ANSYS, Inc.

Ladies and gentlemen, thank you for standing by and welcome to ANSYS Third Quarter 2020 Earnings Conference Call. With us today are Ajay Gopal, Senior Executive Officer, Maria Shields, SVP and Chief Financial Officer, and Annette Arribas, Senior Director, Global Investor Relations. At this time, I would like to turn the call over to Ms. Arribas for some opening remarks. Please proceed.

Good morning, everyone. Our earnings release, the related prepared remarks document, and the link to our third quarter form 10Q have all been posted on the homepage of our investor relations website. They contain the key financial information and supporting data relative to our third quarter financial results and business update, as well as our Q4 and updated fiscal year 2020 outlook and the key underlying quantitative and qualitative assumptions. I would like to remind everyone that in addition to any risks and uncertainties that we highlight during the course of this call, Important factors that may affect our future results are discussed at length in our public filings with the SEC, all of which are also available via our website. We note that the impacts of the COVID-19 pandemic on our performance could cause actual results to differ materially from our projections. Additionally, the company's reported results should not be considered an indication of future performance, as there are risks and uncertainties that could impact our business in the future. These statements are based upon our view of the business as of today and ANSYS undertakes no obligations to update any such information. During the call and in the prepared remarks, we will be referring to non-GAAP financial measures unless otherwise stated. A discussion of the various items that are excluded and a full reconciliation of GAAP to the comparable non-GAAP financial measures is included in this morning's earnings release materials and related form 8K. I would now like to turn the call over to our CEO, Ajay Kapal, for his opening remarks. Ajay?

