Altair Engineering Inc.

Good day and thank you for standing by. Welcome to the Altair Engineering Inc. Q1 2024 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 the 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 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, Stephen Palmtag, Head of Investor Relations. Please go ahead.

Good afternoon. Welcome, and thank you for attending Altair's Earnings Conference Call for the first quarter of 2024, ended March 31st. I'm Stephen Palmtag, Altair's Head of 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 2024 performance and guidance for the second 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 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 those 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, Stephen, and welcome everyone on the call. In the first quarter of 2024, Altair continued its positive momentum with total quarterly revenue of 172.9 million, software revenue of 158.4 million, and adjusted EBITDA of 45.8 million, all exceeding the high end of our guidance range for the first quarter. Altair's Q1 results continue to demonstrate the strength of our software product portfolio and bringing computational intelligence to our customers. Software revenue on a constant currency basis grew by 6.9% in the first quarter on a year-over-year basis. Software revenue as a percentage of total revenue for the first quarter grew to 91.6% compared to 90.1% in the first quarter of 2023. Altair continues to grow with success in multiple industry verticals across global geographies and a broad portfolio of technologies. Adjusted EBITDA for Q1 2024 increased by 6.4% year-over-year to $45.8 million, or 26.5% of revenue, compared to 25.9% in Q1 of 2023. In our banking, financial services, and insurance vertical, a multinational customer specializing in payment card services signed a seven-figure commitment representing over 80% year-on-year expansion compared to 2023. This expansion was driven by Altair Monarch, our self-service data preparation solution within the Altair RapidMiner platform. Additionally, a major European accounting firm committed to utilizing Altair SLC, our SAS language compiler, which will focus on both mainframe and distributed environments. In the energy sector, we signed a deal with a new global customer that provides subsea and surface solutions. The commitment was driven by Altair SimSolid, evidencing our industry-leading structural simulation and the potential for meaningful expansion in our energy vertical. Additionally, a global leader in energy management and automation expanded its subscription renewal, driving an increase in revenue over 80% annually compared to 2023. The expansion was driven by Altair Pollux, a solution that seamlessly integrates with all major eCAD tools and accelerates the development of today's smart, connected, and tightly packaged electronic packaged products. The heavy equipment truck and rail vertical secured a seven-figure, three-year commitment from a global leader in power sports vehicles and propulsion systems. The deal expands our footprint to more departments across more applications, including structural design, kinematics, highly nonlinear events, and data analytics. The automotive vertical continued to highlight our best-in-class technology, In Q1, a European automotive OEM focused on the ultra-luxury segment signed a six-figure contract to use a broad range of our simulation, data analytics, and AI offerings. They will use Altair SimSolid and ROM AI for structural simulation, providing fast and precise whole-engine simulation, and leverage Altair RapidMiner for data mining and predictive modeling across their engineering and operations. At our investor day, we announced the upcoming release of Altair SimSolid for electronics, bringing game-changing, fast, easy, and precise multi-physics scenario exploration for electronics from chips, printed circuit boards, and integrated circuits to full system design. Since solid is already growing its presence rapidly across traditional manufacturing verticals, including automotive, aerospace, and heavy equipment, and is now poised to play significantly in the electronics market as the industry transforms from 2D designs to 3D systems and chiplets. The journey from computer-aided design to simulation has historically been strewn with the obstacles of mesh generation, a necessary but time-intensive step that delays insights and stretches project timelines. The solution's ECAD to simulation workflow will empower users to surpass conventional boundaries and seamlessly scale from meters to nanometers. This translates to faster time to results and the ability to solve even more complex multidisciplinary problems, empowering engineers to achieve superior design outcomes. The first release will support structural and thermal analysis for printed circuit boards and ICs with full wave electromagnetics analysis coming in a future release. As Altair SimSolid advances towards the inclusion of full wave electromagnetics, it showcases Altair's vision of a comprehensive, multidisciplinary simulation environment. This evolution not only sets a new standard against traditional mesh reliant systems, but it also promises a future where thermal, structural, and electromagnetic challenges are addressed within a unified meshless platform for rapid and precise design iterations. Our indirect sales