Artificial Intelligence
Altair Announces Second Quarter 2023 Financial Results
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TROY, Mich., Aug. 03, 2023 (GLOBE NEWSWIRE) — Altair (Nasdaq: ALTR), a global leader in computational science and artificial intelligence, today released its financial results for the second quarter and six months ended June 30, 2023.
“Altair had a solid second quarter of 2023, with software product revenue and total revenue above the high end of guidance,” said James Scapa, founder, chairman and chief executive officer of Altair. “Our Q2 performance aligns well with our guidance for the full year and demonstrates our continued success and strength.”
“We’re pleased with the outperformance we’ve seen in the first half of the year,” said Matt Brown, chief financial officer of Altair. “Our strong first half has been fueled by growth across a number of verticals and particularly in aerospace, defense, technology, and automotive, where demand for our products is robust.”
Second Quarter 2023 Financial Highlights
- Software product revenue was $125.3 million compared to $116.9 million for the second quarter of 2022, an increase of 7.2% in reported currency and 9.4% in constant currency
- Total revenue was $141.2 million compared to $132.7 million for the second quarter of 2022, an increase of 6.4% in reported currency and 8.4% in constant currency
- Net loss was $(22.3) million compared to net loss of $(33.8) million for the second quarter of 2022. Net loss per share, diluted was $(0.28) based on 80.0 million diluted weighted average common shares outstanding, compared to net loss per share, diluted of $(0.43) for the second quarter of 2022, based on 78.9 million diluted weighted average common shares outstanding. Net loss margin was -15.8% compared to net loss margin of -25.5% for the second quarter of 2022
- Non-GAAP net income was $13.2 million, compared to non-GAAP net income of $10.9 million for the second quarter of 2022, an increase of 21.6%. Non-GAAP net income per share, diluted was $0.15 based on 88.4 million non-GAAP diluted common shares outstanding, compared to non-GAAP net income per share, diluted of $0.13 for the second quarter of 2022, based on 86.3 million non-GAAP diluted common shares outstanding
- Adjusted EBITDA was $17.1 million compared to $16.4 million for the second quarter of 2022, an increase of 3.7%. Adjusted EBITDA margin was 12.1% compared to 12.4% for the second quarter of 2022
- Cash provided by operating activities was $30.0 million, compared to $12.3 million for the second quarter of 2022
- Free cash flow was $25.6 million, compared to $11.0 million for the second quarter of 2022.
Business Outlook
Based on information available as of today, Altair is issuing the following guidance for the third quarter and full year 2023:
(in millions, except %) | Third Quarter 2023 | Full Year 2023 | ||||||||||||||
Software Product Revenue | $ | 111 | to | $ | 113 | $ | 548 | to | $ | 558 | ||||||
Growth Rate | 7.0 | % | 8.9 | % | 8.2 | % | 10.2 | % | ||||||||
Growth Rate – Constant Currency | 5.8 | % | 7.7 | % | 9.1 | % | 11.0 | % | ||||||||
Total Revenue | $ | 126 | $ | 128 | $ | 611 | $ | 621 | ||||||||
Growth Rate | 5.6 | % | 7.2 | % | 6.8 | % | 8.5 | % | ||||||||
Growth Rate – Constant Currency | 4.4 | % | 6.1 | % | 7.5 | % | 9.3 | % | ||||||||
Net Loss | $ | (22.8 | ) | $ | (20.9 | ) | $ | (15.3 | ) | $ | (5.6 | ) | ||||
Non-GAAP Net Income | $ | 2.9 | $ | 4.4 | $ | 89.9 | $ | 97.3 | ||||||||
Adjusted EBITDA | $ | 3 | $ | 5 | $ | 119 | $ | 129 | ||||||||
Net Cash Provided by Operating Activities | $ | 120 | $ | 128 | ||||||||||||
Free Cash Flow | $ | 108 | $ | 116 |
The following table provides a reconciliation of Full Year 2023 guidance to the last guidance provided in May:
(Unaudited) | ||||||||||||||
Full Year 2023 | ||||||||||||||
(in millions) | Midpoint of Guidance in May |
Increase/ (Decrease) |
Currency Fluctuations from Prior Guidance |
Midpoint of Guidance in August |
||||||||||
Software Product Revenue | $ | 556.0 | $ | — | $ | (3.0 | ) | $ | 553.0 | |||||
Total Revenue | $ | 619.0 | $ | — | $ | (3.0 | ) | $ | 616.0 | |||||
Adjusted EBITDA | $ | 125.0 | $ | — | $ | (1.0 | ) | $ | 124.0 |
Conference Call Information | |
What: | Altair’s Second Quarter 2023 Financial Results Conference Call |
When: | Thursday, August 3, 2023 |
Time: | 5 p.m. ET |
Webcast: | http://investor.altair.com (live & replay) |
Non-GAAP Financial Measures
This press release contains the following non-GAAP financial measures: Non-GAAP Net Income, Non-GAAP Net Income Per Share, Billings, Adjusted EBITDA, Free Cash Flow, Non-GAAP Gross Profit and Non-GAAP Operating Expense.
