It has been about a month since the last earnings report for Ansys (ANSS). Shares have added about 6.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Ansys due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
ANSYS Q1 Earnings & Revenues Beat Estimates
ANSYS reported first-quarter 2023 earnings of $1.85 per share, beating the Zacks Consensus Estimate by 16.4%. The bottom line increased 36% year over year.
Non-GAAP revenues of $509.4 million surpassed the Zacks Consensus Estimate by 3.5%. The top line increased 19% (up 22% at constant currency or cc) from the year-ago quarter.
The company’s solutions continue to witness strong demand in high-tech, aerospace and automotive, along with strong growth across all regions. Deferred revenues and backlogs were $1.357 billion, up 12.8% year over year.
Quarter in Detail
Subscription lease revenues (29% of non-GAAP revenues) increased 64.4% at cc to $147.9 million. Perpetual licenses’ revenues (14%) increased 10.5% year over year at cc to $71.2 million.
Maintenance revenues (52.7%) increased 10.7% at cc to $268.6 million. Service revenues (4.3%) were up 9.2% year over year to $21.7 million.
Direct and indirect channels contributed 76.3% and 23.7%, respectively, to non-GAAP revenues.
Annual contract value or ACV increased 16.1% year over year (up 19.4% at cc) to $399.4 million.
On a geographic basis, non-GAAP revenues from the Americas, EMEA (comprising Germany, the U.K. and other EMEA) and the Asia-Pacific (Japan and Other Asia-Pacific) contributed 50.4%, 23.8% and 25.8% to non-GAAP revenues, respectively.
Non-GAAP revenues from the Americas were up 24.7% to $256.9 million at cc. Revenues from EMEA increased 19.5% to $121.1 million at cc. Revenues from the Asia-Pacific increased 19.8% to $131.4 million at cc.
Strength in the aerospace and defense, high-tech and automotive sectors increased overall revenues.
The non-GAAP gross margin expanded 160 basis points (bps) on a year-over-year basis to 91.2%.
Total operating expenses increased 12.5% year over year to $314.1 million due to higher research and development and selling, general and administrative expenses.
The non-GAAP operating margin expanded 510 bps on a year-over-year basis to 39.8%.
Balance Sheet & Cash Flow
As of Mar 31, 2023, cash and short-term investments amounted to $507.8 million compared with $614.6 million as of Dec 31, 2022.
As of Mar 31, 2023, the company’s long-term debt was $753.6 million compared with $753.5 million as of Dec 31, 2022.
In the quarter under review, cash from operations increased 24% year over year to $260 million.
In the quarter under review, the company repurchased 649,900 shares for $196.5 million. As of Mar 31, 2023, it had 1.1 million shares remaining under the share buyback program.
For second-quarter 2023, ANSYS expects non-GAAP earnings of $1.35-$1.53 per share.
Non-GAAP revenues are anticipated to be between $473 million and $498 million. Management projects a non-GAAP operating margin of 31.9-34.1%.
For 2023, ANSYS expects non-GAAP revenues of $2,242-$2,322 million. Management expects a non-GAAP operating margin of 41-42%.
Non-GAAP earnings are envisioned to be in the range of $8.39-$8.91 per share compared with the previous guidance of $8.34-$8.86.
ACV is anticipated to be between $2,265 million and $2,335 million while operating cash flow is projected to be between $699 million and $749 million for 2023.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -29.67% due to these changes.
Currently, Ansys has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Ansys has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Ansys is part of the Zacks Computer - Software industry. Over the past month, Microsoft (MSFT), a stock from the same industry, has gained 8.9%. The company reported its results for the quarter ended March 2023 more than a month ago.
Microsoft reported revenues of $52.86 billion in the last reported quarter, representing a year-over-year change of +7.1%. EPS of $2.45 for the same period compares with $2.22 a year ago.
For the current quarter, Microsoft is expected to post earnings of $2.56 per share, indicating a change of +14.8% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.5% over the last 30 days.
Microsoft has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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