channel continues to represent a significant percentage of our overall revenue and is a key priority going forward. This is evidenced by welcoming seven new channel partners to the Altair sales team in the first quarter. EDA Expert in France and Brand Engineering in Switzerland will offer the full suite of Altair's electronic design solutions. We will extend the reach of Altair's cutting-edge data analytics and AI portfolio through relational FS in Greece, Analytium in the United Kingdom and Ireland, Integral Solutions in Poland, Arias Info Communication in Hungary, and Analytical Information Management Solutions in Turkey. To further demonstrate our commitment to verticals, we hire two key leaders who will drive our efforts in healthcare and life sciences and the Federal Department of Defense, which is part of our aerospace and defense vertical. Both individuals bring decades of valuable experience that will further propel Altair's industry efforts and will bolster our focus on high-growth industry segments, helping us expand Altair's market share in segments where we have best-in-class technology, a strong track record of success, and a unique blend of talent. Within HLS, we also signed our first major pharmaceutical customer that will leverage Altair's data analytics and AI across its drug manufacturing sites. In April, we announced the acquisition of Cambridge Semantics, a modern data fabric technology company. We believe Cambridge Semantics brings the fastest and most scalable analytical graph database to organizations that have significant data volumes and deep questions. Knowledge graphs are key pieces of data fabrics and critical for successful generative AI applications as they provide the business context necessary to ground generative AI models, eliminate hallucinations, and dramatically improve response quality. Cambridge Symantec's technologies will be integrated into Altair RapidMiner, adding knowledge graph, data governance, data virtualization, and data discovery technology to the platform's existing data science and data analytics tools. Bringing together Cambridge Symantec's transformational knowledge graph technology with Altair's leading tools for data analytics and data science will offer our customers a solid foundation for building advanced analytics ecosystems, which inject AI into day-to-day business operations. This acquisition also adds deep data warehousing expertise to our already strong analytics and data science team, creating an enhanced core group of engineers that understand the entire data lifecycle, from creation to impact. Now moving from data science to rocket science, yesterday we announced the acquisition of Research in Flight, the maker of Flightstream, a computational fluid dynamics software with a large footprint in the aerospace and defense sector, and a growing presence in marine energy, turbo machinery, and automotive applications. Flightstream is a user-friendly yet powerful flow solver that bridges the gap between high-fidelity CFD simulations and the needs of engineers and designers. Its exceptionally fast computational speeds and low hardware footprint, coupled with a streamlined user interface and a robust aerodynamic solver, make it an invaluable tool for early stage rapid design iterations and in-depth aerodynamic studies for aerospace and defense applications. Flightstream is able to capture subsonic to supersonic flows, including compressible effects and a unique surface vorticity capability. It leverages the strengths of panel method flow solvers and enhances them with modern computational techniques to provide a solver that is fast and capable of handling complex aerodynamic phenomena. Altair's growth in the aerospace defense and surrounding industries has accelerated in recent years through our best-in-class computational intelligence solutions. The integration of Flightstream into our portfolio will enhance our offering with more specialized, modern, and efficient tools to meet the increasingly complex demands of customers in these industries, including the urban air mobility and eVTOL sectors. Flightstream is a United States Air Force network-approved software and is also used at NASA Ames and Langley Research Centers, as well as by the U.S. Army. It will be integrated into the Altair Hyperworks design and simulation platform and be available via Altair Units. Last month, we were honored to win the 2024 Google Cloud North America Partner of the Year Award for Diversity, Equity, and Inclusions. This award further demonstrates that Altair is a global leader and an organization where people always come first. Our numbers speak for themselves. More than 75 languages are spoken and more than 50 nationalities are represented within Altair's global workforce of over 3,000 employees. Women make up 43% of our executives and board of directors, both significantly higher than U.S. averages, and two standout employee resource groups, Women in Technology and the Altair Black Employee Resource Network, further educate and empower all Altair employees by hosting more than 30 events each year, focusing on personal growth, combating bias, and more. Q1 was a strong beginning to 2024, We are optimistic that Altair is well positioned to take advantage of a gradually improving macro environment and remain excited about our future growth. 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 of 2024. Matt?