Altair believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to its financial condition and results of operations. The Company’s management uses these non-GAAP measures to compare the Company’s performance to that of prior periods for trend analysis, for purposes of determining executive and senior management incentive compensation and for budgeting and planning purposes. The Company also believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company’s financial measures with other software companies, many of which present similar non-GAAP financial measures to investors.
Non-GAAP net income excludes stock-based compensation, amortization of intangible assets related to acquisitions, restructuring charges, asset impairment charges, non-cash interest expense, other special items as identified by management and described elsewhere in this press release, and the impact of non-GAAP tax rate to income tax expense, which approximates our tax rate excluding discrete items and other specific events that can fluctuate from period to period.
Non-GAAP diluted common shares includes the diluted weighted average shares outstanding per GAAP regardless of whether the Company is in a loss position.
Billings consists of total revenue plus the change in deferred revenue, excluding deferred revenue from acquisitions.
Adjusted EBITDA represents net income adjusted for income tax expense, interest expense, interest income and other, depreciation and amortization, stock-based compensation expense, restructuring charges, asset impairment charges and other special items as identified by management and described elsewhere in this press release.
Free cash flow consists of cash flow from operations less capital expenditures.
Non-GAAP gross profit represents gross profit adjusted for stock-based compensation expense, restructuring expense and other special items as identified by management and described elsewhere in this press release.
Non-GAAP operating expense represents operating expense excluding stock-based compensation expense, amortization, restructuring charges, asset impairment charges and other special items as identified by management and described elsewhere in this press release.
Company management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. Altair urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company’s business.
Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables at the end of this release.
About Altair
Altair is a global leader in computational science and artificial intelligence (AI) that provides software and cloud solutions in simulation, high-performance computing (HPC), data analytics and AI. Altair enables organizations across all industries to compete more effectively and drive smarter decisions in an increasingly connected world – all while creating a greener, more sustainable future. To learn more, please visit www.altair.com.
Cautionary Language Concerning Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, our guidance for the third quarter and full year 2023, our statements regarding our expectations for 2023, and our reconciliations of projected non-GAAP financial measures. These forward-looking statements are made as of the date of this release and are based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,” variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond Altair’s control. Altair’s actual results could differ materially from those stated or implied in our forward-looking statements due to a number of factors, including but not limited to, the risks detailed in Altair’s quarterly and annual reports filed with the Securities and Exchange Commission as well as other documents that may be filed by the Company from time to time with the Securities and Exchange Commission. Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent Altair’s views as of the date of this press release. The Company anticipates that subsequent events and developments will cause its views to change. Altair undertakes no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing Altair’s views as of any date subsequent to the date of this press release.
