was $68.1 million, an increase of 26% from $54.1 million for the first quarter of 2017.

 

    Total revenue was $91.7 million, an increase of 19% compared to $76.9 million for the first quarter of 2017.

 

    Net income was $3.9 million, compared to net loss of $(2.2) million for the first quarter of 2017. Diluted net income per share was $0.05, based on 72.4 million diluted weighted average common shares outstanding, compared to diluted net loss per share of $(0.04) for the first quarter of 2017, based on 50.1 million diluted weighted average common shares outstanding.

 

    Adjusted EBITDA was $7.7 million, compared to $2.9 million for the first quarter of 2017. Adjusted EBITDA represents net income (loss) adjusted for income tax expense, interest expense, interest income and other, depreciation and amortization, stock-based compensation expense, restructuring charges, asset impairment charges and other special items as determined by management.

 

    Non-GAAP net income was $6.1 million, compared to $1.6 million for the first quarter of 2017. Non-GAAP net income per share was $0.08, based on 72.8 million diluted weighted average common shares outstanding, compared to $0.03 for the first quarter of 2017, based on 61.2 million diluted weighted average common shares outstanding. Non-GAAP net income excludes stock-based compensation, amortization of intangible assets related to acquisitions and certain tax adjustments.


    Cash flow from operations was $26.7 million, compared to $19.2 million for the first quarter of 2017.

 

    Free cash flow, which consists of cash flow from operations less capital expenditures, was $25.0 million compared to $18.2 million for the first quarter of 2017.

Business Outlook

Based on information available as of today, Altair is issuing forward-looking statements on guidance for the second quarter and full year 2018 as indicated below.

 

     Second Quarter 2018      Full Year 2018  

Software Product Revenue

   $ 69.0        to      $ 70.0      $ 276.0        to      $ 280.0  

Total Revenue

   $ 91.0         $ 92.0      $ 369.0         $ 373.0  

GAAP Net Income

   $ 0.5         $ 1.0      $ 11.0         $ 13.0  

Adjusted EBITDA

   $ 5.0         $ 5.5      $ 33.0         $ 35.0  

Non-GAAP Net Income

   $ 2.5         $ 3.0      $ 19.0         $ 21.0  

(All figures in millions)

Conference Call Information

 

What:    Altair First Quarter 2018 Financial Results Conference Call
When:    Monday, May 14, 2018
Time:    4:30 p.m. EDT
Live Call:    (866) 754-5204, domestic
   (636) 812-6621, international
Replay:    (855) 859-2056, passcode 2474564, domestic
   (404) 537-3406, passcode 2474564, international
Webcast:    http://investor.altair.com (live & replay)

Non-GAAP Financial Measures

This press release contains the following non-GAAP financial measures: Adjusted EBITDA, Non-GAAP Net Income, Non-GAAP Net Income Per Share and Free Cash Flow.

Altair believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to its financial condition and results of operations. The Company’s management uses these non-GAAP measures to compare the Company’s performance to that of prior periods for trend analysis, for purposes of determining executive and senior management incentive compensation and for budgeting and planning purposes. The Company also believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company’s financial measures with other software companies, many of which present similar non-GAAP financial measures to investors.


Company management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. Altair urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company’s business.

Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables at the end of this release.

About Altair

Altair transforms design and decision making by applying simulation, machine learning and optimization throughout product lifecycles. Our broad portfolio of simulation technology and patented units-based software licensing model enable Simulation-Driven Innovation for our customers. With more than 2,000 employees, Altair is headquartered in Troy, Michigan, USA and operates 71 offices throughout 24 countries. Altair serves more than 5,000 customers across broad industry segments. To learn more, please visit www.altair.com.


Cautionary Language Concerning Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding our business outlook, potential growth, market positioning and future investments, and our reconciliations of projected non-GAAP financial measures. These forward-looking statements are made as of the date of this release and are based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,” variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond Altair’s control. Altair’s actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, risks detailed in Altair’s quarterly and annual reports filed with the Securities and Exchange Commission as well as other documents that may be filed by the Company from time to time with the Securities and Exchange Commission. Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent Altair’s views as of the date of this press release. The Company anticipates that subsequent events and developments will cause its views to change. Altair undertakes no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing Altair’s views as of any date subsequent to the date of this press release.

