Altair Engineering (ALTR) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $148.8 million, up 5.4% year-over-year, with software revenue at $135.4 million, both exceeding guidance and driven by strong demand across technologies and verticals, especially aerospace and defense.

• Adjusted EBITDA was $17.3 million, up 1.7% year-over-year and above the midpoint of guidance.

• Net loss for Q2 2024 was $5.1 million, a significant improvement from $22.3 million in Q2 2023, due to higher gross profit and lower tax expense.

• Major product enhancements launched, including AI-driven HyperWorks 2024, and two acquisitions expanded analytics and simulation capabilities.

• Free cash flow improved, with strong cash from operations and cash and cash equivalents ending at $507.0 million.

Financial highlights

• Q2 2024 total revenue: $148.8 million (up 5.4% year-over-year); software revenue: $135.4 million (up 8.1%); engineering services and other: $13.4 million (down 16%).

• Calculated total billings were $154.5 million, up 4.5% year-over-year in reported currency and 7.1% in constant currency.

• Non-GAAP gross margin rose to 80.9% from 80.0% year-over-year, driven by higher software mix; GAAP gross margin was 79.5%.

• Adjusted EBITDA margin was 11.7% in Q2 2024.

• Free cash flow for the first half was $97.0 million, up 16.8% year-over-year.

Outlook and guidance

• Q3 2024 software revenue guidance: $130–$133 million, up 9.2%–11.7% year-over-year; total revenue guidance: $145–$148 million.

• Full-year 2024 software revenue guidance raised to $590–$600 million, up 7.3%–9.1%; total revenue at $648–$658 million.

• Adjusted EBITDA for full year 2024 expected at $136–$144 million; free cash flow at $122–$130 million.

• Management expects continued impact from foreign currency fluctuations for the remainder of 2024.

• Existing cash, operations, and credit facility are sufficient for foreseeable cash requirements.