Industry Summary Articles

ANSYS, Inc. reported fourth quarter 2022 GAAP and non-GAAP revenue growth of 6% and 5% in reported currency, respectively, or 11% and 10% in constant currency, respectively, when compared to the fourth quarter of 2021. For FY 2022, GAAP and non-GAAP revenue growth was 8% and 7% in reported currency, respectively, or 14% and 13% in constant currency, respectively, when compared to FY 2021. For the fourth quarter of 2022, the Company reported diluted earnings per share of $2.95 and $3.09 on a GAAP and non-GAAP basis, respectively, compared to $2.30 and $2.81 on a GAAP and non-GAAP basis, respectively, for the fourth quarter of 2021. For FY 2022, the Company reported diluted earnings per share of $5.99 and $7.99 on a GAAP and non-GAAP basis, respectively, compared to $5.16 and $7.37 on a GAAP and non-GAAP basis, respectively, for FY 2021. Additionally, the Company reported fourth quarter and FY 2022 ACV growth of 8% and 9% in reported currency, respectively, and 13% and 14% in constant currency, respectively.

“2022 was an outstanding year for Ansys. Our focus on customer success, product leadership and execution drove double-digit constant currency ACV and revenue growth for the fourth quarter and full year. Our excellent performance is evidence of the significant value that our best-in-class multiphysics product portfolio delivers to our customers as well as the immense opportunity that lies ahead of Ansys,” said Ajei Gopal, Ansys president and CEO. “Our customers continue to rely on Ansys simulation to drive innovation across their next-generation products. We recently released the latest version of our portfolio, which is helping users to bring smarter, more sustainable products to market faster and at lower costs.”

Gopal further stated, “I am also proud to say that we achieved over $2.0 billion in ACV in 2022, which exceeds the 2022 ACV target outlined at our 2019 investor day. We did this despite a global pandemic, the war in Ukraine and trade sanctions, that made for a challenging and volatile macroeconomic environment with unprecedented foreign exchange headwinds. Looking ahead to 2023 and beyond, I am confident in our ability to continue to meet the 2025 goals we outlined in our investor update last August.”

Nicole Anasenes, Ansys CFO, stated, “Q4 concluded another excellent year and demonstrated the strength and resilience of our business model against a backdrop of consistent customer demand for simulation and exceptional execution by the Ansys team. We exceeded our financial guidance across all key metrics for the quarter and the full year. With strong, consistent growth throughout 2022, ACV and non-GAAP revenue grew 14% and 13% in constant currency, respectively, on a full-year basis. In FY 2022, we saw broad-based growth across geographies, industries and customer types. We are entering 2023 with momentum and a robust pipeline and backlog, which gives us continued confidence in achieving our long-term outlook of 12% ACV CAGR and $3.0 billion of unlevered operating cash flow from 2022-2025.”

The non-GAAP financial results highlighted, and the non-GAAP financial outlook for 2023 discussed below, represent non-GAAP financial measures. Reconciliations of these measures to the appropriate GAAP measures, for the three and twelve months ended December 31, 2022 and 2021, and for the 2023 financial outlook, can be found later in this release.

/ Financial Results

Ansys' fourth quarter and FY 2022 and 2021 financial results are presented below. The 2022 and 2021 non-GAAP results exclude the income statement effects of the acquisition accounting adjustments to deferred revenue from business combinations closed prior to 2022, stock-based compensation, excess payroll taxes related to stock-based compensation, amortization of acquired intangible assets, expenses related to business combinations and adjustments for the income tax effect of the excluded items.

GAAP and non-GAAP results are as follows:

/ Other Performance Metrics

ACV is a key performance metric and is useful to investors in assessing the strength and trajectory of our business. ACV is a supplemental metric to help evaluate the annual performance of the business. Over the life of the contract, ACV equals the total value realized from a customer. ACV is not impacted by the timing of license revenue recognition. ACV is used by management in financial and operational decision-making and in setting sales targets used for compensation. ACV is not a replacement for, and should be viewed independently of, GAAP revenue and deferred revenue as ACV is a performance metric and is not intended to be combined with any of these items. There is no GAAP measure comparable to ACV. ACV is composed of the following:

• the annualized value of maintenance and subscription lease contracts with start dates or anniversary dates during the period, plus
• the value of perpetual license contracts with start dates during the period, plus
• the annualized value of fixed-term services contracts with start dates or anniversary dates during the period, plus
• the value of work performed during the period on fixed-deliverable services contracts.

