ANSYS, Inc. (ANSS) Q3 2023 Earnings Call Transcript
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Overview
ANSYS faces significant challenges due to U.S. export restrictions impacting China, resulting in a revenue and ACV shortfall. Despite strong financial metrics like high gross margin and EPS exceeding guidance, the muted growth in China and foreign exchange headwinds create uncertainties. The Q&A reveals management's lack of specific mitigation plans, causing concern. However, the company's strong recurring revenue model and positive guidance for 2023 ACV and revenue provide a counterbalance. Overall, the mixed signals suggest a neutral stock price movement over the next two weeks.
Key Q&A
Q:- Jay Vleeschhouwer – Griffin Securities: Can you provide more details on the impact of the export restrictions and approval processes in China on your Q3 results?
A: - Ajei Gopal explained that the impact of these restrictions resulted in a $20 million headwind, causing ANSYS to fall below expectations in both ACV and revenue for the quarter. Despite the challenges, ANSYS still experienced strong growth in ACV.
Q:- Joe Vruwink – Baird: How did different industries perform for ANSYS in Q3, and what were some notable contracts signed during the quarter?
A: - Ajei Gopal mentioned that high-tech, semiconductors, aerospace and defense, and automotive industries were top performers in Q3. He highlighted a significant contract with a North American aerospace and defense company and a contract with a global automotive OEM in Europe for virtual crash testing.
Q:- Jason Celino – KeyBanc Capital Markets: Can you elaborate on how ANSYS is involved in driving innovation within the automotive industry?
A: - Ajei Gopal discussed ANSYS' role in automotive electrification, autonomy and driver assistance systems, software-defined vehicles, and vehicle development. He provided examples of how ANSYS solutions are being used by customers like Porsche Motorsports and ZF Group to enhance efficiency and safety in vehicle development.
Q:- Ken Wong – Oppenheimer & Company: How did the unexpected impact in Q3 affect your financial performance, and what are your updated outlook and guidance for the remainder of 2023?
A: - Nicole Anasenes explained that the impact of the export restrictions in China resulted in ACV and revenue below expectations in Q3. However, ANSYS raised its full-year ACV and revenue guidance due to operational momentum offset by impacts from the restrictions and foreign exchange headwinds.
Q:- Steven Tusa – JPMorgan: What are ANSYS' expectations for ACV, revenue, and unlevered operating cash flow for Q4 and the full year 2023, considering the challenges faced in Q3?
A: - Nicole Anasenes provided guidance for ACV, revenue, operating margin, and EPS for Q4. ANSYS expects to achieve its Q4 guidance due to robust renewal business and strong demand despite challenges. The company also reaffirmed its long-term outlook for ACV growth and cumulative cash flow.
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ANSS Transcript
ANSYS, Inc. (ANSS) Q3 2023 Earnings Call Transcript
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ANSYS faces significant challenges due to U.S. export restrictions impacting China, resulting in a revenue and ACV shortfall. Despite strong financial metrics like high gross margin and EPS exceeding guidance, the muted growth in China and foreign exchange headwinds create uncertainties. The Q&A reveals management's lack of specific mitigation plans, causing concern. However, the company's strong recurring revenue model and positive guidance for 2023 ACV and revenue provide a counterbalance. Overall, the mixed signals suggest a neutral stock price movement over the next two weeks.
ANSYS, Inc. (ANSS) Q3 2023 Earnings Call Transcript
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