Good morning, everyone, and thank you for joining us. Q3 was another strong quarter for Ansys, meeting or beating our financial guidance on all key metrics. Our performance demonstrates that our core value proposition of helping organizations increase that top line while driving bottom line savings continues to resonate with the markets. I'm excited that the demand for Ansys' multi-physics solutions is strong and growing, and it's furthering our strategy of making simulation pervasive across the product lifecycle. Based on our year-to-date performance and the strength of our pipeline for the fourth quarter, we are increasing both the high-end and the midpoint of our 2020 guidance for ACV, revenue, and EPS. Maria will have the details in a few minutes. Our prepared remarks document has details about the quarter, but let me provide some regional perspective. We anticipate that the Americas will be our strongest region for the full year. From a quarterly perspective, Asia Pacific was strong in Q3, with Japan leading the way, reflecting our ongoing progress towards multi-physics, multi-year lease deals. We expect EMEA to show good growth in Q4, driven by the timing of larger deals. During Q3, our enterprise and strategic account program continue to show strength with approximately 50% of our Q3 ACV coming from our top 100 customers. I'm excited that we closed a five-year $72 million lease with a North American enterprise customer, our largest agreement in the quarter and the second largest in the history of the company. This deal results in ACV and revenue in Q3 and primarily in Q4 and comes after the almost $100 million sale that we announced last quarter. We saw continued headwinds this quarter with small and medium businesses across geographies consistent with what we have previously communicated. From an industry point of view, the high tech automotive and ground transportation and aerospace and defense sectors continue to be our strongest performance for the full year. On our past calls, I have given some additional color around particular aspects of our business. Today, I will discuss our successes in the aerospace and defense vertical. A&D is ANSYS' second largest sector at about 18% of our trailing 12 months ACV. Although the pandemic has impacted commercial air travel, we continue to see spending in the sector thanks to important strategic initiatives. These include eco-friendly fuel-efficient engines, space 2.0 initiatives such as rocket design and satellite deployments, and national defense. I would like to highlight two important Q3 deals in which companies will use ANSYS simulation to develop eco-friendlier aircraft engines. These companies are relying on ANSYS to improve engine efficiency, reduce engine weight, and avoid fuel inefficient over design. The first agreement was with Honeywell, which is using ANSYS simulation to automate its engineering workflows to maximize operational efficiency and drive process improvements. As a result, Honeywell will benefit from product-wide traceability and reusability while significantly cutting development cycle times. The second was with a major aircraft engine manufacturer that is investing $34 million over the next five years to standardize on ANSYS to achieve its vision of developing next-generation engines at lower cost. Space 2.0 companies are democratizing space by launching satellites and astronauts into orbit. and they are embracing the use of simulation to develop better products and to make smarter decisions faster. Firefly Aerospace, one of the more than 1,000 companies that have benefited from the ANSYS startup program, recently announced that it has realized about $15 million in savings from using our simulation for critical tasks, leading to a design that can withstand the extreme conditions of liftoff, flight, and space travel. We are seeing ongoing investments in multi-physics simulation by government agencies and defense contractors, which are trying to solve next generation problems in the interest of national security. These organizations are turning to ANSYS because of our simulation leadership and advanced multi-physics capabilities. In Q3, we saw investment from a large North American defense contractor for the design of an advanced aircraft optical sensor. To help calibrate sensor algorithms to reduce noise and blurriness due to high-speed airflow, our team developed and deployed a fully coupled aero-optical solution. This competitive win was possible not only because of Ansys' multi-physics leadership, but also because of the unparalleled accuracy of our products. Ansys simulations eliminated eight weeks of testing for the company, lowering test costs by 60%, and increasing engineering productivity by up to 15% using the new workflow. We signed another multi-million dollar Q3 deal, this time with a government agency, to use ANSYS to design chips that are more secure. This organization is relying on an important multi-physics breakthrough by ANSYS R&D, in which simulation can be used to help chip designers prevent hard to detect side channel attacks. Specifically, The new Ansys offering, which is deployed and runs on the customer's secure private cloud, enables chip and system designers to simulate and measure their vulnerability to security attacks while the chip is being designed. As an aside, this organization was amongst the first customers to serve the needs of its users and prime contractors using an Ansys private cloud. That is, Ansys products deployed and running on a shared secured infrastructure. Let me move from customers to acquisitions. Last week, we announced our intent to acquire AGI, a pioneer and leader in the analysis and simulation of missions, such as satellite launches, national defense, and search and rescue operations. ANSYS has not traditionally participated in this area, which is growing due to the increasing number of missions. Historically, customer needs were partially addressed by commercial software with multiple applications, or by in-house codes. AGI has a purpose-built solution for mission analysis and simulation and has become a leading firm in this area. By combining forces with AGI, we will be able to address a broader opportunity called digital mission engineering, which combines mission simulation and analysis from AGI and component and system-level simulation from ANSYS. Our combined portfolio will enable customers to simulate up and down the stack, starting at the chip level and going all the way up to the customer's entire mission, thereby increasing the likelihood of success and saving customers time, money, and other crucial resources. You may remember that we formed a partnership with AGI last year, and one of the results of that alliance was a connection between its products and Ansys HFSS, our flagship electromagnetic solver. Several large customers are using both companies' products together. One large prime contractor, for example, uses AGI software to track the radar visibility and signal availability between various mission assets and then employs Ansys HFSF to analyze the quality of that visibility and connectivity. Here's another example to make it more concrete. the use of simulation to plan the successful deployment of a new telecommunication satellite. First, AGI's mission and orbital simulation capabilities can help ensure that the launch and the orbit of the new satellite avoid the collision with other objects in space. Furthermore, the combination of AGI's capabilities and ANSYS HFSS can simulate the relative position and communications capabilities of the satellite to other orbiting telecommunication satellites and to terrestrial base stations to help ensure that the satellite will perform as expected when deployed. We will be in a position to share more with you about our plans with AGI after the transaction closes. Before I turn the call over to Maria, I'd like to discuss two important topics, the Ansys Cloud offering and our commitment to ESG. Ansys Cloud which enables our customers to access high-performance computing in the public cloud, is critically important with so many customers continuing to work remotely during the pandemic. Ansys Cloud is built on our close collaboration with Microsoft and its Azure platform. Today, Ansys Cloud customers can use the majority of our mechanical, fluids, and electromagnetics products on the latest and highest performance compute and networking infrastructure available in the market. Furthermore, Ansys Cloud supports flexible consumption models, lowering the barrier to entry for customers. These include an elastic pay-as-you-go model that gives users fast access to Ansys products and high-performance computing infrastructure in Azure for greatest convenience. A bring-your-own-license model that allows customers to use their existing Ansys lease licenses, thus preserving their existing investments. And a hybrid model that enables customers to mix and match Elastic and Lease licenses for greatest flexibility. The demand for Ansys Cloud continues to increase with usage doubling in the last six months. For example, joint Ansys Microsoft customer Rockwell Automation is using Ansys Cloud to accelerate its product development processes. The company has reduced simulation run times by 50% enabling users to solve larger problems more accurately. Whilst we are excited about our public cloud offering and encouraged by our rapid progress, it is important to note the majority of our customers use Ansys products on premises in their own data centers or in private clouds, such as the government agency I mentioned earlier. As such, we expect our Ansys cloud offering will remain a relatively small piece of our business for the foreseeable future. Finally, we are continuing to advance our environmental, social, and governance programs. In Q3, we submitted our 2020 Climate Change Report to CDP, which helps us identify our internal environmental risks and opportunities. This information is available on our investor relations website. We are also analyzing the benefits in environmental sustainability that our solutions enable for our customers and plan to make that information publicly available when ready. To summarize, Q3 was another strong quarter thanks to great execution from our global team of dedicated employees and channel partners. Our compelling value proposition of helping customers to decrease costs while spurring top line growth continues to gain traction in the market. Those factors combined with our close customer relationships, the power of Ansys products, and the strength of our pipeline gives us continued confidence as we work to deliver against our objectives for the remainder of 2020. With that, I'd like to turn the call over to Maria to discuss the financials for Q3, as well as the details around our outlook and the assumptions for the remainder of the year. Maria?