Altair Engineering Inc.

Good day, and thank you for standing by. Welcome to the Altair Engineering Inc. Q2 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 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 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Stephen Palmtag, Investor Relations. Please go ahead.

Good afternoon. Welcome, and thank you for attending Altair's earnings conference call for the second quarter of 2024, ended June 30th. I am 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 second quarter 2024 performance and guidance for the third quarter and full year 2024, which can be accessed on our investor relations 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, Stephen, and welcome to everyone on the call. During the second quarter of 2024, Altair maintained its strong trajectory. Total quarterly revenue was $148.8 million, with software revenue accounting for $135.4 million, both surpassing the high end of our guidance for the quarter. Adjusted EBITDA was $17.3 million, above the midpoint of our guided range, Altera's Q2 results underscore the robustness of our software product lineup, which continues to empower customers with industry-leading computational intelligence. Software revenue on a constant currency basis grew 10.6% year-over-year in the second quarter. So upper revenue as a percentage of total revenue grew to 91% compared to 88.8% in the second quarter of 2023. Altair's success in the quarter spanned broadly across technologies and industry verticals, with notable strength in aerospace and defense. Last month, we unveiled exciting product enhancements with the release of Altair Hyborgs 2024, which includes substantial advancements in artificial intelligence. This further solidifies our platform status as a leading environment for AI-powered, simulation-driven innovation. HyperWorks 2024 includes improvements in AI-driven engineering, design of mechanical and electronic systems, and design and optimization driven by simulation. It's the only platform that offers a unified, modern user experience across any geometry, physics, and complexity at every stage of the product development lifecycle, from design to in-service. With AI-embedded workflows, photorealistic graphics, and a unified back-end data system, Altair HyperWorks is the foundation upon which many of the world's most innovative digital engineering practices are being built. In June, we announced that Altair was named a leader in the Gartner Magic Quadrant for data science and machine learning platforms for offering Altair RapidMiner. Gartner's Magic Quadrant, especially for data-related technologies, is widely regarded as an influential tool in the IT industry and serves as a key reference point for many organizations when evaluating technology vendors. The evaluation is based on specific criteria that analyzes a company's overall completeness of vision and ability to execute Being named as a leader in this ranking report validates what we have known for years. Altair has one of the market's most unique and comprehensive offerings for data analytics and machine learning. For us, this placement is a testament to our unmatched vision and business model, which has defined us since our inception as pioneers at the forefront of technological innovation and computational intelligence. I am proud of where Altair stands today and look forward to the strides we continue to make each day. In July, we announced the acquisition of Metrix Design Automation, a Canadian company with a game-changing simulation as a service business model for semiconductor electronic functional simulation and design verification. The Metrix Digital Simulator, DSIM, when combined with Altair silicon debug tools, will deliver a world-class advanced simulation environment with superior simulation and debug capabilities in the EDA and semiconductor space. The cloud-based business model has the potential to transform the semiconductor space by making high-caliber EDA design tools much more affordable and accessible for companies looking to aggressively scale out simulations to accelerate design cycles. Today, integrated circuit design verification has high licensing costs and may require hundreds and sometimes thousands of seats to run a single chip simulation. Additionally, these tools run on desktop machines and are not typically cloud-native or cloud-enabled. The Altera Metrics solution delivers the flexibility to run as a desktop app on your own servers or in the cloud. and can run very large regressions with customers paying only for what they use. Customers will be able to run simulations concurrently and at scale, removing massive amounts of time and cost from the traditional design cycle. By combining our best-in-class software with Metrix's cloud-based simulation of the service, we are excited to bring this groundbreaking technology to our EDA and semiconductor customers. We are unique in our ability to merge simulation with industry-leading workload and workflow optimization technology. serving as a true partner for companies embracing innovative tools and resource delivery models in this highly specialized and high-stakes industry. Customers now have a choice in design verification. DSIM will be available through Altair One, Altair's cloud innovation gateway, where it will also be available for desktop download. Halter's software portfolio continues to demonstrate leadership