Dj Ansys Inc. Stock Underperforms Tuesday When Compared To Competitors

ANSYS Inc ANSS reported third-quarter 2024 earnings of $2.58 per share, beating the Zacks Consensus Estimate by 37.2%. The bottom line also increased 83% year over year.

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Revenues of $601.9 million beat the Zacks Consensus Estimate by 13.3%. The top line rose 31.2% year over year on both reported and constant currency basis. This revenue growth was driven by solid multi-year lease growth. ANSS closed an $88 million contract in the high-tech industry in the region of the Americas in the third quarter. This contributed to multi-year lease growth.

In January 2024, Ansys and Synopsys announced a definitive agreement, per which the latter will acquire ANSS. The terms of the agreement outline that Ansys’ shareholders will receive $197 in cash, along with 0.3450 shares of Synopsys common stock for each of its share.

ANSYS, Inc. Price, Consensus and EPS Surprise

ANSYS, Inc. price-consensus-eps-surprise-chart | ANSYS, Inc. Quote

This deal, valued at approximately $35 billion, is anticipated to close in the first half of 2025. Ansys added that it along with Synopsys has received foreign direct investment approvals for the anticipated transaction in almost all of the relevant jurisdictions. On Oct. 9, 2024, the company also received an unconditional clearance from the Israeli Competition Authority.

Given the pending acquisition, Ansys has suspended quarterly earnings conference calls and no longer provides a financial outlook. It expects 2024 annual contract value or ACV to grow in double-digits.

Shares of ANSS are up 1.5% in the pre-market trading today. In the past year, shares have gained 16.2% compared with the subindustry’s growth of 22.1%.

ANSS’ Quarter in Detail

Subscription lease revenues (32.3% of total revenues) were up 87.4% year over year at cc to $194.3 million. Perpetual licenses revenues (13.7%) were up 39.9% at cc to $82.6 million.

Maintenance revenues (51%) climbed 10.5% year over year at cc to $306.7 million. Service revenues (3%) were down 0.3% at cc to $18.3 million.

Direct and indirect channels contributed 74.6% and 25.4%, respectively, to total revenues. ACV grew 18.1% year over year to $540.5 million. The figure was up 17.8% at cc.

On a regional basis, the Americas, EMEA (comprising Germany, the United Kingdom and other EMEA) and the Asia-Pacific (Japan and Other Asia-Pacific) contributed 50.9%, 22.8% and 26.3% to revenues, respectively. Revenues from the Americas were up 40.4% year over year at cc to $306.5 million. EMEA revenues were up 10.7% at cc to $137 million. Revenues from the Asia-Pacific increased 35% at cc to $158.4 million.

Total deferred revenues and backlog was $1,463.8 million, up 21.4% year over year.

Operating Details of ANSS

Non-GAAP gross margin was up 170 basis points (bps) on a year-over-year basis to 92.8%.

Total operating expenses jumped 14.7% year over year to $371.3 million, primarily due to increased selling, general and administrative and research and development expenses.

Non-GAAP operating margin increased 45.8% compared with 34.1% reported in the prior-year quarter.

ANSS’ Balance Sheet & Cash Flow

As of Sept. 30, 2024, cash and short-term investments amounted to $1295.3 million compared with $1119.3 million as of June 30, 2024.

As of Sept. 30, 2024, the company’s long-term debt was $754.1 million, which was a slight increase from the level of June 30, 2024.

In the quarter under review, cash from operations was $174.2 million compared with $160.8 million in the prior-year quarter.

Zacks Rank of ANSS

ANSS currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Companies in Tech Space

Seagate Technology Holdings plc STX reported first-quarter fiscal 2025 non-GAAP earnings of $1.58 per share, beating the Zacks Consensus Estimate by 6.8%. The company reported a non-GAAP loss of 22 cents per share in the year-ago quarter. This improvement in the bottom line was driven by a favorable mix shift to mass-capacity products and a better pricing environment. Non-GAAP revenues of $2.168 billion beat the Zacks Consensus Estimate by 2.4%. The figure increased 49% on a year-over-year basis and 15% sequentially. Shares of STX have gained 43.3% in the past year.

Badger Meter, Inc BMI reported EPS of $1.08 for the third quarter of 2024, beating the Zacks Consensus Estimate by 5.9%. Quarterly net sales were $208.4 million, up 12% from $186.2 million in the year-ago quarter. This uptick resulted from continued strong yet normalizing demand for its tailorable water management solutions. Shares of BMI have gained 57.8% in the past year.

Iridium Communications IRDM reported EPS of 21 cents for the third quarter of 2024, beating the Zacks Consensus Estimate by 5%. The company incurred a loss of a cent per share in the prior-year quarter. Quarterly revenues were $212.8 million, up 8% from the year-ago level, driven by strength across all three segments. The Zacks Consensus Estimate was pegged at $205.7 million. Shares of IRDM have lost 19% in the past year.

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