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Ansys (ANSS) Up 1.7% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Ansys (ANSS - Free Report) . Shares have added about 1.7% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important catalysts.
Ansys Q1 Earnings Miss Estimates
Ansys reported first-quarter 2024 earnings of $1.39 per share, lagging the Zacks Consensus Estimate by 28%. The bottom line declined 24.9% year over year.
Revenues of $466.6 million missed the Zacks Consensus Estimate by 15.9%. The top line fell 8% (down 8% at constant currency or cc) year over year.
In January 2024, Ansys and Synopsys officially announced their entry into a definitive agreement, paving the way for the latter to acquire ANSS. The terms of the agreement outline that ANSS’ shareholders will receive $197 in cash, along with 0.3450 shares of Synopsys common stock for each Ansys share.
This deal, valued at approximately $35 billion, reflects an implied per-share consideration of $390.19 and represents a premium of about 29% over ANSS’ closing stock price on Dec 21, 2023. ANSS’ shareholders are likely to own approximately 16.5% of the combined company (on a pro-forma basis). The deal is anticipated to close in the first half of 2025, subject to approval by ANSS shareholders, regulatory approvals and customary closing conditions.
Given the pending acquisition, the company no longer provides financial outlook. However, management expects ACV and revenue growth rates to vary across the quarters in 2024 and will be affected by the performance comparisons to 2023.
ANSS expects double-digit ACV and revenue growth in the remaining quarters of 2024. It anticipates full-year ACV to grow in double digits.
It expected ACV and revenue growth for the first quarter to be the lowest among the four quarters of 2024.
Quarter in Detail
Subscription lease revenues (20.3% of total revenues) were down 35.5% year over year at cc to $94.8 million. Perpetual licenses revenues (14%) declined 7.7% year over year at cc to $65.5 million.
Maintenance revenues (62%) climbed 8.8% year over year at cc to $289.3 million. Service revenues (3.6%) were down 21.3% year over year at cc to $16.9 million.
Direct and indirect channels contributed 66.5% and 33.5%, respectively, to total revenues.
ACV grew 2% year over year (up 3% at cc) to $407.4 million.
On a geographic basis, the Americas, EMEA (comprising Germany, the U.K. and other EMEA) and the Asia-Pacific (Japan and Other Asia-Pacific) contributed 44.7%, 25.4% and 29.9% to revenues, respectively.
Revenues from the Americas were down 18.8% year over year at cc to $208.7 million. EMEA revenues were down 3.4% at cc to $118.6 million. Revenues from the Asia-Pacific increased 10.2% at cc to $139.3 million.
Total deferred revenues and backlog was $1,369.5 million, up 0.9% year over year.
Operating Details
Non-GAAP gross margin was down 30 basis points (bps) on a year-over-year basis to 90.9%.
Total operating expenses jumped 12.9% year over year to $354.6 million due to higher research and development, and selling, general and administrative expenses.
Non-GAAP operating margin contracted 760 bps on a year-over-year basis to 32.2%.
Balance Sheet & Cash Flow
As of Mar 31, 2024, cash and short-term investments amounted to $1070.6 million compared with $860.4 million as of Dec 31, 2023.
As of Mar 31, 2024, the company’s long-term debt was $754 million compared with $753.9 million as of Dec 31, 2023
In the quarter under review, cash from operations came in at $282.8 million compared with $260.8 million in the prior-year quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, Ansys has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Ansys has a Zacks Rank #4 (Sell). We expect a below average 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 - Free Report) , a stock from the same industry, has gained 4.2%. The company reported its results for the quarter ended March 2024 more than a month ago.
Microsoft reported revenues of $61.86 billion in the last reported quarter, representing a year-over-year change of +17%. EPS of $2.94 for the same period compares with $2.45 a year ago.
Microsoft is expected to post earnings of $2.90 per share for the current quarter, representing a year-over-year change of +7.8%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.2%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Microsoft. Also, the stock has a VGM Score of C.
