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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38263

 

ALTAIR ENGINEERING INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

38-2591828

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

 

1820 East Big Beaver Road, Troy, Michigan

 

48083

(Address of principal executive offices)

 

(Zip Code)

(248) 614-2400

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Class A Common Stock $0.0001 par value per share

ALTR

The NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

☒

 

 

Accelerated filer

☐

Non-accelerated filer

☐

 

 

Smaller reporting company

☐

 

 

 

 

Emerging growth company

☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

On October 21, 2022, there were 52,397,844 shares of the registrant’s Class A common stock outstanding and 27,744,574 shares of the registrant’s Class B common stock outstanding.

 

 

ALTAIR ENGINEERING INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2022

INDEX

 

 

 

 

 

 

 

 

Page

 

 

 

 

 

 

 

 

PART I.

FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

 

 

 

Item 1.

 

Financial Statements – Unaudited

 

3

 

 

 

 

 

 

 

 

 

 

 

a)

 

Consolidated Balance Sheets

 

3

 

 

 

 

 

 

 

 

 

 

 

b)

 

Consolidated Statements of Operations

 

4

 

 

 

 

 

 

 

 

 

 

 

c)

 

Consolidated Statements of Comprehensive Loss

 

5

 

 

 

 

 

 

 

 

 

 

 

d)

 

Consolidated Statements of Changes in Stockholders’ Equity

 

6

 

 

 

 

 

 

 

 

 

 

 

e)

 

Consolidated Statements of Cash Flows

 

8

 

 

 

 

 

 

 

 

 

 

 

f)

 

Notes to Consolidated Financial Statements

 

9

 

 

 

 

 

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

26

 

 

 

 

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

44

 

 

 

 

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

45

 

 

 

 

 

 

 

 

PART II.

OTHER INFORMATION

 

 

 

 

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

46

 

 

 

 

 

 

 

 

 

Item 1A.

 

Risk Factors

 

46

 

 

 

 

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

50

 

 

 

 

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

50

 

 

 

 

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

50

 

 

 

 

 

 

 

 

 

Item 5.

 

Other Information

 

50

 

 

 

 

 

 

 

 

 

Item 6.

 

Exhibits

 

51

 

 

 

 

 

 

 

 

SIGNATURES

 

 

 

 

 

52

 

 

 

 

 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

 

ALTAIR ENGINEERING INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

 

 

September 30, 2022

 

 

December 31, 2021

 

(In thousands)

 

(Unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash and cash equivalents

 

$

311,853

 

 

$

413,743

 

Accounts receivable, net

 

 

119,921

 

 

 

137,561

 

Income tax receivable

 

 

10,465

 

 

 

9,388

 

Prepaid expenses and other current assets

 

 

23,492

 

 

 

27,529

 

Total current assets

 

 

465,731

 

 

 

588,221

 

Property and equipment, net

 

 

38,938

 

 

 

40,478

 

Operating lease right of use assets

 

 

32,627

 

 

 

28,494

 

Goodwill

 

 

455,211

 

 

 

370,178

 

Other intangible assets, net

 

 

86,080

 

 

 

99,057

 

Deferred tax assets

 

 

7,605

 

 

 

8,495

 

Other long-term assets

 

 

38,736

 

 

 

28,352

 

TOTAL ASSETS

 

$

1,124,928

 

 

$

1,163,275

 

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

 

CURRENT LIABILITIES:

 

 

 

 

 

 

Accounts payable

 

$

6,235

 

 

$

6,647

 

Accrued compensation and benefits

 

 

37,036

 

 

 

42,307

 

Current portion of operating lease liabilities

 

 

9,996

 

 

 

9,933

 

Other accrued expenses and current liabilities

 

 

50,686

 

 

 

122,226

 

Deferred revenue

 

 

94,523

 

 

 

93,160

 

Convertible senior notes, net

 

 

—

 

 

 

199,705

 

Total current liabilities

 

 

198,476

 

 

 

473,978

 

Operating lease liabilities, net of current portion

 

 

23,466

 

 

 

19,550

 

Deferred revenue, non-current

 

 

22,017

 

 

 

12,872

 

Convertible senior notes, net

 

 

305,158

 

 

 

—

 

Other long-term liabilities

 

 

40,282

 

 

 

42,894

 

TOTAL LIABILITIES

 

 

589,399

 

 

 

549,294

 

Commitments and contingencies

 

 

 

 

 

 

MEZZANINE EQUITY

 

 

—

 

 

 

784

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

 

Preferred stock ($0.0001 par value), authorized 45,000 shares, none issued and outstanding

 

 

—

 

 

 

—

 

Common stock ($0.0001 par value)

 

 

 

 

 

 

Class A common stock, authorized 513,797 shares, issued and outstanding 52,377
   and 51,524 shares as of September 30, 2022, and December 31, 2021, respectively

 

 

5

 

 

 

5

 

Class B common stock, authorized 41,203 shares, issued and outstanding 27,745 
   shares as of September 30, 2022, and December 31, 2021

 

 

3

 

 

 

3

 

Additional paid-in capital

 

 

715,736

 

 

 

724,226

 

Accumulated deficit

 

 

(133,642

)

 

 

(102,087

)

Accumulated other comprehensive loss

 

 

(46,573

)

 

 

(8,950

)

TOTAL STOCKHOLDERS’ EQUITY

 

 

535,529

 

 

 

613,197

 

TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

 

$

1,124,928

 

 

$

1,163,275

 

 

See accompanying notes to consolidated financial statements.