Media Relations
Altair
Dave Simon
248-614-2400 ext. 332
[email protected]
Investor Relations
The Blueshirt Group
Monica Gould
212-871-3927
[email protected]
ALTAIR ENGINEERING INC. AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
June 30, 2023 | December 31, 2022 | ||||||
(In thousands) | (Unaudited) | ||||||
ASSETS | |||||||
CURRENT ASSETS: | |||||||
Cash and cash equivalents | $ | 418,338 | $ | 316,146 | |||
Accounts receivable, net | 124,260 | 170,279 | |||||
Income tax receivable | 14,505 | 11,259 | |||||
Prepaid expenses and other current assets | 29,678 | 29,142 | |||||
Total current assets | 586,781 | 526,826 | |||||
Property and equipment, net | 39,107 | 37,517 | |||||
Operating lease right of use assets | 30,284 | 33,601 | |||||
Goodwill | 453,093 | 449,048 | |||||
Other intangible assets, net | 94,642 | 107,609 | |||||
Deferred tax assets | 8,183 | 9,727 | |||||
Other long-term assets | 43,717 | 40,410 | |||||
TOTAL ASSETS | $ | 1,255,807 | $ | 1,204,738 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
Accounts payable | $ | 4,682 | $ | 10,434 | |||
Accrued compensation and benefits | 35,951 | 42,456 | |||||
Current portion of operating lease liabilities | 9,557 | 10,396 | |||||
Other accrued expenses and current liabilities | 66,044 | 56,371 | |||||
Deferred revenue | 121,853 | 113,081 | |||||
Current portion of convertible senior notes, net | 81,161 | — | |||||
Total current liabilities | 319,248 | 232,738 | |||||
Convertible senior notes, net | 225,320 | 305,604 | |||||
Operating lease liabilities, net of current portion | 21,337 | 24,065 | |||||
Deferred revenue, non-current | 26,694 | 31,379 | |||||
Other long-term liabilities | 42,993 | 41,216 | |||||
TOTAL LIABILITIES | 635,592 | 635,002 | |||||
Commitments and contingencies | |||||||
STOCKHOLDERS’ EQUITY: | |||||||
Preferred stock ($0.0001 par value), authorized 45,000 shares, none issued and outstanding | — | — | |||||
Common stock ($0.0001 par value) | |||||||
Class A common stock, authorized 513,797 shares, issued and outstanding 53,951 and 52,277 shares as of June 30, 2023, and December 31, 2022, respectively | 5 | 5 | |||||
Class B common stock, authorized 41,203 shares, issued and outstanding 27,175 and 27,745 shares as of June 30, 2023, and December 31, 2022 | 3 | 3 | |||||
Additional paid-in capital | 790,184 | 721,307 | |||||
Accumulated deficit | (145,816 | ) | (121,577 | ) | |||
Accumulated other comprehensive loss | (24,161 | ) | (30,002 | ) | |||
TOTAL STOCKHOLDERS’ EQUITY | 620,215 | 569,736 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 1,255,807 | $ | 1,204,738 |
ALTAIR ENGINEERING INC. AND SUBSIDIARIES | |||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
(in thousands, except per share data) | 2023 | 2022 | 2023 | 2022 | |||||||||||
Revenue | |||||||||||||||
License | $ | 87,738 | $ | 82,688 | $ | 200,147 | $ | 188,857 | |||||||
Maintenance and other services | 37,583 | 34,205 | 74,817 | 68,933 | |||||||||||
Total software | 125,321 | 116,893 | 274,964 | 257,790 | |||||||||||
Software related services | 6,664 | 7,376 | 13,764 | 16,437 | |||||||||||
Total software and related services | 131,985 | 124,269 | 288,728 | 274,227 | |||||||||||
Client engineering services | 8,034 | 7,047 | 15,810 | 15,059 | |||||||||||
Other | 1,142 | 1,340 | 2,657 | 3,151 | |||||||||||
Total revenue | 141,161 | 132,656 | 307,195 | 292,437 | |||||||||||
Cost of revenue | |||||||||||||||
License | 3,981 | 4,120 | 8,805 | 8,807 | |||||||||||
Maintenance and other services | 13,639 | 12,884 | 28,065 | 25,603 | |||||||||||
Total software * | 17,620 | 17,004 | 36,870 | 34,410 | |||||||||||
Software related services | 5,308 | 5,464 | 10,924 | 11,499 | |||||||||||
Total software and related services | 22,928 | 22,468 | 47,794 | 45,909 | |||||||||||
Client engineering services | 6,767 | 5,914 | 13,391 | 12,555 | |||||||||||
Other | 1,102 | 1,141 | 2,347 | 2,662 | |||||||||||
Total cost of revenue | 30,797 | 29,523 | 63,532 | 61,126 | |||||||||||
Gross profit | 110,364 | 103,133 | 243,663 | 231,311 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development * | 55,277 | 50,437 | 108,528 | 97,516 | |||||||||||
