Altair Engineering Inc.

Good day, and thank you for standing by. Welcome to the OTSER Fourth Quarter 2021 Earnings Conference Call. At this time, no participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded, and if you require any further assistance, please press star 0. I would like to hand the conference over to the speaker today, Dave Simon, Chief Administrative Officer of Altair. Please go ahead.

Good afternoon, welcome, and thank you for attending Altair's earnings conference call for the fourth quarter and full year 2021, ended December 31st, 2021. I'm Dave Simon, Chief Administrative Officer of Altair, And with me on the call are Jim Scapa, founder, chairman, and CEO, and Matt Brown, chief financial officer. After market closed today, we issued a press release with details regarding our fourth quarter and full year 2021 performance and guidance for the first quarter and full year 2022, which can be accessed on the investor relations section of our website at investor.altair.com. This call is being recorded. and a replay will be available on the IR section of our website following the conclusion of this call. During today's call, we will make statements related to our business that may be considered forward-looking under federal securities laws. These statements reflect our views only as of today and should not be considered representative of our views as of any subsequent date. We disclaim any obligation to update any forward-looking statements or outlook. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from our expectations. These risks are summarized in the press release that we issued earlier today. For a further discussion of the material risks and other important factors that could affect our actual results, please refer to those contained in our quarterly and annual reports filed with the SEC, as well as other documents that we have filed or may file from time to time. During the course of today's call, we will refer to certain non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in our price release. Finally, at times in our prepared comments or responses to your questions, we may offer metrics that are incremental to our usual presentation to provide greater insight into the dynamics of our business or our quarterly results. Please be advised that we may, or may not continue to provide this additional detail in the future. With that, let me turn the call over to Jim for his prepared remarks. Jim?

Thank you, Dave, and welcome to everyone on the call. Today I will discuss our strong results for 2021, the recent acquisitions of World Programming and Cassini, some additional awards the company received, and the overall momentum we are experiencing early in 2022. Altair had an excellent fourth quarter and full year 2021, with all of our key numbers for Q4 and full year coming in above our guidance ranges. Our vision for driving smarter decisions with computational science and artificial intelligence is resonating with customers. Our products continue to gain market share, and we are expanding our footprint across all verticals. Total revenue for Q4 2021 was $140.8 million, including software product revenue of $122.4 million. Adjusted EBITDA for the quarter was $24 million, representing a 17% adjusted EBITDA margin. Total revenue for the full year 2021 grew 13.2 percent to $532.2 million, compared to $469.9 million in 2020. And software product revenue for the full year 2021 grew 15.8 percent to $453.7 million, compared to $391.7 million in 2020. Software product revenue for 2021 represented 85.3% of total revenue compared to 83.4% during 2020. And our recurring software license rate remained high at 92% for the year. Adjusted EBITDA for the full year of 2021 was 85.3 million, representing growth of 49% compared to 57.3 million in 2020. Free cash flow grew 100% in 2021 to $53.8 million from $26.8 million in 2020. Our adjusted EBITDA margin for the full year of 2021 grew to 16%, a significant improvement over adjusted EBITDA of 12% in 2020. In December of 2021, Altair acquired World Programming. a UK-based technology company specializing in data analytics software used by many of the world's leading companies. World Programming brings great technology to Altair, as well as a world-class team of mathematicians, statisticians, data scientists, programmers, and thought leaders. World Programming's platform, WPS Analytics, supports development and execution of software applications written in popular languages such as Python, R, SQL, and the SAS language, including the ability to develop, compile, and execute millions of models built using the SAS language. WPS Analytics will be incorporated into Altair's Data Analytics Solution Suite and available under Altair Units. WPS Analytics technology, integrated into the powerful low-code Altair solution, creates a strong and unique offering to address the requirements within enterprises, programming data scientists, and business analysts, including the ability to develop, compile, and interpret SAS language programs. WPS Hub, combined with Altair's MLOps environment, will make it straightforward and simple to productionize machine learning models, programs written in the language of SAS, and modern data analytics applications. The acquisition of world programming aligns with Altair's open architecture philosophy, giving customers easy access to technologies in a flexible and intuitive environment. We see the acquisition as a significant opportunity to help companies transition to modern open solutions and languages while preserving significant investments made developing critical enterprise business applications in the SAS language and leverage the best elements of this older technology. As Altair broadens our data analytics offering under the Altair Units business model, We believe customers will increasingly appreciate the value we deliver and