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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 02, 2023

 

 

Altair Engineering Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware			001-38263	38-2591828
(State or Other Jurisdiction of Incorporation)			(Commission File Number)	(IRS Employer Identification No.)
1820 E. Big Beaver Road
Troy, Michigan				48083
(Address of Principal Executive Offices)				(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: (248) 614-2400

 

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

Title of each class		Trading Symbol(s)		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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

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. ☐

 

 

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Item 2.02. Results of Operations and Financial Condition.

 

On November 2, 2023, Altair Engineering Inc. issued a press release disclosing its financial information and operating metrics for its third quarter and nine months ended September 30, 2023. A copy of the press release is being furnished as Exhibit 99.1 to this Report on Form 8-K.

 

The information in this Report on Form 8-K and Exhibit 99.1 attached hereto is intended to be furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

 

Item 9.01. Financial Statements and Exhibits.

 

Exhibit 99.1		Press Release issued by Altair Engineering Inc. dated November 2, 2023, furnished hereto.
Exhibit 104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

 

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SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	ALTAIR ENGINEERING INC.
Date: November 2, 2023	By:	/s/ Matthew Brown
		Matthew Brown
		Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

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Exhibit 99.1

Altair Announces Third Quarter 2023 Financial Results

Quarterly Software Product Revenue Increased more than 14% Year-Over-Year

TROY, Mich. – November 2, 2023 – Altair (Nasdaq: ALTR), a global leader in computational science and artificial intelligence, today released its financial results for the third quarter and nine months ended September 30, 2023.

"The third quarter of 2023 was excellent for Altair, with software product revenue and total revenue again above the high end of guidance," said James Scapa, founder, chairman and chief executive officer of Altair. "Our Q3 performance demonstrates the power and veracity of our vision for the convergence of computational science and AI across industries and verticals including engineering, scientific discovery, and business."

"Fiscal 2023 continues to progress in a positive way," said Matt Brown, chief financial officer of Altair. "Our performance through the first nine months of 2023 gives us confidence we're on track to meet our financial goals for the year."

Third Quarter 2023 Financial Highlights

 

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Business Outlook

Based on information available as of today, Altair is issuing the following guidance for the fourth quarter and full year 2023:

 

(in millions, except %)		Fourth Quarter 2023								Full Year 2023
Software Product Revenue		$	153		to	$	159			$	547		to	$	553
Growth Rate			5.6	%			9.7	%			8.0	%			9.2	%
Growth Rate - Constant Currency			5.1	%			9.3	%			9.4	%			10.6	%
Total Revenue		$	169			$	175			$	610			$	616
Growth Rate			5.3	%			9.1	%			6.6	%			7.7	%
Growth Rate - Constant Currency			4.9	%			8.6	%			7.9	%			9.0	%
Net Income (Loss)		$	15.5			$	21.3			$	(12.6	)		$	(6.8	)
Non-GAAP Net Income		$	33.6			$	38.0			$	91.6			$	96.1
Adjusted EBITDA		$	44			$	50			$	120			$	126
Net Cash Provided by Operating Activities										$	118			$	126
Free Cash Flow										$	108			$	116

The following table provides a reconciliation of Full Year 2023 guidance to the last guidance provided in August:

 

		(Unaudited)
		Full Year 2023
(in millions)		Midpoint of Guidance in August				Increase/ (Decrease)				Currency Fluctuations from Prior Guidance				Midpoint of Guidance in November
Software Product Revenue		$	553.0			$	—			$	(3.0	)		$	550.0
Total Revenue		$	616.0			$	—			$	(3.0	)		$	613.0
Adjusted EBITDA		$	124.0			$	—			$	(1.0	)		$	123.0

Conference Call Information

 

What: Altair’s Third Quarter 2023 Financial Results Conference Call
When: Thursday, November 2, 2023

Time: 5 p.m. ET
Webcast: http://investor.altair.com (live & replay)

***

 

Non-GAAP Financial Measures

 

This press release contains the following non-GAAP financial measures: Non-GAAP Net Income, Non-GAAP Net Income Per Share, Billings, Adjusted EBITDA, Free Cash Flow, Non-GAAP Gross Profit and Non-GAAP Operating Expense.

Altair believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to its financial condition and results of operations. The Company’s management uses these non-GAAP measures to compare the Company’s performance to that of prior periods for trend analysis, for purposes of determining executive and senior management incentive compensation and for budgeting and planning purposes. The Company also believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company’s financial measures with other software companies, many of which present similar non-GAAP financial measures to investors.