Sales and marketing * | 44,982 | 41,153 | 88,474 | 78,993 | |||||||||||
General and administrative * | 18,622 | 18,370 | 36,573 | 35,796 | |||||||||||
Amortization of intangible assets | 7,625 | 6,208 | 15,439 | 12,111 | |||||||||||
Other operating expense (income), net | 127 | (5,767 | ) | 5,732 | (6,548 | ) | |||||||||
Total operating expenses | 126,633 | 110,401 | 254,746 | 217,868 | |||||||||||
Operating (loss) income | (16,269 | ) | (7,268 | ) | (11,083 | ) | 13,443 | ||||||||
Interest expense | 1,528 | 700 | 3,054 | 1,285 | |||||||||||
Other (income) expense, net | (4,195 | ) | 21,907 | (7,808 | ) | 23,975 | |||||||||
Loss before income taxes | (13,602 | ) | (29,875 | ) | (6,329 | ) | (11,817 | ) | |||||||
Income tax expense | 8,678 | 3,899 | 17,910 | 10,429 | |||||||||||
Net loss | $ | (22,280 | ) | $ | (33,774 | ) | $ | (24,239 | ) | $ | (22,246 | ) | |||
Loss per share: | |||||||||||||||
Net loss per share attributable to common stockholders, basic and diluted | $ | (0.28 | ) | $ | (0.43 | ) | $ | (0.30 | ) | $ | (0.28 | ) | |||
Weighted average shares outstanding: | |||||||||||||||
Weighted average number of shares used in computing net loss per share, basic and diluted | 79,986 | 78,948 | 80,088 | 79,204 |
* Amounts include stock-based compensation expense as follows (in thousands):
(Unaudited) | |||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | |||||||||||
Cost of revenue – software | $ | 2,572 | $ | 2,030 | $ | 5,324 | $ | 3,933 | |||||||
Research and development | 9,943 | 8,979 | 18,686 | 16,337 | |||||||||||
Sales and marketing | 7,581 | 7,664 | 15,172 | 14,699 | |||||||||||
General and administrative | 3,640 | 2,527 | 6,715 | 4,845 | |||||||||||
Total stock-based compensation expense | $ | 23,736 | $ | 21,200 | $ | 45,897 | $ | 39,814 |
(Unaudited) | |||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | |||||||||||
Employee stock-based compensation plans | $ | 19,189 | $ | 14,873 | $ | 37,673 | $ | 28,132 | |||||||
Post combination expense in connection with acquisitions | 4,547 | 6,327 | 8,224 | 11,682 | |||||||||||
Total stock-based compensation expense | $ | 23,736 | $ | 21,200 | $ | 45,897 | $ | 39,814 |
ALTAIR ENGINEERING INC. AND SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENTS OF CASH FLOW | |||||||
(Unaudited) | |||||||
Six Months Ended June 30, | |||||||
(In thousands) | 2023 | 2022 | |||||
OPERATING ACTIVITIES: | |||||||
Net loss | $ | (24,239 | ) | $ | (22,246 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Depreciation and amortization | 19,488 | 15,819 | |||||
Stock-based compensation expense | 45,897 | 39,814 | |||||
Amortization of debt issuance costs | 930 | 829 | |||||
Deferred income taxes | 2,015 | (64 | ) | ||||
Loss (gain) on mark-to-market adjustment of contingent consideration | 7,987 | (5,304 | ) | ||||
Expense on repurchase of convertible senior notes | — | 16,621 | |||||
Other, net | 405 | 229 | |||||
Changes in assets and liabilities: | |||||||
Accounts receivable, net | 45,077 | 29,270 | |||||
Prepaid expenses and other current assets | (3,166 | ) | 2,056 | ||||
Other long-term assets | (2,516 | ) | 4,397 | ||||
Accounts payable | (5,529 | ) | (2,070 | ) | |||
Accrued compensation and benefits | (6,591 | ) | (9,742 | ) | |||
Other accrued expenses and current liabilities | 4,857 | (61,648 | ) | ||||
Deferred revenue | 4,614 | 10,080 | |||||
Net cash provided by operating activities | 89,229 | 18,041 | |||||
INVESTING ACTIVITIES: | |||||||
Capital expenditures | (6,184 | ) | (3,457 | ) | |||
Payments for acquisition of businesses, net of cash acquired | (721 | ) | (37,660 | ) | |||
Other investing activities, net | (1,452 | ) | (322 | ) | |||
Net cash used in investing activities | (8,357 | ) | (41,439 | ) | |||
FINANCING ACTIVITIES: | |||||||
Proceeds from the exercise of common stock options | 23,507 | 1,689 | |||||
Payments for repurchase and retirement of common stock | (6,255 | ) | (4,387 | ) | |||
Proceeds from employee stock purchase plan contributions | 3,797 | 4,431 | |||||
