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ANSYS (ANSS) Q1 Earnings & Revenues Miss Estimates, Fall Y/Y

ANSYS Inc ANSS reported first-quarter 2024 earnings of $1.39 per share, lagging the Zacks Consensus Estimate by 28%. The bottom line declined 24.9% year over year.

Revenues of $466.6 million missed the Zacks Consensus Estimate by 15.9%. The top line fell 8% (down 8% at constant currency or cc) year over year.

In January 2024, Ansys and Synopsys officially announced their entry into a definitive agreement, paving the way for the latter to acquire ANSS. The terms of the agreement outline that ANSS’ shareholders will receive $197 in cash, along with 0.3450 shares of Synopsys common stock for each Ansys share.

This deal, valued at approximately $35 billion, reflects an implied per-share consideration of $390.19 and represents a premium of about 29% over ANSS’ closing stock price on Dec 21, 2023. ANSS’ shareholders are likely to own approximately 16.5% of the combined company (on a pro-forma basis). The deal is anticipated to close in the first half of 2025, subject to approval by ANSS shareholders, regulatory approvals and customary closing conditions.

ANSYS, Inc. Price, Consensus and EPS Surprise

ANSYS, Inc. Price, Consensus and EPS Surprise
ANSYS, Inc. Price, Consensus and EPS Surprise

ANSYS, Inc. price-consensus-eps-surprise-chart | ANSYS, Inc. Quote

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Given the pending acquisition, the company no longer provides financial outlook. However, management expects ACV and revenue growth rates to vary across the quarters in 2024 and will be affected by the performance comparisons to 2023.

ANSS expects double-digit ACV and revenue growth in the remaining quarters of 2024. It anticipates full-year ACV to grow in double digits.

It expected ACV and revenue growth for the first quarter to be the lowest among the four quarters of 2024.

Quarter in Detail

Subscription lease revenues (20.3% of total revenues) were down 35.5% year over year at cc to $94.8 million. Perpetual licenses revenues (14%) declined 7.7% year over year at cc to $65.5 million.

Maintenance revenues (62%) climbed 8.8% year over year at cc to $289.3 million. Service revenues (3.6%) were down 21.3% year over year at cc to $16.9 million.

Direct and indirect channels contributed 66.5% and 33.5%, respectively, to total revenues.

ACV grew 2% year over year (up 3% at cc) to $407.4 million.

On a geographic basis, the Americas, EMEA (comprising Germany, the U.K. and other EMEA) and the Asia-Pacific (Japan and Other Asia-Pacific) contributed 44.7%, 25.4% and 29.9% to revenues, respectively.

Revenues from the Americas were down 18.8% year over year at cc to $208.7 million. EMEA revenues were down 3.4% at cc to $118.6 million. Revenues from the Asia-Pacific increased 10.2% at cc to $139.3 million.

Total deferred revenues and backlog was $1,369.5 million, up 0.9% year over year.

Operating Details

Non-GAAP gross margin was down 30 basis points (bps) on a year-over-year basis to 90.9%.

Total operating expenses jumped 12.9% year over year to $354.6 million due to higher research and development, and selling, general and administrative expenses.

Non-GAAP operating margin contracted 760 bps on a year-over-year basis to 32.2%.

Balance Sheet & Cash Flow

As of Mar 31, 2024, cash and short-term investments amounted to $1070.6 million compared with $860.4 million as of Dec 31, 2023.

As of Mar 31, 2024, the company’s long-term debt was $754 million compared with $753.9 million as of Dec 31, 2023

In the quarter under review, cash from operations came in at $282.8 million compared with $260.8 million in the prior-year quarter.

Zacks Rank

ANSS currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked stocks worth consideration in the broader technology space are Badger Meter BMI, Salesforce CRM and The Descartes Systems Group Inc DSGX. While BMI sports a Zacks Rank #1 (Strong Buy), CRM and DSGX carry a Zacks Rank of 2 (Buy) each, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Badger Meter’s 2024 EPS is pegged at $3.89, up 9.9% in the past 60 days. The long-term earnings growth rate is 15.6%.

BMI’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 12.7%. Shares of BMI have soared 32.6% in the past year.

The Zacks Consensus Estimate for CRM’s fiscal 2025 EPS is pegged at $9.71. Salesforce’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 5.1%.

The long-term earnings growth rate for CRM is 17.4%. Shares of CRM have gained 38.7% in the past year.

The Zacks Consensus Estimate for DSGX’s fiscal 2025 EPS has increased 3% in the past 60 days to $1.69. Descartes earnings beat the Zacks Consensus Estimate in two of the last four quarters, while missing in the remaining two quarters, the average surprise being 5.1%. Shares of DSGX have gained 21.3% in the past year.

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