Altair Engineering Inc.

Good day and thank you for standing by. Welcome to the Altair Engineering fourth quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's 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 your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Dave Simon, Altair's Senior Vice President for Investor Relations. Please go ahead.

Good afternoon, welcome, and thank you for attending Altair's earnings conference call for the fourth quarter of 2023, ended December 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 fourth quarter 2023 performance and guidance for the first quarter and full year 2024, 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 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. The 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. The fourth quarter of 2023 carried positive momentum for Altair with record high total quarterly and full year revenue of $171.5 million and $612.7 million, respectively. Software product revenue and total revenue both well within our guidance with adjusted EBITDA above the top end of the guided range. Altair's Q4 results continue our growth path of helping organizations succeed through computational intelligence. Adjusted EBITDA for Q4 2023 increased by 38.3% year-over-year to $53.6 million or 31.2% of total revenue. Adjusted EBITDA grew 19% for the full year 2023 to $129.1 million or 21.1% of total revenue versus $108.6 million or 19% of revenue in 2022, continuing our trend of increasing adjusted EBITDA margin by 200 to 300 basis points per year over the last four years. Software product revenue for the full year 2023 grew by 8.6% compared to 2022 and 9.8% on a constant currency basis. Software product revenue as a percentage of total revenue for the full year 2023 increased to 90% as compared to 89% in 2022. And the recurring software license rate for 2023 was 93%. an increase from 92% during 2022. Altair's growth continues to be broad-based across many geographies, technologies, and verticals. In the fall of 2023, we released what we believe was the most important update to our products in the last 10 years. Our upcoming release this spring is expected to take another leap forward as we continue to bring all of our solutions for simulation under a common user framework, graphics engine, and backend data model. In addition, we believe, and many customers agree, our investments in engineering AI are positioning us as the leader in this important and growing domain because of the enormous base of data science talent and technology we are leveraging across our enterprise. Despite some recent uncertainties around EV sales, the transition of the automotive sector toward alternative power sources, including purely electric, continues to present an exciting field of opportunities for Altair. In December, we announced funding awarded for the UK government's Faraday Battery Challenge to a consortium of three organizations, Altair, JLR, and battery manufacturer Danica. The project will leverage Altair's technology to develop vehicles with a new, lighter body that offers more room for the battery without adding additional weight. JLR will apply Altair's C123 process, a unique three-stage concept development process for body and wide structures, and will utilize Altair's technologies for structural optimization and electro thermal simulation. Also in the electric powertrain space, a heavy duty commercial vehicle manufacturer has substantially increased its commitment to Altair simulation tools for improving battery predictive analytics. In APAC, a leading manufacturer of electric vehicles has made an eight figure commitment to use a broad portfolio of Altair simulation and data analytics software in its multi-division product development processes. A U.S. headquartered electric vehicle manufacturer doubled its Altair technology purchases, bringing our annual revenue with them into seven figures. And finally, another U.S. headquartered EV manufacturer signed a three-year seven-figure agreement with Altair representing more than 100 percent growth over the previous three years. We had some good fourth-quarter wins in the BFSI vertical and for our data analytics solutions. One of the largest credit unions in the U.S. inked a renewal with 33 percent growth, recognizing its increased usage and high value from our data analytics and AI platform, RapidMiner. A major European banking group signed on to a major deployment of Altair SLC across many applications throughout its organization. And a North American consulting organization has agreed to use Altair SLC as a primary tool for its work with many clients and supply chain analytics. Altair's high performance computing solutions drove substantial activity in the technology vertical. one of the leading companies in the power semiconductor field placed in order for Altera's workload and workflow management software based on experiencing a 20 percent throughput increase. This not only enhances its operational efficiency, but also leads to substantial cost savings given the high cost of EDA application software. an EMEA semiconductor company renewed with a 127% annual increase. We also received a three-year agreement with seven figures of annual revenue from a U.S. semiconductor manufacturer based on its desire to leverage cloud computing for design and development while effectively managing cloud usage costs. Indirect sales continues to represent an important percentage of our overall revenue, and we look forward to further success in that regard, especially for our data analytics solutions. We welcomed three new channel partners to the Altair sales team in the fourth quarter. Do It Now is focused on high-performance computing applications in EMEA. Neand in Portugal and Matogen Applied Insights of South Africa are both focused on data analytics and artificial intelligence. Altair has expanded its relationship with the FIRST technology organization founded by Dean Kamen, where Altair technology is now available to all teams in the FIRST robotics competition kit of parts. More than 3,500 high school teams across 26 countries competing in this year's FIRST Robotics competition, will have free access to Altair software. Altair's collaboration with FIRST will bolster students' technical skills and support a diverse community of students by building citizenship, self-esteem, and leadership through hands-on experiences and project-based learning. Furthering our collaboration with FIRST is a perfect example of Altair's commitment to students and the role they have in technology, both today and in the future. Combining our academic focus with work on e-mobility, Altair India recently formalized a strategic partnership with the Indian Institute of Technology Madras to establish an e-mobility simulation lab within the Department of Engineering Design. This collaborative initiative under Altair's corporate social responsibility program includes grant money from Altair along with simulation and design software and high performance computing infrastructure. Exclusively powered by Altair Technologies, the lab's goal is to support startups, researchers, and students in advancing the study and development of electric vehicles. We are pleased to be supporting IIT Madras, a clear global leader in educating the world's best and brightest young minds. 2023 for Altair was a year of hard work, significant investments in new software technologies, sales team alignment into market verticals, steady focus, and ultimately outstanding execution from our stellar global teams amidst a lot of economic and geopolitical uncertainty. I am proud of the individual and group accomplishments of our people and appreciative of the strong Altarian culture that keeps us moving forward in ways that benefit our customers, employees, partners, and shareholders. We believe the culmination of our organizational advancements combined with the power of our technology portfolio positions Altair well for the future. We are holding an Altair Investor Day the morning of March 20th in Santa Clara, California, where we will discuss our vision for the future and our plans to capitalize on our growing market opportunity. We will also introduce what we believe to be a very exciting and disruptive technology for the electronics market. I hope all of our investors and prospective investors, as well as the analysts who cover Altair and the markets we compete in, will attend. 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 of 2024. Matt?