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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 March 31, 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 April 18, 2022, there were 52,025,249 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 MARCH 31, 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 Income (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

 

22

 

 

 

 

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

33

 

 

 

 

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

34

 

 

 

 

 

 

 

 

PART II.

OTHER INFORMATION

 

 

 

 

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

35

 

 

 

 

 

 

 

 

 

Item 1A.

 

Risk Factors

 

35

 

 

 

 

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

35

 

 

 

 

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

35

 

 

 

 

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

36

 

 

 

 

 

 

 

 

 

Item 5.

 

Other Information

 

36

 

 

 

 

 

 

 

 

 

Item 6.

 

Exhibits

 

37

 

 

 

 

 

 

 

 

SIGNATURES

 

 

 

 

 

38

 

 

 

 


 

 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

 

ALTAIR ENGINEERING INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

 

 

March 31, 2022

 

 

December 31, 2021

 

(In thousands)

 

(Unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

405,578

 

 

$

413,743

 

Accounts receivable, net

 

 

112,444

 

 

 

137,561

 

Income tax receivable

 

 

12,185

 

 

 

9,388

 

Prepaid expenses and other current assets

 

 

25,467

 

 

 

27,529

 

Total current assets

 

 

555,674

 

 

 

588,221

 

Property and equipment, net

 

 

40,188

 

 

 

40,478

 

Operating lease right of use assets

 

 

27,910

 

 

 

28,494

 

Goodwill

 

 

379,320

 

 

 

370,178

 

Other intangible assets, net

 

 

93,345

 

 

 

99,057

 

Deferred tax assets

 

 

8,228

 

 

 

8,495

 

Other long-term assets

 

 

29,025

 

 

 

28,352

 

TOTAL ASSETS

 

$

1,133,690

 

 

$

1,163,275

 

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Accounts payable

 

$

6,061

 

 

$

6,647

 

Accrued compensation and benefits

 

 

35,038

 

 

 

42,307

 

Current portion of operating lease liabilities

 

 

9,948

 

 

 

9,933

 

Other accrued expenses and current liabilities

 

 

56,978

 

 

 

122,226

 

Deferred revenue

 

 

96,529

 

 

 

93,160

 

Convertible senior notes, net

 

 

226,187

 

 

 

199,705

 

Total current liabilities

 

 

430,741

 

 

 

473,978

 

Operating lease liabilities, net of current portion

 

 

18,847

 

 

 

19,550

 

Deferred revenue, non-current

 

 

21,874

 

 

 

12,872

 

Other long-term liabilities

 

 

43,019

 

 

 

42,894

 

TOTAL LIABILITIES

 

 

514,481

 

 

 

549,294

 

Commitments and contingencies

 

 

 

 

 

 

 

 

MEZZANINE EQUITY

 

 

784

 

 

 

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 52,011

   and 51,524 shares as of March 31, 2022, and December 31, 2021, respectively

 

 

5

 

 

 

5

 

Class B common stock, authorized 41,203 shares, issued and outstanding 27,745

   shares as of March 31, 2022, and December 31, 2021

 

 

3

 

 

 

3

 

Additional paid-in capital

 

 

698,045

 

 

 

724,226

 

Accumulated deficit

 

 

(66,620

)

 

 

(102,087

)

Accumulated other comprehensive loss

 

 

(13,008

)

 

 

(8,950

)

TOTAL STOCKHOLDERS’ EQUITY

 

 

618,425

 

 

 

613,197

 

TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

 

$

1,133,690

 

 

$

1,163,275

 

 

See accompanying notes to consolidated financial statements.

 

 

 

3


 

 

 

ALTAIR ENGINEERING INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended

March 31,

 

(in thousands, except per share data)

 

2022

 

 

2021

 

Revenue

 

 

 

 

 

 

 

 

License

 

$

106,169

 

 

$

96,395

 

Maintenance and other services

 

 

34,728

 

 

 

33,146

 

Total software

 

 

140,897

 

 

 

129,541

 

Software related services

 

 

9,061

 

 

 

8,098

 

Total software and related services

 

 

149,958

 

 

 

137,639

 

Client engineering services

 

 

8,012

 

 

 

10,677

 

Other

 

 

1,811

 

 

 

1,847

 

Total revenue

 

 

159,781

 

 

 

150,163

 

Cost of revenue

 

 

 

 

 

 

 

 

License

 

 

4,687

 

 

 

5,395

 

Maintenance and other services

 

 

12,719

 

 

 

11,555

 

Total software

 

 

17,406

 

 

 

16,950

 