across industries. This quarter, we were thrilled to highlight the role our technology is playing throughout the development cycle for many teams in their quest for victory in the 37th America's Cup, beginning August 22. Our work with America's Cup teams demonstrates the power of Altair's computational intelligence vision on a global stage like no other. These are world-class organizations always looking to find new ways to innovate and succeed, just as Altair is. Their use of Altair solutions and expertise is helping design state-of-the-art AC75 yachts. Altair is the official computational science and artificial intelligence partner for the New York Yacht Club American Magic team, as well as an official supplier of Lunarosa Prada Pirelli, and we are excited to watch the races and experience the outcome of these remarkable athletes and technologists. In the second quarter, we partnered with Hewlett Packard to enrich the Altair Material Data Center with HP's proprietary material information, enhancing its utility for designers, engineers, and scientists. This aims to overcome traditional 3D printing challenges and improve component design for multi-jet fusion and metal jet printers. The collaboration bridges the often siloed functions of design and production of 3D printed parts. Now engineers with access to the Altair Material Data Center will be able to use HP material data to design efficient components, conduct structural analysis using finite element analysis, and predict and fix manufacturing defects during design and simulation. The collaboration will also benefit users of Altair Inspire Print3D, which accelerates the creation, optimization, and study of innovative, structurally efficient, additively manufactured parts by providing a fast and accurate toolset for the design and process simulation of parts made by metal binder jetting. Customers within our automotive vertical continue to adopt our cutting edge technology. In the quarter, a motorsports company with aspirations of joining the F1 grid signed a six-figure, three-year deal to leverage our comprehensive suite of simulation and high-performance computing solutions. The organization believes our simulation-driven design philosophy and will use SimSolid and Inspire throughout the design process for rapid design exploration. The value, breadth, and flexibility of the Altair unit software licensing model continues to be an important factor in securing new deals. In the banking, financial services, and insurance vertical, we welcomed one of the largest property and casualty insurance companies in the United States as a new customer. This organization will leverage Altair SLC, our powerful SAS language compiler, to construct advanced machine learning models, perform data preparation, and execute data transformations. Their decision not only emphasizes the quality of our data analytics and AI platform, but also highlights the significant potential for growth in this sector. In addition, a Canadian bank leveraging our data analytics platform expanded its six-figure annual spend with Altair by over 200%. We also maintained strong performance within the aerospace and defense vertical. We signed an eight-figure, three-year contract with a multinational aerospace company, our largest deal ever. The commitment was driven by Altair HyperMesh, part of the Altair Hyperworks design and simulation platform, which continues to provide superior capabilities for structural modeling and analysis. With Hypermesh, we continue to expand our presence in mission-critical workflows at some of the world's most important companies. In addition, a European aerospace defense and security company signed a seven-figure agreement representing a 49% year-on-year expansion compared to 2023. This agreement grows our presence in simulation, high-performance computing, and data analytics, underscoring the convergence of these domains and Alters' unique ability to deliver comprehensive solutions. This year, Altair established a new vertical focused on healthcare and life sciences, where we already had significant business in the areas of HPC and simulation, and won our first data analytics deal in Q1 2024. During the second quarter, we saw several new sales, and our pipeline of data science activities significantly grow in this vertical, especially for our SAS language solutions, and our graph database technology. Our indirect sales channel remains an important contributor to our overall revenue and a priority moving forward. A clear testament of this commitment is the addition of three new channel partners during the second quarter. FactSpan, based in Seattle, will offer customers Altair's full suite of comprehensive data analytics and AI solutions found in the Altair RapidMiner platform. DevoTeam and Symantec Partners will extend the reach of Altair's data analytics and AI solutions to customers across the EMEA region. and ATEC will bolster Altair's expansion into the North, West, and Central African regions' dynamic areas primed for swift adoption of technological solutions. The first half of 2024 was a strong start to the year. We are confident Altair is well positioned for future growth, and we remain committed to delivering best-in-class technology to our customers. I will now turn the call over to Matt to provide more details on our financial performance and our guidance for the third quarter and full year of 2024. Matt?