3

 

ALTAIR ENGINEERING INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended
 September 30,

 

 

Nine Months Ended
September 30,

 

(in thousands, except per share data)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

License

 

$

67,245

 

 

$

67,603

 

 

$

256,102

 

 

$

230,630

 

Maintenance and other services

 

 

36,520

 

 

 

34,686

 

 

 

105,453

 

 

 

100,758

 

Total software

 

 

103,765

 

 

 

102,289

 

 

 

361,555

 

 

 

331,388

 

Software related services

 

 

6,706

 

 

 

7,650

 

 

 

23,143

 

 

 

23,229

 

Total software and related services

 

 

110,471

 

 

 

109,939

 

 

 

384,698

 

 

 

354,617

 

Client engineering services

 

 

7,355

 

 

 

10,060

 

 

 

22,414

 

 

 

31,005

 

Other

 

 

1,525

 

 

 

1,308

 

 

 

4,676

 

 

 

5,760

 

Total revenue

 

 

119,351

 

 

 

121,307

 

 

 

411,788

 

 

 

391,382

 

Cost of revenue

 

 

 

 

 

 

 

 

 

 

 

 

License

 

 

2,579

 

 

 

4,694

 

 

 

11,386

 

 

 

13,706

 

Maintenance and other services

 

 

13,025

 

 

 

11,770

 

 

 

38,628

 

 

 

35,368

 

Total software

 

 

15,604

 

 

 

16,464

 

 

 

50,014

 

 

 

49,074

 

Software related services

 

 

5,240

 

 

 

5,707

 

 

 

16,739

 

 

 

17,560

 

Total software and related services

 

 

20,844

 

 

 

22,171

 

 

 

66,753

 

 

 

66,634

 

Client engineering services

 

 

5,835

 

 

 

7,982

 

 

 

18,390

 

 

 

25,163

 

Other

 

 

1,230

 

 

 

1,348

 

 

 

3,892

 

 

 

5,072

 

Total cost of revenue

 

 

27,909

 

 

 

31,501

 

 

 

89,035

 

 

 

96,869

 

Gross profit

 

 

91,442

 

 

 

89,806

 

 

 

322,753

 

 

 

294,513

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

48,781

 

 

 

35,839

 

 

 

138,352

 

 

 

112,872

 

Sales and marketing

 

 

39,244

 

 

 

30,589

 

 

 

114,042

 

 

 

94,568

 

General and administrative

 

 

24,677

 

 

 

22,196

 

 

 

72,613

 

 

 

67,983

 

Amortization of intangible assets

 

 

6,571

 

 

 

4,432

 

 

 

18,682

 

 

 

13,924

 

Other operating income, net

 

 

(2,835

)

 

 

(1,324

)

 

 

(9,383

)

 

 

(2,526

)

Total operating expenses

 

 

116,438

 

 

 

91,732

 

 

 

334,306

 

 

 

286,821

 

Operating (loss) income

 

 

(24,996

)

 

 

(1,926

)

 

 

(11,553

)

 

 

7,692

 

Interest expense

 

 

1,566

 

 

 

3,037

 

 

 

2,851

 

 

 

8,998

 

Other expense, net

 

 

2,107

 

 

 

124

 

 

 

26,082

 

 

 

1,667

 

Loss before income taxes

 

 

(28,669

)

 

 

(5,087

)

 

 

(40,486

)

 

 

(2,973

)

Income tax expense

 

 

4,579

 

 

 

3,022

 

 

 

15,008

 

 

 

4,424

 

Net loss

 

$

(33,248

)

 

$

(8,109

)

 

$

(55,494

)

 

$

(7,397

)

Loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share attributable to common
  stockholders, basic

 

$

(0.42

)

 

$

(0.11

)

 

$

(0.70

)

 

$

(0.10

)

Net loss per share attributable to common
  stockholders, diluted

 

$

(0.42

)

 

$

(0.11

)

 

$

(0.70

)

 

$

(0.10

)

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares used in computing
  net loss per share, basic

 

 

79,207

 

 

 

75,750

 

 

 

79,205

 

 

 

75,226

 

Weighted average number of shares used in computing
  net loss per share, diluted

 

 

79,207

 

 

 

75,750

 

 

 

79,205

 

 

 

75,226

 

 

See accompanying notes to consolidated financial statements.

4

 

ALTAIR ENGINEERING INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

 

 

 

Three Months Ended
 September 30,

 

 

Nine Months Ended
September 30,

 

(in thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net loss

 

$

(33,248

)

 

$

(8,109

)

 

$

(55,494

)

 

$

(7,397

)

Other comprehensive (loss) income, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation (net of tax effect of $0 for
   all periods)

 

 

(17,817

)

 

 

(4,350

)

 

 

(37,929

)

 

 

(5,685

)

Retirement related benefit plans (net of tax effect of $0, $0, $7
   and $0, respectively)

 

 

24

 

 

 

117

 

 

 

306

 

 

 

344

 

Total other comprehensive loss

 

 

(17,793

)

 

 

(4,233

)

 

 

(37,623

)

 

 

(5,341

)

Comprehensive loss

 

$

(51,041

)

 

$

(12,342

)

 

$

(93,117

)

 

$

(12,738

)

 

See accompanying notes to consolidated financial statements.

 

 

 

5

 

ALTAIR ENGINEERING INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

Common stock

 

 

Additional

 

 

 

 

 

other

 

 

Total

 

 

 

Class A

 

 

Class B

 

 

paid-in

 

 

Accumulated

 

 

comprehensive

 

 

stockholders’

 

(in thousands)

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

capital

 

 

deficit

 

 

loss

 

 

equity

 

Balance as of December 31, 2021

 

 

51,524

 

 

$

5

 

 

 

27,745

 

 

$

3

 

 

$

724,226

 

 

$

(102,087

)

 

$

(8,950

)

 

$

613,197

 

Cumulative effect of an accounting change

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—