Software related services

 

 

6,035

 

 

 

6,122

 

Total software and related services

 

 

23,441

 

 

 

23,072

 

Client engineering services

 

 

6,641

 

 

 

8,888

 

Other

 

 

1,521

 

 

 

1,462

 

Total cost of revenue

 

 

31,603

 

 

 

33,422

 

Gross profit

 

 

128,178

 

 

 

116,741

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

 

 

43,094

 

 

 

38,276

 

Sales and marketing

 

 

35,682

 

 

 

32,070

 

General and administrative

 

 

23,569

 

 

 

23,926

 

Amortization of intangible assets

 

 

5,903

 

 

 

4,877

 

Other operating income, net

 

 

(781

)

 

 

(617

)

Total operating expenses

 

 

107,467

 

 

 

98,532

 

Operating income

 

 

20,711

 

 

 

18,209

 

Interest expense

 

 

585

 

 

 

2,973

 

Other expense, net

 

 

2,068

 

 

 

835

 

Income before income taxes

 

 

18,058

 

 

 

14,401

 

Income tax expense

 

 

6,530

 

 

 

41

 

Net income

 

$

11,528

 

 

$

14,360

 

Income per share:

 

 

 

 

 

 

 

 

Net income per share attributable to common

  stockholders, basic

 

$

0.15

 

 

$

0.19

 

Net income per share attributable to common

  stockholders, diluted

 

$

0.13

 

 

$

0.18

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

Weighted average number of shares used in computing

  net income per share, basic

 

 

79,462

 

 

 

74,651

 

Weighted average number of shares used in computing

  net income per share, diluted

 

 

87,261

 

 

 

79,295

 

 

See accompanying notes to consolidated financial statements.

 

 

4


 

 

ALTAIR ENGINEERING INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

 

 

 

Three Months Ended

March 31,

 

(in thousands)

 

2022

 

 

2021

 

Net income

 

$

11,528

 

 

$

14,360

 

Other comprehensive (loss) income, net of tax:

 

 

 

 

 

 

 

 

Foreign currency translation (net of tax effect of $0 for

   all periods)

 

 

(4,163

)

 

 

(3,975

)

Retirement related benefit plans (net of tax effect of $0 for

   all periods)

 

 

105

 

 

 

143

 

Total other comprehensive loss

 

 

(4,058

)

 

 

(3,832

)

Comprehensive income

 

$

7,470

 

 

$

10,528

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19,403

 

 

 

 

 

 

 

 

 

19,403

 

Foreign currency translation, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,163

)

 

 

(4,163

)

Retirement related benefit plans, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

105

 

 

 

105

 

Balance as of March 31, 2022

 

 

52,011

 

 

$

5

 

 

 

27,745

 

 

$

3

 

 

$

698,045

 

 

$

(66,620

)

 

$

(13,008

)

 

$

618,425

 

 

 

 

See accompanying notes to consolidated financial statements.


6


 

 

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, 2020

 

 

44,216

 

 

$

4

 

 

 

30,111

 

 

$

3

 

 

$

474,669

 

 

$

(93,293

)

 

$

(2,797

)

 

$

378,586

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14,360

 

 

 

 

 

 

14,360

 

Exercise of stock options

 

 

490

 

 

 

 

 

 

 

 

 

 

 

 

271

 

 

 

 

 

 

 

 

 

271

 

Vesting of restricted stock

 

 

278

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion from Class B to Class A common stock

 

 

510

 

 

 

 

 

 

(510

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,644

 

 

 

 

 

 

 

 

 

9,644

 

Foreign currency translation, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,975

)

 

 

(3,975

)

Retirement related benefit plans, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

143

 

 

 

143

 

Balance as of March 31, 2021

 

 

45,494

 

 

$

4

 

 

$

29,601

 

 

$

3

 

 

$

484,584

 

 

$

(78,933

)

 

$

(6,629

)

 

$

399,029

 

 

See accompanying notes to consolidated financial statements.

 

 

7


 

 

ALTAIR ENGINEERING INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Three Months Ended March 31,

 

(In thousands)

 

2022

 

 

2021

 

OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net income

 

$

11,528

 

 

$

14,360

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

7,686

 

 

 

6,686

 

Provision for credit loss

 

 

48

 

 

 

89

 

Amortization of debt discount and issuance costs

 

 

418

 

 

 

2,800

 

Stock-based compensation expense

 

 

18,614

 

 

 

9,648

 

Deferred income taxes

 

 

(67

)

 

 

(687

)

Other, net

 

 

107

 

 

 

(18