ANSYS Reports Record Q4 and Fiscal Year 2016 Results

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Fourth Quarter 2016 

• GAAP and non-GAAP revenue of $270.6 million
• GAAP diluted earnings per share of $0.80 and non-GAAP diluted earnings per share of $0.98
• Operating cash flows of $96.2 million
• GAAP operating profit margin of 35.8% and non-GAAP operating profit margin of 45.1%

Fiscal Year 2016 

• GAAP revenue of $988.5 million and non-GAAP revenue of $988.6 million
• GAAP diluted earnings per share of $2.99 and non-GAAP diluted earnings per share of $3.63
• Operating cash flows of $356.8 million
• GAAP operating profit margin of 38.1% and non-GAAP operating profit margin of 47.0%

Other Highlights 

• Deferred revenue and backlog of $637.8 million at December 31, 2016, an increase of 26.5% over 2015
• Repurchased 1.0 million shares in the fourth quarter at an average price of $93.05 and 3.7 million shares in FY 2016 at an average price of $90.90

ANSYS, Inc., today reported fourth quarter and FY 2016 revenue growth of 8% and 5%, respectively, in constant currency. Recurring revenue, which is comprised of lease license and annual maintenance revenue, totaled 71% of revenue for the fourth quarter and 74% for the year.  For the quarter, the Company reported 7% and 8% growth in diluted earnings per share on a GAAP and non-GAAP basis, respectively, and 8% and 6% GAAP and non-GAAP diluted earnings per share growth, respectively, for the full year.  The results for the fourth quarter and for the year include a charge of $4.7 million, or $0.03 per share, associated with an employment-related settlement.  This charge was not previously included in the outlook provided by management in its November 3, 2016 earnings press release. 

Ajei Gopal, ANSYS president & CEO, stated, “The demand for ANSYS' portfolio has never been stronger.  The merger of the physical and digital worlds is creating an unprecedented disruption, resulting in amazing new products such as self-driving vehicles, personalized medical devices and smart buildings.  But the complexity required to develop these products is immense. ANSYS is the only company with the depth and breadth of simulation capabilities to empower our customers to bring this next generation of products to the market.” 

“I am very pleased with our strong finish to the year and am encouraged by our early progress on our 2017 initiatives. The underlying fundamentals of our business performed within expectations as evidenced by our record revenue and deferred revenue and backlog, all while maintaining continued strong margins" said Gopal.  “I am very encouraged by our progress in sales growth initiatives in North America and Asia-Pacific, which grew 10% and 12% in constant currency, respectively.  Our European business had some challenges, and we have made changes to improve our sales execution.  We saw continued improvements in our channel partners’ performance, most notably in China and India, where we had strong double-digit growth for the quarter and the full year. During Q4 we had thirty-seven customers with orders in excess of $1 million, including eight enterprise agreements, bringing the total number of enterprise agreements to eighteen for 2016, three above our previous projection.” 

Maria Shields, ANSYS CFO, stated, “To continue to strengthen our position, as part of our 2017 annual planning process, we are implementing a workforce realignment that is intended to accelerate investments toward strategic initiatives and higher growth opportunities, while also allowing the Company to maintain the gross and operating margins that we communicated last November.  Through this realignment, we intend to reduce expenses across the business and to reallocate resources and ongoing investments to align with the Company's future plans.  These actions resulted in GAAP restructuring charges of $3.4 million ($2.4 million, net of tax) in the fourth quarter and are expected to result in additional charges in 2017 of approximately $10 to $15 million ($7 - $10 million, net of tax) for one-time severance benefits and other costs related to the realignment.  The majority of the 2017 charges are currently expected to be recorded in the first quarter of 2017, with the remainder being recorded in the second quarter. The Company anticipates that substantially all of the cash payments related to these charges will be made in 2017.” 

Financial Results 

ANSYS' fourth quarter and fiscal year 2016 financial results are presented below. The 2016 and 2015 non-GAAP results exclude the income statement effects of acquisition adjustments to deferred revenue, the impact of stock-based compensation, acquisition-related amortization of intangible assets and acquisition-related transaction costs.  The 2016 fourth quarter and fiscal year non-GAAP results also exclude restructuring charges.

2017 Financial Outlook

The Company's first quarter and fiscal year 2017 revenue and earnings per share guidance is provided below. The Company last provided its guidance on November 3, 2016.  The previously provided fiscal year 2017 guidance has been updated to reflect changes in currency exchange rates, as well as the Company's announced realignment initiatives.  The revenue and earnings per share guidance is provided on both a GAAP and a non-GAAP basis. Non-GAAP financial measures exclude the income statement effects of acquisition accounting adjustments to deferred revenue, stock-based compensation expense, acquisition-related amortization of intangible assets, restructuring charges and acquisition-related transaction expenses. 

First Quarter 2017 Guidance 

The Company currently expects the following for the quarter ending March 31, 2017:

• GAAP and non-GAAP revenue in the range of $237.0 - $246.0 million
• GAAP diluted earnings per share of $0.51 - $0.63
• Non-GAAP diluted earnings per share of $0.81 - $0.85

Fiscal Year 2017 Guidance

The Company currently expects the following for the fiscal year ending December 31, 2017: 

• GAAP and non-GAAP revenue in the range of $1.010 - $1.045 billion
• GAAP diluted earnings per share of $2.84 - $3.16
• Non-GAAP diluted earnings per share of $3.63 - $3.83

About ANSYS, Inc. 

If you’ve ever seen a rocket launch, flown on an airplane, driven a car, used a computer, touched a mobile device, crossed a bridge, or put on wearable technology, chances are you’ve used a product where ANSYS software played a critical role in its creation. ANSYS is the global leader in engineering simulation. We help the world’s most innovative companies deliver radically better products to their customers. By offering the best and broadest portfolio of engineering simulation software, we help them solve the most complex design challenges and create products limited only by imagination.  Founded in 1970, ANSYS employs thousands of professionals, many of whom are expert M.S. and Ph.D.-level engineers in finite element analysis, computational fluid dynamics, electronics, semiconductors, embedded software and design optimization. Headquartered south of Pittsburgh, Pennsylvania, U.S.A., ANSYS has more than 75 strategic sales locations throughout the world with a network of channel partners in 40+ countries.