Altair Engineering (ALTR) Q3 2024 earnings summary

Executive summary

• Revenue grew 13% year-over-year to $151.5M for Q3 2024, driven by strong software license growth, while engineering services declined due to lower demand.

• Software revenue grew 16.5% year-over-year to $138.7M in Q3 2024.

• Net income was $1.8M for Q3 2024, reversing a net loss of $4.4M in Q3 2023, with diluted EPS of $0.02.

• Adjusted EBITDA rose 66% year-over-year to $25.7M for Q3 2024, reflecting improved operating performance.

• On October 30, 2024, a definitive merger agreement was entered with Siemens Industry Software Inc. for $113.00 per share in cash.

Financial highlights

• Q3 2024 software revenue increased 16% year-over-year to $138.7M, while engineering services and other revenue fell 14% to $12.8M.

• Gross profit margin improved to 80% in Q3 2024 from 78% in Q3 2023; non-GAAP gross margin was 81.6%.

• Adjusted EBITDA margin improved to 17% in Q3 2024 from 12% in Q3 2023.

• Free cash flow for the nine months ended September 30, 2024, was $106.8M, a 9% increase year-over-year.

• Net cash provided by operating activities was $116.6M for the nine months ended September 30, 2024.

Outlook and guidance

• Management anticipates that revenues and profit may be impacted by foreign currency fluctuations for the remainder of 2024.

• The company expects to close the Siemens merger in the second half of 2025, subject to regulatory and shareholder approvals.

• Quarterly and annual guidance suspended due to the pending Siemens transaction.