Proceeds from issuance of convertible senior notes, net of discounts and commissions | — | 224,265 | |||||
Repurchase of convertible senior notes | — | (192,792 | ) | ||||
Payments of debt issuance costs | — | (1,157 | ) | ||||
Other financing activities | (48 | ) | (131 | ) | |||
Net cash provided by financing activities | 21,001 | 31,918 | |||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (44 | ) | (6,226 | ) | |||
Net increase in cash, cash equivalents and restricted cash | 101,829 | 2,294 | |||||
Cash, cash equivalents and restricted cash at beginning of year | 316,958 | 414,012 | |||||
Cash, cash equivalents and restricted cash at end of period | $ | 418,787 | $ | 416,306 |
Financial Results
The following table provides a reconciliation of Non-GAAP net income and Non-GAAP net income per share – diluted, to net loss and net loss per share – diluted, the most comparable GAAP financial measures:
(Unaudited) | |||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
(in thousands, except per share amounts) | 2023 | 2022 | 2023 | 2022 | |||||||||||
Net loss | $ | (22,280 | ) | $ | (33,774 | ) | $ | (24,239 | ) | $ | (22,246 | ) | |||
Stock-based compensation expense | 23,736 | 21,200 | 45,897 | 39,814 | |||||||||||
Amortization of intangible assets | 7,625 | 6,208 | 15,439 | 12,111 | |||||||||||
Non-cash interest expense | 465 | 422 | 930 | 839 | |||||||||||
Impact of non-GAAP tax rate(1) | 4,033 | 79 | 2,100 | (4,957 | ) | ||||||||||
Special adjustments and other(2) | (361 | ) | 16,737 | 4,870 | 18,229 | ||||||||||
Non-GAAP net income | $ | 13,218 | $ | 10,872 | $ | 44,997 | $ | 43,790 | |||||||
Net loss per share, diluted | $ | (0.28 | ) | $ | (0.43 | ) | $ | (0.30 | ) | $ | (0.28 | ) | |||
Non-GAAP net income per share, diluted | $ | 0.15 | $ | 0.13 | $ | 0.51 | $ | 0.51 | |||||||
GAAP diluted shares outstanding | 79,986 | 78,948 | 80,088 | 79,204 | |||||||||||
Non-GAAP diluted shares outstanding | 88,383 | 86,281 | 88,735 | 86,516 |
(1) | The Company uses a non-GAAP effective tax rate of 26%. |
(2) | The three months ended June 30, 2023, includes $1.0 million loss from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition and $1.3 million currency gains on acquisition-related intercompany loans. The three months ended June 30, 2022, includes $16.6 million expense on repurchase of convertible senior notes, $5.4 million currency losses on acquisition-related intercompany loans, and a $5.3 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. The six months ended June 30, 2023, includes $8.0 million loss from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition and $3.1 million currency gains on acquisition-related intercompany loans. The six months ended June 30, 2022, includes $16.6 million expense on repurchase of convertible senior notes, $6.9 million currency losses on acquisition-related intercompany loans and a $5.3 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. |
The following table provides a reconciliation of Adjusted EBITDA to net loss, the most comparable GAAP financial measure:
(Unaudited) | |||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | |||||||||||
Net loss | $ | (22,280 | ) | $ | (33,774 | ) | $ | (24,239 | ) | $ | (22,246 | ) | |||
Income tax expense | 8,678 | 3,899 | 17,910 | 10,429 | |||||||||||
Stock-based compensation expense | 23,736 | 21,200 | 45,897 | 39,814 | |||||||||||
Interest expense | 1,528 | 700 | 3,054 | 1,285 | |||||||||||
Depreciation and amortization | 9,738 | 8,133 | 19,488 | 15,819 | |||||||||||
Special adjustments, interest income and other(1) | (4,344 | ) | 16,282 | (1,999 | ) | 17,929 | |||||||||
Adjusted EBITDA | $ | 17,056 | $ | 16,440 | $ | 60,111 | $ | 63,030 |