When we refer to the anniversary dates in the definition of ACV above, we are referencing the date of the beginning of the next twelve-month period in a contractually committed multi-year contract. If a contract is three years in duration, with a start date of July 1, 2022, the anniversary dates would be July 1, 2023 and July 1, 2024. We label these anniversary dates as they are contractually committed. While this contract would be up for renewal on July 1, 2025, our ACV performance metric does not assume any contract renewals.

Example 1: For purposes of calculating ACV, a $100,000 subscription lease contract or a $100,000 maintenance contract with a term of July 1, 2022 – June 30, 2023, would each contribute $100,000 to ACV for fiscal year 2022 with no contribution to ACV for fiscal year 2023.

Example 2: For purposes of calculating ACV, a $300,000 subscription lease contract or a $300,000 maintenance contract with a term of July 1, 2022 – June 30, 2025, would each contribute $100,000 to ACV in each of fiscal years 2022, 2023 and 2024. There would be no contribution to ACV for fiscal year 2025 as each period captures the full annual value upon the anniversary date.

Example 3: A perpetual license valued at $200,000 with a contract start date of March 1, 2022 would contribute $200,000 to ACV in fiscal year 2022.

/ Management's 2023 Financial Outlook

The Company's first quarter and FY 2023 revenue, diluted earnings per share and ACV guidance is provided below. The Company is also providing its FY 2023 guidance for operating cash flows and unlevered operating cash flow. The revenue and diluted earnings per share guidance is provided on both a GAAP and non-GAAP basis. Non-GAAP financial measures exclude the income statement effects of the acquisition accounting adjustments to deferred revenue from business combinations closed prior to 2022, stock-based compensation, excess payroll taxes related to stock-based compensation, amortization of acquired intangible assets, expenses related to business combinations and adjustments for the income tax effect of the excluded items.

This guidance is based on the Company's evaluation of factual information it has determined to be relevant and the application of certain assumptions made by the Company. Please refer to the Company's prepared remarks document for additional information regarding the Company's financial guidance, including its assumptions regarding overall business dynamics.

/ First Quarter 2023 Guidance

The Company currently expects the following for the quarter ending March 31, 2023:

/ Fiscal Year 2023 Guidance

The Company currently expects the following for the fiscal year ending December 31, 2023:

Our diluted FY 2023 EPS guidance is inclusive of $44.1 million in interest expense ($36.4 million, net of tax). This compares to interest expense in FY 2022 of $22.7 million ($18.6 million, net of tax) with the significant increase in FY 2023 driven by the recent rising interest rate environment and our floating interest rate on our term loans. Because of the unpredictable nature of the interest rate environment, our go-forward guidance for operating cash flow will be on an unlevered basis. We will continue to provide a reconciliation to operating cash flow in our GAAP to Non-GAAP reconciliations. Reconciliations of the GAAP to Non-GAAP diluted EPS outlook and the operating cash flow to unlevered operating cash flow outlook are available in our "Reconciliations of GAAP to Non-GAAP Measures" section found later in this document.

/ Conference Call Information

Ansys will hold a conference call at 8:30 a.m. Eastern Time on February 23, 2023 to discuss fourth quarter and FY 2022 results. The Company will provide its prepared remarks on the Company’s investor relations homepage and as an exhibit in its Form 8-K in advance of the call to provide stockholders and analysts with additional time and detail for analyzing its results in preparation for the conference call. The prepared remarks will not be read on the call, and only brief remarks will be made prior to the Q&A session.

To participate in the live conference call, dial 855-239-2942 (US) or 412-542-4124 (Canada & Int’l). The call will be recorded and a replay will be available within two hours after the call. The replay will be available by dialing (877) 344-7529 (US), (855) 669-9658 (Canada) or (412) 317-0088 (Int’l) and entering the access code 3180704. The archived webcast can be accessed, along with other financial information, on Ansys' website at https://investors.ansys.com/events-presentations/events.

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