Altair Engineering Inc.

and welcome to Altair's first quarter 2023 earnings conference call. At this time, all 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 1-1 on your telephone. You will then hear an automated message advising that your hand has been raised. To lower your hand, press star 1-1 again. Please be advised that today's conference is being recorded. It is now my pleasure to introduce SVP of Investor Relations, David Simon.

Good afternoon, welcome, and thank you for attending Altair's earnings conference call for the first quarter of 2023, ended March 31st, 2023. I'm Dave Simon, Altair's SVP for Investor Relations, And with me on the call are Jim Scappa, Founder, Chairman, and CEO, and Matt Brown, Chief Financial Officer. After market closed today, we issued a press release with details regarding our first quarter 2023 performance and guidance for the second quarter and full year 2023, 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 press 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. Altair had a very strong start to 2023 with software product revenue, total revenue, and EBITDA above the high end of our guidance. Q1 exceeded our expectations and represents an all-time high for software product revenue and total revenue, and continues our good momentum from 2022. Demand for our products is strong, and we're seeing the investments we've made in product development and our approach to customer success paying off. Adjusted EBITDA for Q1 2023 was $43.1 million, well above our expectations. Software product revenue as a percentage of total revenue for the first quarter continued a strong positive trend at 90.1% compared to 88.2% in the first quarter of 2022 and 88.5% for the full year of 2022. Our recurring software license rate was 95% for the quarter as compared to 93% in the first quarter of 2022 and 92% for the full year of 2022. Software product revenue in the first quarter grew by 10% year-over-year on a constant currency basis, led by strong renewals and expansion, especially in automotive and the aerospace verticals. We also continued to add several new and important logos in the first quarter, and the number of significant deals continues to grow as we focus on selling our broad solution set especially our data analytics offerings into existing and new customers. We are experiencing a substantial increase in engagement from our traditional manufacturing customers to apply our data analytics portfolio and leverage AI to accelerate simulation using CAE and test data. This is translating into meaningful new opportunities. Overall, We believe our strong first quarter performance positions the company well for the rest of 2023. The core of Altair's success is the industry leading breadth and depth of our technology. We work hard to deliver awesome capabilities and our Hyperworks 2022.3 platform release exemplifies this commitment. Hyperworks 2022.3 offers an enhanced Altair One experience by providing users with flexible access to solutions, applications, data, and compute power. Users can submit solver jobs covering structural, thermal, computational fluid dynamics, and electromagnetics disciplines in Altair's scalable Elastic Cloud infrastructure, making it easier for organizations to meet budgets and demand. The latest software updates enable product teams to collaborate on all aspects of electronic systems, printed circuit board, firmware, and 5G connectivity development in a connected end-to-end environment. HyperWorks 2022.3 features tighter integration between Altair Flux, Flux Motor, NanoFluidX, SimLab, and Material Data Center to help users streamline workflows and provide advanced modeling capabilities, electrical system design exploration and optimization, and faster acoustic and thermal flow analysis. Debugging and post-production servicing updates are also available with Altair EE Vision for electronic system design. Further improvements enable better modeling and analysis through low and no-code design and engineering tools, reduced pre- and post-processing lead times, improved surface modeling, integrated solver dashboard capabilities, expanded fluid topology optimization, coupling between AccuSolve and EDEM, and more. HyperWorks has been augmented with AI to enhance the modeling experience with automated part identification, characterization, and grouping, as well as geometry feature recognition and management for use in downstream processes and further end-user recommendations. In addition, we introduced Physics AI, an all-new module, seamlessly integrated within our modeling environment to automatically train a neural net with previous simulations to quickly predict accurate results for a new CAD or simulation model without running additional solver analyses. Last week, we announced the release of SimSolid Cloud, allowing users to access next-generation simulation technology through a web browser anywhere, anytime. SimSolid Cloud eliminates geometry simplification and meshing, the two most time-consuming and expertise-intensive tasks in traditional finite element analysis, handles complex assemblies, and delivers results with unprecedented ease and speed. SimSolid Cloud is available via Altair One, Altair's cloud innovation gateway that offers collaborative access to simulation and data analytics technology alongside scalable high-performance computing and cloud resources. We believe SimSolid Cloud has the potential to dramatically accelerate and simplify the daily work of structural analysis in all markets. and that rapid adoption of this technology will become necessary for companies to maintain their competitive advantage in product development. We reached a positive milestone for Altair related to our acquisition of World Programming in 2021 and the establishment of Altair SLC. On April 6, the U.S. Court of Appeals for the Federal Circuit affirmed the decision of the court for the Eastern District of Texas, which ruled in favor of Altair by dismissing the 2018 lawsuit initiated by the SAS Institute against World Programming for alleged copyright infringement of SAS software. After more than 10 years of litigation across multiple international venues, it was ruled that the SAS language is not proprietary and companies other than the SAS Institute are free to provide compilers and development environments supporting the SAS language, as is the case with other languages, including Python, C++, Fortran, and others in the public domain. Altair SLC demonstrates our dedication to open architecture technology, which we believe is the best way for people