Non-GAAP net income excludes stock-based compensation, amortization of intangible assets related to acquisitions, restructuring charges, asset impairment charges, non-cash interest expense, other special items as identified by management and described elsewhere in this press release, and the impact of non-GAAP tax rate to income tax expense, which approximates our tax rate excluding discrete items and other specific events that can fluctuate from period to period.

 

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Non-GAAP diluted common shares includes the diluted weighted average shares outstanding per GAAP regardless of whether the Company is in a loss position.

Billings consists of total revenue plus the change in deferred revenue, excluding deferred revenue from acquisitions.

Adjusted EBITDA represents net income adjusted for income tax expense, interest expense, interest income and other, depreciation and amortization, stock-based compensation expense, restructuring charges, asset impairment charges and other special items as identified by management and described elsewhere in this press release.

Free cash flow consists of cash flow from operations less capital expenditures.

Non-GAAP gross profit represents gross profit adjusted for stock-based compensation expense, restructuring expense and other special items as identified by management and described elsewhere in this press release.

Non-GAAP operating expense represents operating expense excluding stock-based compensation expense, amortization, restructuring charges, asset impairment charges and other special items as identified by management and described elsewhere in this press release.

 

Company management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. Altair urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company’s business.

 

Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables at the end of this release.

 

About Altair

Altair is a global leader in computational science and artificial intelligence (AI) that provides software and cloud solutions in simulation, high-performance computing (HPC), data analytics and AI. Altair enables organizations across all industries to compete more effectively and drive smarter decisions in an increasingly connected world – all while creating a greener, more sustainable future. To learn more, please visit www.altair.com.

 

Cautionary Language Concerning Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, our guidance for the fourth quarter and full year 2023, our statements regarding our expectations for 2023, and our reconciliations of projected non-GAAP financial measures. These forward-looking statements are made as of the date of this release and are based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,” variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond Altair’s control. Altair’s actual results could differ materially from those stated or implied in our forward-looking statements due to a number of factors, including but not limited to, the risks detailed in Altair’s quarterly and annual reports filed with the Securities and Exchange Commission as well as other documents that may be filed by the Company from time to time with the Securities and Exchange Commission. Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent Altair’s views as of the date of this press release. The Company anticipates that subsequent events and developments will cause its views to change. Altair undertakes no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing Altair’s views as of any date subsequent to the date of this press release.

 

 

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Media Relations

Altair

Dave Simon

248-614-2400 ext. 332

dls@altair.com

 

Investor Relations

The Blueshirt Group

Monica Gould

212-871-3927

ir@altair.com

 

 

 

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ALTAIR ENGINEERING INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

 

		September 30, 2023				December 31, 2022
(In thousands)		(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	431,188			$	316,146
Accounts receivable, net			121,855				170,279
Income tax receivable			12,402				11,259
Prepaid expenses and other current assets			26,561				29,142
Total current assets			592,006				526,826
Property and equipment, net			38,167				37,517
Operating lease right of use assets			32,132				33,601
Goodwill			452,822				449,048
Other intangible assets, net			86,491				107,609
Deferred tax assets			8,046				9,727
Other long-term assets			42,327				40,410
TOTAL ASSETS		$	1,251,991			$	1,204,738
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable		$	5,159			$	10,434
Accrued compensation and benefits			39,468				42,456
Current portion of operating lease liabilities			9,209				10,396
Other accrued expenses and current liabilities			50,917				56,371
Deferred revenue			110,843				113,081
Current portion of convertible senior notes, net			81,319				—
Total current liabilities			296,915				232,738
Convertible senior notes, net			225,635				305,604
Operating lease liabilities, net of current portion			23,373				24,065
Deferred revenue, non-current			28,090				31,379
Other long-term liabilities			43,860				41,216
TOTAL LIABILITIES			617,873				635,002
Commitments and contingencies
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 54,351    and 52,277 shares as of September 30, 2023, and December 31, 2022, respectively			5				5
Class B common stock, authorized 41,203 shares, issued and outstanding 27,045    and 27,745 shares as of September 30, 2023, and December 31, 2022, respectively			3				3
Additional paid-in capital			816,551				721,307
Accumulated deficit			(150,178	)			(121,577	)
Accumulated other comprehensive loss			(32,263	)			(30,002	)
TOTAL STOCKHOLDERS’ EQUITY			634,118				569,736
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	1,251,991			$	1,204,738

