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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 June 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 Stock 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 July 22, 2022, there were 52,201,672 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 JUNE 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

 

49

 

 

 

 

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

49

 

 

 

 

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

49

 

 

 

 

 

 

 

 

 

Item 5.

 

Other Information

 

49

 

 

 

 

 

 

 

 

 

Item 6.

 

Exhibits

 

50

 

 

 

 

 

 

 

 

SIGNATURES

 

 

 

 

 

51

 

 

 

 


 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

 

ALTAIR ENGINEERING INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

 

 

June 30, 2022

 

 

December 31, 2021

 

(In thousands)

 

(Unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash and cash equivalents

 

$

416,137

 

 

$

413,743

 

Accounts receivable, net

 

 

103,483

 

 

 

137,561

 

Income tax receivable

 

 

11,412

 

 

 

9,388

 

Prepaid expenses and other current assets

 

 

23,282

 

 

 

27,529

 

Total current assets

 

 

554,314

 

 

 

588,221

 

Property and equipment, net

 

 

39,370

 

 

 

40,478

 

Operating lease right of use assets

 

 

24,977

 

 

 

28,494

 

Goodwill

 

 

385,989

 

 

 

370,178

 

Other intangible assets, net

 

 

90,327

 

 

 

99,057

 

Deferred tax assets

 

 

7,943

 

 

 

8,495

 

Other long-term assets

 

 

25,588

 

 

 

28,352

 

TOTAL ASSETS

 

$

1,128,508

 

 

$

1,163,275

 

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

 

CURRENT LIABILITIES:

 

 

 

 

 

 

Accounts payable

 

$

4,962

 

 

$

6,647

 

Accrued compensation and benefits

 

 

31,084

 

 

 

42,307

 

Current portion of operating lease liabilities

 

 

9,433

 

 

 

9,933

 

Other accrued expenses and current liabilities

 

 

49,444

 

 

 

122,226

 

Deferred revenue

 

 

92,141

 

 

 

93,160

 

Convertible senior notes, net

 

 

 

 

 

199,705

 

Total current liabilities

 

 

187,064

 

 

 

473,978

 

Operating lease liabilities, net of current portion

 

 

16,340

 

 

 

19,550

 

Deferred revenue, non-current

 

 

20,785

 

 

 

12,872

 

Convertible senior notes, net

 

 

304,676

 

 

 

 

Other long-term liabilities

 

 

41,471

 

 

 

42,894

 

TOTAL LIABILITIES

 

 

570,336

 

 

 

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 52,191
   and
51,524 shares as of June 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 June 30, 2022, and December 31, 2021

 

 

3

 

 

 

3

 

Additional paid-in capital

 

 

687,338

 

 

 

724,226

 

Accumulated deficit

 

 

(100,394

)

 

 

(102,087

)

Accumulated other comprehensive loss

 

 

(28,780

)

 

 

(8,950

)

TOTAL STOCKHOLDERS’ EQUITY

 

 

558,172

 

 

 

613,197

 

TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

 

$

1,128,508

 

 

$

1,163,275

 

 

See accompanying notes to consolidated financial statements.

3


 

ALTAIR ENGINEERING INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended
 June 30,

 

 

Six Months Ended
June 30,

 

(in thousands, except per share data)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

License

 

$

82,688

 

 

$

66,632

 

 

$

188,857

 

 

$

163,027

 

Maintenance and other services

 

 

34,205

 

 

 

32,926

 

 

 

68,933

 

 

 

66,072

 

Total software

 

 

116,893

 

 

 

99,558

 

 

 

257,790

 

 

 

229,099

 

Software related services

 

 

7,376

 

 

 

7,481

 

 

 

16,437

 

 

 

15,579

 

Total software and related services

 

 

124,269

 

 

 

107,039

 

 

 

274,227

 

 

 

244,678

 

Client engineering services

 

 

7,047

 

 

 

10,268

 

 

 

15,059

 

 

 

20,945

 

Other

 

 

1,340

 

 

 

2,605

 

 

 

3,151

 

 

 

4,452

 

Total revenue

 

 

132,656

 

 

 

119,912

 

 

 

292,437

 

 

 

270,075

 

Cost of revenue

 

 

 

 

 

 

 

 

 

 

 

 

License

 

 

4,120

 

 

 

3,617

 

 