Investor Relations

Brian Denyeau

ICR

248-614-2400 ext. 346

ir@altair.com

Media Relations

Dave Simon

Altair

248-614-2400 ext. 332

pr@altair.com


Altair Engineering Inc. and subsidiaries

Consolidated balance sheets

 

     March 31, 2018     December 31, 2017  
(In thousands)    (Unaudited)        

ASSETS

    

CURRENT ASSETS:

    

Cash and cash equivalents

   $ 63,196     $ 39,213  

Accounts receivable, net

     83,350       86,635  

Inventory, net

     1,051       1,980  

Income tax receivable

     6,898       6,054  

Prepaid expenses and other current assets

     13,148       10,006  
  

 

 

   

 

 

 

Total current assets

     167,643       143,888  

Property and equipment, net

     30,501       31,446  

Goodwill

     63,771       62,706  

Other intangible assets, net

     22,813       24,461  

Deferred tax assets

     8,824       8,351  

Other long-term assets

     17,270       17,019  
  

 

 

   

 

 

 

TOTAL ASSETS

   $ 310,822     $ 287,871  
  

 

 

   

 

 

 

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

 

CURRENT LIABILITIES:

    

Current portion of long-term debt

   $ 294     $ 232  

Accounts payable

     5,650       4,880  

Accrued compensation and benefits

     25,360       26,560  

Obligations for acquisition of businesses

     13,226       13,925  

Other accrued expenses and current liabilities

     21,486       21,744  

Deferred revenue

     152,663       130,122  
  

 

 

   

 

 

 

Total current liabilities

     218,679       197,463  

Long-term debt, net of current portion

     526       178  

Deferred revenue, non-current

     9,961       9,640  

Other long-term liabilities

     14,179       17,647  
  

 

 

   

 

 

 

TOTAL LIABILITIES

     243,345       224,928  
  

 

 

   

 

 

 

Commitments and contingencies

    

MEZZANINE EQUITY

     2,352       2,352  

STOCKHOLDERS’ EQUITY:

    

Preferred stock ($0.0001 par value), authorized 45,000 shares, none issued and outstanding

            

Common stock ($0.0001 par value)

    

Class A common stock, authorized 513,797 shares, issued and outstanding 27,357 and 26,725 shares as of March 31, 2018 and December 31, 2017, respectively

     3       2  

Class B common stock, authorized 41,203 shares, issued and outstanding 36,508 shares as of March 31, 2018 and December 31, 2017

     4       4  

Additional paid-in capital

     232,576       232,156  

Accumulated deficit

     (162,579     (166,499

Accumulated other comprehensive loss

     (4,879     (5,072
  

 

 

   

 

 

 

TOTAL STOCKHOLDERS’ EQUITY

     65,125       60,591  
  

 

 

   

 

 

 

TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

   $ 310,822     $ 287,871  
  

 

 

   

 

 

 


Altair Engineering Inc. and subsidiaries

Consolidated statements of operations

(Unaudited)

 

     Three months ended
March 31,
 
(in thousands, except per share data)    2018     2017  

Revenue

    

Software

   $ 68,143     $ 54,097  

Software related services

     9,473       8,971  
  

 

 

   

 

 

 

Total software

     77,616       63,068  

Client engineering services

     12,080       12,229  

Other

     2,035       1,585  
  

 

 

   

 

 

 

Total revenue

     91,731       76,882  
  

 

 

   

 

 

 

Cost of revenue

    

Software*

     10,922       8,904  

Software related services

     6,709       6,659  
  

 

 

   

 

 

 

Total software

     17,631       15,563  

Client engineering services

     10,200       10,141  

Other

     1,211       1,050  
  

 

 

   

 

 

 

Total cost of revenue

     29,042       26,754  
  

 