(1) | The three months ended June 30, 2023, includes $1.0 million loss from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, $4.0 million of interest income, and $1.3 million currency gains on acquisition-related intercompany loans. The three months ended June 30, 2022, includes $16.6 million expense on repurchase of convertible senior notes, $5.4 million currency losses on acquisition-related intercompany loans, and a $5.3 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. The six months ended June 30, 2023, includes $8.0 million loss from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, $6.9 million of interest income, and $3.1 million currency gains on acquisition-related intercompany loans. The six months ended June 30, 2022, includes $16.6 million expense on repurchase of convertible senior notes, $6.9 million currency losses on acquisition-related intercompany loans and a $5.3 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. |
The following table provides a reconciliation of Free Cash Flow to net cash provided by operating activities, the most comparable GAAP financial measure:
(Unaudited) | |||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | |||||||||||
Net cash provided by operating activities(1) | $ | 30,030 | $ | 12,255 | $ | 89,229 | $ | 18,041 | |||||||
Capital expenditures | (4,457 | ) | (1,267 | ) | (6,184 | ) | (3,457 | ) | |||||||
Free cash flow(1) | $ | 25,573 | $ | 10,988 | $ | 83,045 | $ | 14,584 |
(1) | The six months ended June 30, 2022, includes a $65.9 million payment in January 2022 for a damages judgement assumed as part of an acquisition in December 2021. |
The following table provides a reconciliation of Non-GAAP gross profit to gross profit, the most comparable GAAP financial measure, and a comparison of Non-GAAP gross margin (Non-GAAP gross profit as a percentage of total revenue) to gross margin (gross profit as a percentage of total revenue), the most comparable GAAP financial measure:
(Unaudited) | |||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | |||||||||||
Gross profit | $ | 110,364 | $ | 103,133 | $ | 243,663 | $ | 231,311 | |||||||
Stock-based compensation expense | 2,572 | 2,030 | 5,324 | 3,933 | |||||||||||
Non-GAAP gross profit | $ | 112,936 | $ | 105,163 | $ | 248,987 | $ | 235,244 | |||||||
Gross profit margin | 78.2 | % | 77.7 | % | 79.3 | % | 79.1 | % | |||||||
Non-GAAP gross margin | 80.0 | % | 79.3 | % | 81.1 | % | 80.4 | % |
The following table provides a reconciliation of Non-GAAP operating expense to Total operating expense, the most comparable GAAP financial measure:
(Unaudited) | |||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | |||||||||||
Total operating expense | $ | 126,633 | $ | 110,401 | $ | 254,746 | $ | 217,868 | |||||||
Stock-based compensation expense | (21,164 | ) | (19,170 | ) | (40,573 | ) | (35,881 | ) | |||||||
Amortization | (7,625 | ) | (6,208 | ) | (15,439 | ) | (12,111 | ) | |||||||
(Loss) gain on mark-to-market adjustment of contingent consideration | (981 | ) | 5,304 | (7,987 | ) | 5,304 | |||||||||
Non-GAAP operating expense | $ | 96,863 | $ | 90,327 | $ | 190,747 | $ | 175,180 |
The following table provides a reconciliation of Billings to revenue, the most comparable GAAP financial measure:
(Unaudited) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | |||||||||||
Revenue | $ | 141,161 | $ | 132,656 | $ | 307,195 | $ | 292,437 | |||||||
Ending deferred revenue | 148,547 | 112,926 | 148,547 | 112,926 | |||||||||||
Beginning deferred revenue | (141,943 | ) | (118,403 | ) | (144,460 | ) | (106,032 | ) | |||||||
Deferred revenue acquired | — | (1,756 | ) | — | (2,572 | ) | |||||||||
Billings | $ | 147,765 | $ | 125,423 | $ | 311,282 | $ | 296,759 |
The following table provides revenue, Billings and Adjusted EBITDA on a constant currency basis:
(Unaudited) | |||||||||||||||||||||||
Three Months Ended June 30, 2023 |
Three Months Ended June 30, 2022 |
Increase/ (Decrease) % |
|||||||||||||||||||||
(in thousands) | As reported | Currency changes |
As adjusted for constant currency |
As reported | As reported | As adjusted for constant currency |
|||||||||||||||||
Software revenue | $ | 125.3 | $ | 2.6 | $ | 127.9 | $ | 116.9 | 7.2 | % | 9.4 | % | |||||||||||
Total revenue | $ | 141.2 | $ | 2.7 | $ | 143.9 | $ | 132.7 | 6.4 | % | 8.4 | % | |||||||||||
Billings | $ | 147.8 | $ | 2.3 | $ | 150.1 | $ | 125.4 | 17.8 | % | 19.6 | % | |||||||||||
Adjusted EBITDA | $ | 17.1 | $ | 1.4 | $ | 18.5 | $ | 16.4 | 3.7 | % | 12.8 | % | |||||||||||
(Unaudited) | |||||||||||||||||||||||