to harness innovation, improve product, and get the most from their work. Now companies in any industry across the globe can embrace open source languages and technology while simultaneously leveraging the decades of investment they've put into the SAS language. Momentum in our data analytics business continues to be positive as companies look to modernize their data analysis operations and standardized development primarily with Python, the most popular language taught in universities, the Altair RapidMiner offers a unique solution to support companies converting a percentage of existing SAS language code to Python while leveraging Altair SLC for the rest. We want a multi-year, seven-figure software license for the Altair RapidMiner platform with a major computational hardware company for its users in IT, marketing, corporate affairs, data office engineering, and e-commerce. We are currently engaged with many BFSI accounts on modernization projects, where SLC accelerates and de-risks their move to Python and the cloud. We also have new revenue coming in for Altair SLC from three financial sector companies in India. and an insurance company in South America. A bank in APAC founded more than 100 years ago has committed to Altair SLC and RapidMiner to help their corporate credit check activities. Our simulation business continues to grow with the convergence of data analytics and AI in CAE workflows. Every week, we hear more stories from our account teams about customers using AI combined with simulation to produce clear efficiency gains in product development. A government research organization is using the Altair Hyperworks and RapidMiner platforms to acquire real-world armored vehicle data, apply machine learning, and develop predictive models. A passenger vehicle manufacturer is using Altair SimSolid and other Altair simulation tools combined with data analytics, including Altair Panopticon for real-time data streaming to develop operational digital twins for electric vehicles. Another vehicle manufacturer is using Altair's tools for machine learning to use historical simulation data for crash, NVH, and durability. A global leader in power management is using Altair Compose, combined with data analytics, to develop a digital test bench for electrical systems. The stories from the field continue to build and the convergence of simulation with AI is a reality for Altair's customers. Altair's HPCworks platform for high performance computing continues to be a strong growth area for Altair. One of the top five global fabless semiconductor companies committed to a six-figure expansion, representing a 6x year-on-year increase. And in EMEA, a major materials company awarded Altair a multi-year, seven-figure deal for Altair's Azure Virtual Appliance Cloud solution, on which it will run a broad spectrum of Altair CAE software, along with third-party CAE offerings. A recently published case study demonstrates the positive social impact of high-performance computing. Argonne National Laboratories with university and industry collaborators won the 2022 Gordon Bell Special Prize for high-performance computing-based COVID-19 research for its work using AI to track virus variants. Machine learning played an important role in the research and the researchers analyzed 1.5 million complete high-quality SARS COVID-2 genome sequences, a process that would have previously been time and labor intensive by individually examining every protein and mapping mutation. Instead, the team streamlined the process by developing the first genome scale language model. The computing hardware used in the project is equipped with workload orchestration by Altair PBS Professional, and we are pleased to have played a part in this important life-saving work. In addition to our technology, Altair's culture has kept us moving in the right direction. Throughout our history, we have always prioritized diversity as it is a foundational pillar of our culture and thereby our success. We have also long supported STEM education. Combining these two values, we recently established the Altair Only Forward Scholarship at Columbia University's School of Engineering and Applied Science. It is designed to assist incoming first-year students pursuing an undergraduate degree in engineering and applied science and who have demonstrated leadership in or support for the African American and or Latino community. Ideally, the scholarship will benefit first-generation college students and students who are socioeconomically disadvantaged. The scholarship will award 10 students pursuing a four-year engineering or STEM-related undergraduate degree with $25,000 annually, which they will receive each year of their undergraduate studies until graduation. Columbia Engineering will select and announce the first cohort of scholarship recipients in the fall of 2023. We continue to invest and partner with companies developing leading-edge technologies to remain on the forefront of innovation. Altair has a long history of creating and investing in HPC technologies. In the fourth quarter of 2022, we invested in Xscape Photonics, a Columbia University startup dramatically accelerating data transfer rates between various computing elements, leveraging photonic chips for ultra-high bandwidth connections inside data centers and HPC. More recently, we invested in Riverlane, a Cambridge University startup developing an operating system for quantum computers to support multiple hardware architectures for error corrected quantum computing. Riverlane's groundbreaking technology has the potential to accelerate the impact and scale of quantum computing. Collaborating with Xscape and Riverlane allows Altair to stay ahead of the curve of transformative technologies to help our customers fast track their innovations. In conclusion, Q1 2023 was a strong quarter. and we are optimistic that the value we bring to our customers will continue to help us perform well against a backdrop of global uncertainty. We have been prudent in our hiring practices, and we are investing to develop our exceptional workforce. We are experiencing a less competitive hiring environment this year versus the last couple of years, and our turnover rates have returned to our historically low pre-pandemic levels. Our summer internship program, which focuses on top-tier educational institutions, saw a 100% acceptance rate, which is well above normal. Now I will turn the call over to Matt to provide more details on our financial performance and our guidance for the second quarter and full year 2023. Matt? Thank you, Jim.