 

   

 

 

 

Gross profit

     62,689       50,128  

Operating expenses:

    

Research and development*

     22,703       18,770  

Sales and marketing*

     18,977       16,910  

General and administrative*

     16,990       16,089  

Amortization of intangible assets

     1,940       943  

Other operating income

     (2,191     (594
  

 

 

   

 

 

 

Total operating expenses

     58,419       52,118  
  

 

 

   

 

 

 

Operating income (loss)

     4,270       (1,990

Interest expense

     16       611  

Other (income) expense, net

     (900     359  
  

 

 

   

 

 

 

Income (loss) before income taxes

     5,154       (2,960

Income tax expense (benefit)

     1,234       (772
  

 

 

   

 

 

 

Net income (loss)

   $ 3,920     $ (2,188
  

 

 

   

 

 

 

Income (loss) per share:

    

Net income (loss) per share attributable to common stockholders, basic

   $ 0.06     $ (0.04

Net income (loss) per share attributable to common stockholders, diluted

   $ 0.05     $ (0.04

Weighted average shares outstanding:

    

Weighted average number of shares used in computing net income (loss) per share, basic

     63,638       50,132  

Weighted average number of shares used in computing net income (loss) per share, diluted

     72,390       50,132  


*Amounts include stock-based compensation expense as follows (in thousands):

     
     Three months ended
March 31,
 
     2018      2017  

Cost of revenue – software

   $ 8      $ 5  

Research and development

     47        775  

Sales and marketing

     41        431  

General and administrative

     120        1,658  
  

 

 

    

 

 

 

Total stock-based compensation expense

   $ 216      $ 2,869  
  

 

 

    

 

 

 


Altair Engineering Inc. and subsidiaries

Consolidated statements of cash flows

(Unaudited)

 

     Three months ended
March 31,
 
(In thousands)    2018     2017  

OPERATING ACTIVITIES:

    

Net income (loss)

   $ 3,920     $ (2,188

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

    

Depreciation and amortization

     3,543       2,461  

Provision for bad debt

     65       91  

Stock-based compensation expense

     216       2,869  

Deferred income taxes

     (432     182  

Other, net

     (7     18  

Changes in assets and liabilities:

    

Accounts receivable

     4,492       8,153  

Prepaid expenses and other current assets

     (715     (4,058

Other long-term assets

     119       (1,523

Accounts payable

     510       (186

Accrued compensation and benefits

     (1,560     (2,478

Other accrued expenses and current liabilities

     (3,967     (632

Deferred revenue

     20,505       16,493  
  

 

 

   

 

 

 

Net cash provided by operating activities

     26,689       19,202  
  

 

 

   

 

 

 

INVESTING ACTIVITIES:

    

Capital expenditures

     (1,684     (969

Payments for acquisition of businesses

     (1,199     (1,099

Payments for acquisition of developed technology

     (353     (120

Other investing activities, net

     23       (44
  

 

 

   

 

 

 

Net cash used in investing activities

     (3,213     (2,232
  

 

 

   

 

 

 

FINANCING ACTIVITIES:

    

Proceeds from issuance of common stock

     302       115  

Payments of initial public offering costs

     (186     (81

Payments for redemption of common stock

     (60     (305

Principal payments on long-term debt

     (51     (2,688

Payments on revolving commitment

           (32,061

Borrowings under revolving commitment

           17,271  

Other financing activities

           (16
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     5       (17,765
  

 

 

   

 

 

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

     495       490  
  

 

 

   

 

 

 

Net increase (decrease) in cash, cash equivalents and restricted cash

     23,976       (305

Cash, cash equivalents and restricted cash at beginning of year

     39,578       17,139  
  

 

 

   

 

 

 

Cash, cash equivalents and restricted cash at end of period

   $ 63,554     $ 16,834  
  

 

 

   

 

 

 

Supplemental disclosure of cash flow:

    

Interest paid

   $ 10     $ 634  

Income taxes paid

   $ 2,143     $ 1,641  

Supplemental disclosure of non-cash investing and financing activities:

    

Initial public offering costs in other long-term assets

   $     $ 1,625  

Property and equipment in accounts payable and other accrued expenses and current liabilities

   $ 736     $ 64  

Capital leases

   $ 565     $  


The following table provides a reconciliation of Adjusted EBITDA to net income (loss), the most comparable GAAP financial measure (in thousands):

 

     (Unaudited)  
     Three months ended
March 31,
 
     2018     2017  

Net income (loss)

   $ 3,920     $ (2,188

Income tax expense (benefit)

     1,234       (772

Stock-based compensation expense

     216       2,869  

Interest expense

     16       611  

Interest income and other(1)

     (1,255     (85

Depreciation and amortization

     3,543       2,474  
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 7,674     $ 2,909  
  

 

 

   

 

 

 

 

(1)  Includes a non-recurring adjustment for a change in estimated legal expenses resulting in $2.0 million of income and a non-recurring adjustment for royalty contracts resulting in $0.9 million of expense for the three months ended March 31, 2018.

The following table provides a reconciliation of Non-GAAP net income and Non-GAAP diluted earnings per share to net income (loss) and earnings (loss) per share - diluted, the most comparable GAAP financial measures (in thousands):

 

     (Unaudited)  
     Three months ended
March 31,
 
     2018      2017  

Net income (loss)

   $ 3,920      $ (2,188

Stock-based compensation expense

     216        2,869  

Amortization of intangible assets

     1,940        943  
  

 

 

    

 

 

 

Non-GAAP net income

   $ 6,076      $ 1,624  
  

 

 

    

 

 

 

Earnings (loss) per share - diluted

   $ 0.05      $ (0.04

Non-GAAP earnings per share - diluted

   $ 0.08      $ 0.03  

GAAP diluted shares outstanding:

     

Weighted average number of shares used in computing net income (loss) per share, diluted

     72,390        50,132  

Non-GAAP diluted shares outstanding:

     

Weighted average number of shares used in computing net income per share, diluted

     72,800        61,200  


The following table provides a reconciliation of Free Cash Flow to net cash provided by operating activities, the most comparable GAAP financial measure (in thousands):

 

     (Unaudited)  
     Three months ended
March 31,
 
     2018     2017  

Net cash provided by operating activities

   $ 26,689     $ 19,202  

Capital expenditures

     (1,684     (969
  

 

 

   

 

 

 

Free cash flow

   $ 25,005     $ 18,233  
  

 

 

   

 

 

 

The following table provides a reconciliation of projected net income to projected Non-GAAP net income, the most comparable GAAP financial measure (in thousands):

 

     (Unaudited)  
     Three months ending
June 30, 2018
     Year ending
December 31, 2018
 
     low      high      low      high  

Net income

   $ 500      $ 1,000      $ 11,000      $ 13,000  

Stock-based compensation expense

     500        500        2,000        2,000  

Amortization of intangible assets

     1,500        1,500        6,000        6,000  
  

 

 

    

 

 

    

 

 

    

 

 

 

Non-GAAP net income

   $ 2,500      $ 3,000      $ 19,000      $ 21,000  
  

 

 

    

 

 

    

 

 

    

 

 

 

The following table provides a reconciliation of projected Adjusted EBITDA to projected net income, the most comparable GAAP financial measure (in thousands):

 

     (Unaudited)  
     Three months ending
June 30, 2018
     Year ending
December 31, 2018
 
     low      high      low      high  

Net income

   $ 500      $ 1,000      $ 11,000      $ 13,000  

Income tax expense

     600        600        4,200        4,200  

Stock-based compensation expense

     500        500        2,000        2,000  

Interest expense

                           

Interest income and other

                           

Depreciation and amortization

     3,400        3,400        13,500        13,500  

Other non-recurring charges(1)

                   2,300        2,300  
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA

   $ 5,000      $ 5,500      $ 33,000      $ 35,000  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)  Represents projected non-recurring costs related to accelerated compliance-related costs or impairment charges.

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