 

 

 

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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)		2023				2022				2023				2022
Revenue
License		$	79,825			$	67,245			$	279,972			$	256,102
Maintenance and other services			39,252				36,520				114,069				105,453
Total software			119,077				103,765				394,041				361,555
Software related services			6,517				6,706				20,281				23,143
Total software and related services			125,594				110,471				414,322				384,698
Client engineering services			7,126				7,355				22,936				22,414
Other			1,283				1,525				3,940				4,676
Total revenue			134,003				119,351				441,198				411,788
Cost of revenue
License			3,083				2,579				11,888				11,386
Maintenance and other services			13,689				13,025				41,754				38,628
Total software *			16,772				15,604				53,642				50,014
Software related services			5,251				5,240				16,175				16,739
Total software and related services			22,023				20,844				69,817				66,753
Client engineering services			5,930				5,835				19,321				18,390
Other			1,133				1,230				3,480				3,892
Total cost of revenue			29,086				27,909				92,618				89,035
Gross profit			104,917				91,442				348,580				322,753
Operating expenses:
Research and development *			51,598				53,092				160,126				150,608
Sales and marketing *			44,069				41,352				132,543				120,345
General and administrative *			17,218				18,258				53,791				54,054
Amortization of intangible assets			7,704				6,571				23,143				18,682
Other operating (income) expense, net			(4,408	)			(2,835	)			1,324				(9,383	)
Total operating expenses			116,181				116,438				370,927				334,306
Operating loss			(11,264	)			(24,996	)			(22,347	)			(11,553	)
Interest expense			1,529				1,566				4,583				2,851
Other (income) expense, net			(1,890	)			2,107				(9,698	)			26,082
Loss before income taxes			(10,903	)			(28,669	)			(17,232	)			(40,486	)
Income tax (benefit) expense			(6,541	)			4,579				11,369				15,008
Net loss		$	(4,362	)		$	(33,248	)		$	(28,601	)		$	(55,494	)
Loss per share:
Net loss per share attributable to common   stockholders, basic and diluted		$	(0.05	)		$	(0.42	)		$	(0.36	)		$	(0.70	)
Weighted average shares outstanding:
Weighted average number of shares used in computing   net loss per share, basic and diluted			80,431				79,207				80,204				79,205

 

 

 

 

 

 

 

 

 

* Amounts include stock-based compensation expense as follows (in thousands):

 

 

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		(Unaudited)
		Three Months Ended  September 30,								Nine Months Ended September 30,
(in thousands)		2023				2022				2023				2022
Cost of revenue – software		$	2,468			$	2,332			$	7,792			$	6,265
Research and development			7,824				10,243				26,510				26,580
Sales and marketing			6,933				7,806				22,105				22,505
General and administrative			3,301				2,329				10,016				7,174
Total stock-based compensation expense		$	20,526			$	22,710			$	66,423			$	62,524

 

 

		(Unaudited)
		Three Months Ended  September 30,								Nine Months Ended September 30,
(in thousands)		2023				2022				2023				2022
Employee stock-based compensation plans		$	19,187			$	15,490			$	56,860			$	43,622
Post combination expense in connection with acquisitions			1,339				7,220				9,563				18,902
Total stock-based compensation expense		$	20,526			$	22,710			$	66,423			$	62,524

 

 

 

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ALTAIR ENGINEERING INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

 