Altair will grow to be a very significant player in this market. We recently announced the acquisition of Cassini, a next generation cloud native platform for industry 4.0. Cassini's technology manages the entire product lifecycle from concept to customer through four key product pillars. engineering, manufacturing, quality, and service by bringing data, people, and processes together in an end-to-end digital environment, creating a digital thread and providing a 360-degree view of the conceptualized product data. Along with their technology, we bring on board a talented team with deep experience in both the mechanical and and electronic sector. Cassini software will be integrated into the Altair One cloud innovation platform to provide customers a comprehensive digital thread view of activities in the PLM value chain, especially with respect to simulation. Altair One's best-in-class top-down and bottom-up simulation data management capabilities augmented with Cassini's technology, will provide a closed-loop product validation platform to harness the power of physics and data science-based simulations. Altair sees the integration of strong data management capabilities within our platforms and seamlessly enabled as critical for customers to manage the enormous and growing complexity of traditional mechanical, and electrical simulation models, simulation results, sensor data, and AI reduced order models. Altair One and Cassini each bring different and important aspects of these requirements. Both are cloud-native, and both teams are passionate about the vision. After being awarded Newsweek's Most Loved Workplace and Inc. Magazine's Best Led Company earlier in 2021, our string of workplace and corporate awards continued in the fourth quarter of 2021. Altair Germany was named a Top 2022 Employer by Canunu, a leading employer review and branding site in the DOC region. The Economic Times, the world's second most widely read English-language business newspaper, named Altair India the best brand for 2021-2022. We were recently named the top workplace in the USA for 2022, and Investors Business Daily ranked Altair number 50 on its list of best 100 ESG companies. We are proud of these awards, as they recognize the enduring strength of our culture and values and the hard work our global teams put forward to help the world be a better and more sustainable place for all. Customers increasingly recognize the value and power of Altair's data analytics suite and product set. Our data analytics team had several notable wins in the fourth quarter, including two seven-figure multi-year software licensing deals in the banking and financial services industry. The majority of our new enterprise customer wins leverage the units model, and many existing customers see the high value benefits of units licensing, including concurrent users, floating licenses, and access to all products, and are asking to switch over. As examples, a major bank with active users across a range of Altair's applications, including data preparation, AI, real-time analytics, and visualization, recently committed to converting all its existing licenses to Altair units. A retail customer with hundreds of users also converted their existing licenses to Altair units. This trend is important as we grow our footprint in the market and expand the portfolio of solutions available to customers. Beyond resulting in increased revenue, these units conversions and new deals demonstrate how our licensing model can help us disrupt the traditional data analytics market and separate us from the competition. Momentum surrounding the convergence of computational science and AI with engineering is accelerating. In APAC, a major automotive manufacturer purchased licenses to our data analytics suite, giving their manufacturing engineering team the ability to easily connect, elect, and build simulation models. An automotive supplier and longtime Altair simulation software customer began using Altair's data analytics tools within its CAE team to leverage past company data to create predictive models for use cases, including cost modeling and part quality predictions based on manufacturing conditions. Another supplier is using our data analytics tools compare manufacturing processes, utilizing historic data, and selecting the best matches to create faster and more accurate quotes for new parts. When historical and or technical data is used in these types of applications, organizations often experience significantly improved financial performance. These are just a few examples that show simulation and data analytics. converging, resulting in true computational intelligence. The vision for simulation-driven design continues to evolve. The INSPIRE platform supports significantly more geometry creation and manipulation with every release, and we believe is becoming the solution of choice for mechanical conceptual design. Our math and systems digital twin studio released new capability to perform complex SPICE simulations, and our SPICE solver is now also available integrated within our HPC workflow technology for highly cost-efficient IC design. We believe our solution to design antennas and simulate complex wave propagation for 5G and ADAS applications for radar leads the market. and our solution to synthesize e-motor designs driven by multidisciplinary simulation and optimization are best in class and employed by many customers, with multiple wins in the fourth quarter related to electric vehicle development. A major customer in Europe has been embracing the Inspire platform, including SimSolid, as a strong basis for re-architecting their design process driven by simulation. This customer had previously selected HyperWorks as the platform for high-level simulation and is now implementing Inspire and SimSolid in their new overall computer-aided design and analysis workflow. SimSolid