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Ansys (ANSS) Up 1.7% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Ansys (ANSS - Free Report) . Shares have added about 1.7% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important catalysts.
Ansys Q1 Earnings Miss Estimates
Ansys reported first-quarter 2024 earnings of $1.39 per share, lagging the Zacks Consensus Estimate by 28%. The bottom line declined 24.9% year over year.
Revenues of $466.6 million missed the Zacks Consensus Estimate by 15.9%. The top line fell 8% (down 8% at constant currency or cc) year over year.
In January 2024, Ansys and Synopsys officially announced their entry into a definitive agreement, paving the way for the latter to acquire ANSS. The terms of the agreement outline that ANSS’ shareholders will receive $197 in cash, along with 0.3450 shares of Synopsys common stock for each Ansys share.
This deal, valued at approximately $35 billion, reflects an implied per-share consideration of $390.19 and represents a premium of about 29% over ANSS’ closing stock price on Dec 21, 2023. ANSS’ shareholders are likely to own approximately 16.5% of the combined company (on a pro-forma basis). The deal is anticipated to close in the first half of 2025, subject to approval by ANSS shareholders, regulatory approvals and customary closing conditions.
Given the pending acquisition, the company no longer provides financial outlook. However, management expects ACV and revenue growth rates to vary across the quarters in 2024 and will be affected by the performance comparisons to 2023.
ANSS expects double-digit ACV and revenue growth in the remaining quarters of 2024. It anticipates full-year ACV to grow in double digits.
It expected ACV and revenue growth for the first quarter to be the lowest among the four quarters of 2024.
Quarter in Detail
Subscription lease revenues (20.3% of total revenues) were down 35.5% year over year at cc to $94.8 million. Perpetual licenses revenues (14%) declined 7.7% year over year at cc to $65.5 million.
Maintenance revenues (62%) climbed 8.8% year over year at cc to $289.3 million. Service revenues (3.6%) were down 21.3% year over year at cc to $16.9 million.
Direct and indirect channels contributed 66.5% and 33.5%, respectively, to total revenues.
ACV grew 2% year over year (up 3% at cc) to $407.4 million.
On a geographic basis, the Americas, EMEA (comprising Germany, the U.K. and other EMEA) and the Asia-Pacific (Japan and Other Asia-Pacific) contributed 44.7%, 25.4% and 29.9% to revenues, respectively.
Revenues from the Americas were down 18.8% year over year at cc to $208.7 million. EMEA revenues were down 3.4% at cc to $118.6 million. Revenues from the Asia-Pacific increased 10.2% at cc to $139.3 million.
Total deferred revenues and backlog was $1,369.5 million, up 0.9% year over year.
Operating Details
Non-GAAP gross margin was down 30 basis points (bps) on a year-over-year basis to 90.9%.
Total operating expenses jumped 12.9% year over year to $354.6 million due to higher research and development, and selling, general and administrative expenses.
Non-GAAP operating margin contracted 760 bps on a year-over-year basis to 32.2%.
Balance Sheet & Cash Flow
As of Mar 31, 2024, cash and short-term investments amounted to $1070.6 million compared with $860.4 million as of Dec 31, 2023.
As of Mar 31, 2024, the company’s long-term debt was $754 million compared with $753.9 million as of Dec 31, 2023
In the quarter under review, cash from operations came in at $282.8 million compared with $260.8 million in the prior-year quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, Ansys has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Ansys has a Zacks Rank #4 (Sell). We expect a below average 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 - Free Report) , a stock from the same industry, has gained 4.2%. The company reported its results for the quarter ended March 2024 more than a month ago.
Microsoft reported revenues of $61.86 billion in the last reported quarter, representing a year-over-year change of +17%. EPS of $2.94 for the same period compares with $2.45 a year ago.
Microsoft is expected to post earnings of $2.90 per share for the current quarter, representing a year-over-year change of +7.8%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.2%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Microsoft. Also, the stock has a VGM Score of C.