		Nine Months Ended September 30,
(In thousands)		2023				2022
OPERATING ACTIVITIES:
Net loss		$	(28,601	)		$	(55,494	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization			29,271				24,092
Stock-based compensation expense			66,423				62,524
Amortization of debt issuance costs			1,399				1,330
Deferred income taxes			2,178				4
Loss (gain) on mark-to-market adjustment of contingent consideration			4,494				(7,482	)
Expense on repurchase of convertible senior notes			—				16,621
Other, net			(14	)			336
Changes in assets and liabilities:
Accounts receivable, net			47,226				13,859
Prepaid expenses and other current assets			959				1,906
Other long-term assets			(1,491	)			3,134
Accounts payable			(5,494	)			(270	)
Accrued compensation and benefits			(2,726	)			(3,639	)
Other accrued expenses and current liabilities			(4,526	)			(48,698	)
Deferred revenue			(3,442	)			18,311
Net cash provided by operating activities			105,656				26,534
INVESTING ACTIVITIES:
Capital expenditures			(7,882	)			(6,721	)
Payments for acquisition of businesses, net of cash acquired			(3,235	)			(134,130	)
Other investing activities, net			(2,452	)			(10,322	)
Net cash used in investing activities			(13,569	)			(151,173	)
FINANCING ACTIVITIES:
Proceeds from the exercise of common stock options			25,526				2,840
Payments for repurchase and retirement of common stock			(6,255	)			(4,387	)
Proceeds from employee stock purchase plan contributions			5,772				6,549
Proceeds from issuance of convertible senior notes,    net of discounts and commissions			—				224,265
Repurchase of convertible senior notes			—				(192,422	)
Payments of debt issuance costs			—				(1,523	)
Other financing activities			(73	)			(170	)
Net cash provided by financing activities			24,970				35,152
Effect of exchange rate changes on cash, cash equivalents and restricted cash			(2,599	)			(12,142	)
Net increase (decrease) in cash, cash equivalents and restricted cash			114,458				(101,629	)
Cash, cash equivalents and restricted cash at beginning of year			316,958				414,012
Cash, cash equivalents and restricted cash at end of period		$	431,416			$	312,383

 

 

 

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Financial Results

 

The following table provides a reconciliation of Non-GAAP net income and Non-GAAP net income per share – diluted, to net loss and net loss per share – diluted, the most comparable GAAP financial measures:

 

		(Unaudited)
		Three Months Ended  September 30,								Nine Months Ended September 30,
(in thousands, except per share amounts)		2023				2022				2023				2022
Net loss		$	(4,362	)		$	(33,248	)		$	(28,601	)		$	(55,494	)
Stock-based compensation expense			20,526				22,710				66,423				62,524
Amortization of intangible assets			7,704				6,571				23,143				18,682
Non-cash interest expense			469				501				1,399				1,339
Impact of non-GAAP tax rate (1)			(10,997	)			3,079				(8,897	)			(1,878	)
Special adjustments and other (2)			(658	)			4,657				4,212				22,886
Non-GAAP net income		$	12,682			$	4,270			$	57,679			$	48,059
Net loss per share, diluted		$	(0.05	)		$	(0.42	)		$	(0.36	)		$	(0.70	)
Non-GAAP net income per share, diluted		$	0.14			$	0.05			$	0.65			$	0.55
GAAP diluted shares outstanding			80,431				79,207				80,204				79,205
Non-GAAP diluted shares outstanding			88,556				88,100				88,066				86,708

The following table provides a reconciliation of Adjusted EBITDA to net loss, the most comparable GAAP financial measure:

 

		(Unaudited)
		Three Months Ended  September 30,								Nine Months Ended September 30,
(in thousands)		2023				2022				2023				2022
Net loss		$	(4,362	)		$	(33,248	)		$	(28,601	)		$	(55,494	)
Income tax (benefit) expense			(6,541	)			4,579				11,369				15,008
Stock-based compensation expense			20,526				22,710				66,423				62,524
Interest expense			1,529				1,566				4,583				2,851
Depreciation and amortization			9,783				8,273				29,271				24,092
Special adjustments, interest income and other (1)			(5,481	)			2,949				(7,480	)			20,878
Adjusted EBITDA		$	15,454			$	6,829			$	75,565			$	69,859

 

 

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The following table provides a reconciliation of Free Cash Flow to net cash provided by operating activities, the most comparable GAAP financial measure:

		(Unaudited)
		Three Months Ended  September 30,								Nine Months Ended September 30,
(in thousands)		2023				2022				2023				2022
Net cash provided by operating activities (1)		$	16,427			$	8,493			$	105,656			$	26,534
Capital expenditures			(1,698	)			(3,264	)			(7,882	)			(6,721	)
Free cash flow (1)		$	14,729			$	5,229			$	97,774			$	19,813

 

The following table provides a reconciliation of Non-GAAP gross profit to gross profit, the most comparable GAAP financial measure, and a comparison of Non-GAAP gross margin (Non-GAAP gross profit as a percentage of total revenue) to gross margin (gross profit as a percentage of total revenue), the most comparable GAAP financial measure:

 