capabilities and performance are advancing quickly, and its usage continues to grow in a large proportion of our manufacturing customers. In one APAC country, the fourth quarter saw a sim solid across the transportation sector with wins at a commercial vehicle manufacturer, a passenger vehicle OEM, and at a Tier 1 supplier focused on plastics applications. Usage gains are happening both within the design engineering user base as well as several core CAE groups. SimSolid played a critical role in acquiring a new AEC client in Europe where their experienced simulation users recognized the ability of SimSolid to dramatically speed up their processes. And its unique capabilities are being embraced in the energy sector traditional analysis codes, which are unable to match performance. Altair was recently selected as the solution of choice for safety and crash simulation by a major rail manufacturing company, which resulted from the merger of two significant players in this market. Each company had used a different solution, and the newly combined company has decided to go forward only with Altair. With this victory and several other wins in the rail market, we believe Altair is emerging as the leading solution in the rail market. Our high-performance computing business grew strongly in 2021 as the efficient usage of HPC resources and HPC application licenses on-prem and in the cloud has become an important differentiator for most companies and research institutes. We recently announced a multi-year agreement with Hewlett Packard Enterprise to offer Altair's HPC solution suite for workload and workflow management with HPE's HPC systems to support next-generation supercomputing. The solution includes job scheduling software with robust, scalable technology capable of handling the most intense jobs while improving productivity, optimizing utilization and efficiency, and simplifying administration for supercomputers of any size. The agreement strengthens a nearly 20-year relationship between HPE and Altair, and we look forward to many more years of success together. Argonne National Laboratory announced it will utilize Altair's HPC technology across the organization's HPC systems at the Argonne Leadership Computing Facility, the ALCF, including the Polaris and Aurora supercomputers. Altair PBS Professional, which replaces the ALCF's Cobalt Workload Manager, will be the default workload management solution and will allow researchers to easily and more efficiently run diverse workloads and data-intensive tasks, including machine learning and simulation. With Polaris as the leading edge testbed system for Aurora, scheduled to be the fastest exascale computing system in the U.S., and capable of performing a quintillion calculations per second, it's critical to ensure that downtime is avoided, as it could put research teams hundreds of hours behind completing a project. Supported by Altair's global team of HPC specialists, Altair's technology will optimize and manage thousands of node hours simultaneously and help ensure researchers can make quicker, more efficient scientific discoveries. We are honored and excited to be a part of a team enabling pure science to move forward, A significant Altair Unlimited HPC appliance deal in the fourth quarter was deployed at a European division of a global automotive supplier. This seven-figure, multi-year deal represents the renewal of customers' predecessor system and a billings expansion of 87%. The applications include computational fluid dynamics, structures, and electromagnetics. We secured a notable Altair Unlimited HPC appliance deal at a major global material supplier. By demonstrating the scalability of our solutions and establishing successful solver benchmarks, the value proposition of Altair Unlimited was quickly evident. Solver applications, including nonlinear analysis of plastic components, material characterization, random response-based fatigue life prediction, and impact analysis. This convergence of simulation and high-performance computing is a great boost to customer productivity and an excellent example of the power of Altair's solutions. I am pleased to have welcomed Sandy Carter to Altair's Board of Directors. As a pioneer in the digital business revolution, and a former high-level executive at AWS for five years, Sandy is Senior Vice President and Channel Chief of Unstoppable Domains and Chairman of the Board for Girls in Tech. She was named to Forbes Global Top 40 Marketing Masters List and CNN's 10 Most Powerful Women in Tech. Her energy, technical knowledge, executive talent, and inclusive management style are a tremendous addition to our board. We performed well in the fourth quarter to finish out an extraordinary 2021 against a backdrop of global uncertainty. We made excellent progress against the targets we set forward at our May 27, 2021 Analyst Day. And we experienced broad success throughout the year across many industry verticals, technology areas, and geographies. We added great technology, both internally developed and from acquisitions, including S-Gram, which offers interesting new opportunities in the fast-growing AEC sector. 2022 carries some of the same uncertainties and challenges from the prior year, and some new ones, including COVID-19 variants, supply chain, inflation, a tight labor market in technology, and geopolitical issues with negative effects on the macroeconomy. We believe we can carry our good momentum forward through this year and remain confident in the value we provide to customers, driving smart decisions and innovative products with computational science and artificial intelligence. I am sincerely appreciative of our global teams and excited about our future. Now I will turn the call over to Matt to provide more details on our financial performance and our guidance for the first quarter and full year 2022. Matt? Thank you, Jim.