 

8,807

 

 

 

9,012

 

Maintenance and other services

 

 

12,884

 

 

 

12,043

 

 

 

25,603

 

 

 

23,598

 

Total software

 

 

17,004

 

 

 

15,660

 

 

 

34,410

 

 

 

32,610

 

Software related services

 

 

5,464

 

 

 

5,731

 

 

 

11,499

 

 

 

11,853

 

Total software and related services

 

 

22,468

 

 

 

21,391

 

 

 

45,909

 

 

 

44,463

 

Client engineering services

 

 

5,914

 

 

 

8,293

 

 

 

12,555

 

 

 

17,181

 

Other

 

 

1,141

 

 

 

2,262

 

 

 

2,662

 

 

 

3,724

 

Total cost of revenue

 

 

29,523

 

 

 

31,946

 

 

 

61,126

 

 

 

65,368

 

Gross profit

 

 

103,133

 

 

 

87,966

 

 

 

231,311

 

 

 

204,707

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

46,477

 

 

 

38,757

 

 

 

89,571

 

 

 

77,033

 

Sales and marketing

 

 

39,116

 

 

 

31,909

 

 

 

74,798

 

 

 

63,979

 

General and administrative

 

 

24,367

 

 

 

21,861

 

 

 

47,936

 

 

 

45,787

 

Amortization of intangible assets

 

 

6,208

 

 

 

4,615

 

 

 

12,111

 

 

 

9,492

 

Other operating income, net

 

 

(5,767

)

 

 

(585

)

 

 

(6,548

)

 

 

(1,202

)

Total operating expenses

 

 

110,401

 

 

 

96,557

 

 

 

217,868

 

 

 

195,089

 

Operating (loss) income

 

 

(7,268

)

 

 

(8,591

)

 

 

13,443

 

 

 

9,618

 

Interest expense

 

 

700

 

 

 

2,988

 

 

 

1,285

 

 

 

5,961

 

Other expense, net

 

 

21,907

 

 

 

708

 

 

 

23,975

 

 

 

1,543

 

(Loss) income before income taxes

 

 

(29,875

)

 

 

(12,287

)

 

 

(11,817

)

 

 

2,114

 

Income tax expense

 

 

3,899

 

 

 

1,361

 

 

 

10,429

 

 

 

1,402

 

Net (loss) income

 

$

(33,774

)

 

$

(13,648

)

 

$

(22,246

)

 

$

712

 

(Loss) income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income per share attributable to common
  stockholders, basic

 

$

(0.43

)

 

$

(0.18

)

 

$

(0.28

)

 

$

0.01

 

Net (loss) income per share attributable to common
  stockholders, diluted

 

$

(0.43

)

 

$

(0.18

)

 

$

(0.28

)

 

$

0.01

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

78,948

 

 

 

75,263

 

 

 

79,204

 

 

 

74,959

 

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

 

 

78,948

 

 

 

75,263

 

 

 

79,204

 

 

 

79,851

 

 

See accompanying notes to consolidated financial statements.

4


 

ALTAIR ENGINEERING INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

 

 

 

Three Months Ended
 June 30,

 

 

Six Months Ended
June 30,

 

(in thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net (loss) income

 

$

(33,774

)

 

$

(13,648

)

 

$

(22,246

)

 

$

712

 

Other comprehensive (loss) income, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

(15,949

)

 

 

2,640

 

 

 

(20,112

)

 

 

(1,335

)

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

 

 

177

 

 

 

84

 

 

 

282

 

 

 

227

 

Total other comprehensive (loss) income

 

 

(15,772

)

 

 

2,724

 

 

 

(19,830

)

 

 

(1,108

)

Comprehensive loss

 

$

(49,546

)

 

$

(10,924

)

 

$

(42,076

)

 

$

(396

)

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(50,009

)

 

 

23,939

 

 

 

 

 

 

(26,070

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11,528

 

 

 

 

 

 

11,528

 

Issuance of common stock for employee stock
   purchase program

 

 

77

 

 

 

 

 

 

 

 

 

 

 

 

4,187

 

 

 

 

 

 

 

 

 

4,187

 

Exercise of stock options

 

 

86

 

 

 

 

 

 

 

 

 

 

 

 

238

 

 

 

 

 

 

 

 

 

238

 

Vesting of restricted stock

 

 

324