		(Unaudited)
		Three Months Ended  September 30,								Nine Months Ended September 30,
(in thousands)		2023				2022				2023				2022
Gross profit		$	104,917			$	91,442			$	348,580			$	322,753
Stock-based compensation expense			2,468				2,332				7,792				6,265
Non-GAAP gross profit		$	107,385			$	93,774			$	356,372			$	329,018
Gross profit margin			78.3	%			76.6	%			79.0	%			78.4	%
Non-GAAP gross margin			80.1	%			78.6	%			80.8	%			79.9	%

The following table provides a reconciliation of Non-GAAP operating expense to Total operating expense, the most comparable GAAP financial measure:

 

		(Unaudited)
		Three Months Ended  September 30,								Nine Months Ended September 30,
(in thousands)		2023				2022				2023				2022
Total operating expense		$	116,181			$	116,438			$	370,927			$	334,306
Stock-based compensation expense			(18,058	)			(20,378	)			(58,631	)			(56,259	)
Amortization			(7,704	)			(6,571	)			(23,143	)			(18,682	)
Gain (loss) on mark-to-market adjustment of    contingent consideration			3,493				2,178				(4,494	)			7,482
Non-GAAP operating expense		$	93,912			$	91,667			$	284,659			$	266,847

The following table provides a reconciliation of Billings to revenue, the most comparable GAAP financial measure:

		(Unaudited)
		Three Months Ended  September 30,								Nine Months Ended September 30,
(in thousands)		2023				2022				2023				2022
Revenue		$	134,003			$	119,351			$	441,198			$	411,788
Ending deferred revenue			138,933				116,540				138,933				116,540
Beginning deferred revenue			(148,547	)			(112,926	)			(144,460	)			(106,032	)
Deferred revenue acquired			—				(26	)			—				(2,598	)
Billings		$	124,389			$	122,939			$	435,671			$	419,698

 

 

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The following table provides revenue, Billings and Adjusted EBITDA on a constant currency basis:

		(Unaudited)
		Three Months Ended September 30, 2023												Three Months Ended September 30, 2022				Increase/ (Decrease) %
(in thousands)		As reported				Currency changes				As adjusted for constant currency				As reported				As reported				As adjusted for constant currency
Software revenue		$	119.1			$	(0.3	)		$	118.8			$	103.8				14.8	%			14.5	%
Total revenue		$	134.0			$	(0.4	)		$	133.6			$	119.4				12.3	%			11.9	%
Billings		$	124.4			$	(1.3	)		$	123.1			$	122.9				1.2	%			0.1	%
Adjusted EBITDA		$	15.5			$	1.0			$	16.5			$	6.8				126.3	%			142.1	%
		(Unaudited)
		Nine Months Ended September 30, 2023												Nine Months Ended September 30, 2022				Increase/ (Decrease) %
(in thousands)		As reported				Currency changes				As adjusted for constant currency				As reported				As reported				As adjusted for constant currency
Software revenue		$	394.0			$	7.7			$	401.7			$	361.6				9.0	%			11.1	%
Total revenue		$	441.2			$	8.0			$	449.2			$	411.8				7.1	%			9.1	%
Billings		$	435.7			$	6.5			$	442.2			$	419.7				3.8	%			5.4	%
Adjusted EBITDA		$	75.6			$	4.9			$	80.5			$	69.9				8.2	%			15.2	%

 

 

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Change in Classification of Indirect Costs

Beginning in the first quarter of 2023, the Company refined its classification of certain indirect costs to reflect the way management is now reviewing the information in decision making and to improve comparability with peers. These indirect costs include certain IT, facilities, and depreciation expenses that were previously reported primarily in General and administrative expense. These indirect costs have now been reclassified to Research and development, Sales and marketing, and General and administrative expenses based on global headcount. Management believes this refined methodology better reflects the nature of the costs and financial performance of the Company.

As a result, the Company’s consolidated statements of operations have been recast for prior periods presented to reflect the effects of the changes to Research and development, Sales and marketing, and General and administrative expense. There was no net impact to total operating expenses, income from operations, net income or net income per share for any periods presented. The consolidated balance sheets, consolidated statements of comprehensive income, consolidated statements of changes in stockholders’ equity, and the consolidated statements of cash flows were not affected by changes in the presentation of these costs.

Each prior period that will be presented in the forthcoming Form 10-Q and Form 10-K filings will be recast to conform to current period presentation. The following tables provide the relevant financial results as previously reported, as recast for the current period and forthcoming filings, and the associated impacts of the changes. Within these tables, the references to periods such as “FY 2021” and “Q1 2022” refer to the corresponding periods as reported in the applicable Form 10-K, Form 10-Q, or Form 8-K filings.

The following table summarizes the changes made to the consolidated statements of operations (in thousands):

 

		Previously Reported
		FY 2021				Q1 2022				Q2 2022				Q3 2022				Q4 2022				FY 2022
Operating expenses:
Research and development		$	151,049			$	43,094			$	46,477			$	48,781			$	47,511			$	185,863
Sales and marketing			132,750				35,682				39,116				39,244				41,203				155,245
General and administrative			91,500				23,569				24,367				24,677				24,993				97,606
Amortization of intangible assets			18,357				5,903				6,208				6,571				8,828				27,510
Other operating income, net			(3,482	)			(781	)			(5,767	)			(2,835	)			(572	)			(9,955	)
Total operating expenses		$	390,174			$	107,467			$	110,401			$	116,438			$	121,963			$	456,269
		Recast
		FY 2021				Q1 2022				Q2 2022				Q3 2022				Q4 2022				FY 2022
Operating expenses:
Research and development		$	167,341			$	47,079			$	50,437			$	53,092			$	51,934			$	202,542
Sales and marketing			141,484				37,840				41,153				41,352				43,539				163,884
General and administrative			66,474				17,426				18,370				18,258				18,234				72,288
Amortization of intangible assets			18,357				5,903				6,208				6,571				8,828				27,510
Other operating income, net			(3,482	)			(781	)			(5,767	)			(2,835	)			(572	)			(9,955	)
Total operating expenses		$	390,174			$	107,467			$	110,401			$	116,438			$	121,963			$	456,269
		Change
		FY 2021				Q1 2022				Q2 2022				Q3 2022				Q4 2022				FY 2022
Operating expenses:
Research and development		$	16,292			$	3,985			$	3,960			$	4,311			$	4,423			$	16,679
Sales and marketing			8,734				2,158				2,037				2,108				2,336				8,639
General and administrative			(25,026	)			(6,143	)			(5,997	)			(6,419	)			(6,759	)			(25,318	)
Amortization of intangible assets			—				—				—				—				—				—
Other operating income, net			—				—				—				—				—				—
Total operating expenses		$	—			$	—			$	—			$	—			$	—			$	—

 

 

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Business Outlook

The following table provides a reconciliation of projected Non-GAAP net income to projected net income (loss), the most comparable GAAP financial measure:

 

		(Unaudited)
		Three Months Ending December 31, 2023								Year Ending  December 31, 2023
(in thousands)		Low				High				Low				High
Net income (loss)		$	15,500			$	21,300			$	(12,600	)		$	(6,800	)
Stock-based compensation expense			17,100				17,100				83,500				83,500
Amortization of intangible assets			7,400				7,400				30,500				30,500
Non-cash interest expense			500				500				1,900				1,900
Impact of non-GAAP tax rate(1)			(6,900	)			(8,300	)			(15,900	)			(17,200	)
Special adjustments and other(2)			—				—				4,200				4,200
Non-GAAP net income		$	33,600			$	38,000			$	91,600			$	96,100

 

The following table provides a reconciliation of projected Adjusted EBITDA to projected net income (loss), the most comparable GAAP financial measure:

 

		(Unaudited)
		Three Months Ending December 31, 2023								Year Ending  December 31, 2023
(in thousands)		Low				High				Low				High
Net income (loss)		$	15,500			$	21,300			$	(12,600	)		$	(6,800	)
Income tax expense			4,900				5,100				16,300				16,500
Stock-based compensation expense			17,100				17,100				83,500				83,500
Interest (income) expense			(3,000	)			(3,000	)			(10,100	)			(10,100	)
Depreciation and amortization			9,500				9,500				38,700				38,700
Special adjustments and other(1)			—				—				4,200				4,200
Adjusted EBITDA		$	44,000			$	50,000			$	120,000			$	126,000

 

The following table provides a reconciliation of projected Free Cash Flow to projected net cash provided by operating activities, the most comparable GAAP financial measure:

 

						(Unaudited)
						Year Ending  December 31, 2023
(in thousands)						Low				High
Net cash provided by operating activities						$	118,400			$	126,400
Capital expenditures							(10,400	)			(10,400	)
Free cash flow						$	108,000			$	116,000

 

 

 

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