Six Months Ended June 30, 2023 |
Six Months Ended June 30, 2022 |
Increase/ (Decrease) % |
|||||||||||||||||||||
(in thousands) | As reported | Currency changes |
As adjusted for constant currency |
As reported | As reported | As adjusted for constant currency |
|||||||||||||||||
Software revenue | $ | 275.0 | $ | 7.9 | $ | 282.9 | $ | 257.8 | 6.7 | % | 9.7 | % | |||||||||||
Total revenue | $ | 307.2 | $ | 8.5 | $ | 315.7 | $ | 292.4 | 5.0 | % | 7.9 | % | |||||||||||
Billings | $ | 311.3 | $ | 8.6 | $ | 319.9 | $ | 296.8 | 4.9 | % | 7.8 | % | |||||||||||
Adjusted EBITDA | $ | 60.1 | $ | 3.8 | $ | 63.9 | $ | 63.0 | -4.6 | % | 1.5 | % |
Change in Classification of Indirect Costs
Beginning in the first quarter of 2023, the Company refined its classification of certain indirect costs to reflect the way management is now reviewing the information in decision making and to improve comparability with peers. These indirect costs include certain IT, facilities, and depreciation expenses that were previously reported primarily in General and administrative expense. These indirect costs have now been reclassified to Research and development, Sales and marketing, and General and administrative expenses based on global headcount. Management believes this refined methodology better reflects the nature of the costs and financial performance of the Company.
As a result, the Company’s consolidated statements of operations have been recast for prior periods presented to reflect the effects of the changes to Research and development, Sales and marketing, and General and administrative expense. There was no net impact to total operating expenses, income from operations, net income or net income per share for any periods presented. The consolidated balance sheets, consolidated statements of comprehensive income, consolidated statements of changes in stockholders’ equity, and the consolidated statements of cash flows were not affected by changes in the presentation of these costs.
Each prior period that will be presented in the forthcoming Form 10-Q and Form 10-K filings will be recast to conform to current period presentation. The following tables provide the relevant financial results as previously reported, as recast for the current period and forthcoming filings, and the associated impacts of the changes. Within these tables, the references to periods such as “FY 2021” and “Q1 2022” refer to the corresponding periods as reported in the applicable Form 10-K, Form 10-Q, or Form 8-K filings.
The following table summarizes the changes made to the consolidated statements of operations (in thousands):
Previously Reported | |||||||||||||||||||||||
FY 2021 | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | FY 2022 | ||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Research and development | $ | 151,049 | $ | 43,094 | $ | 46,477 | $ | 48,781 | $ | 47,511 | $ | 185,863 | |||||||||||
Sales and marketing | 132,750 | 35,682 | 39,116 | 39,244 | 41,203 | 155,245 | |||||||||||||||||
General and administrative | 91,500 | 23,569 | 24,367 | 24,677 | 24,993 | 97,606 | |||||||||||||||||
Amortization of intangible assets | 18,357 | 5,903 | 6,208 | 6,571 | 8,828 | 27,510 | |||||||||||||||||
Other operating income, net | (3,482 | ) | (781 | ) | (5,767 | ) | (2,835 | ) | (572 | ) | (9,955 | ) | |||||||||||
Total operating expenses | $ | 390,174 | $ | 107,467 | $ | 110,401 | $ | 116,438 | $ | 121,963 | $ | 456,269 | |||||||||||
Recast | |||||||||||||||||||||||
FY 2021 | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | FY 2022 | ||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Research and development | $ | 167,341 | $ | 47,079 | $ | 50,437 | $ | 53,092 | $ | 51,934 | $ | 202,542 | |||||||||||
Sales and marketing | 141,484 | 37,840 | 41,153 | 41,352 | 43,539 | 163,884 | |||||||||||||||||
General and administrative | 66,474 | 17,426 | 18,370 | 18,258 | 18,234 | 72,288 | |||||||||||||||||
Amortization of intangible assets | 18,357 | 5,903 | 6,208 | 6,571 | 8,828 | 27,510 | |||||||||||||||||
Other operating income, net | (3,482 | ) | (781 | ) | (5,767 | ) | (2,835 | ) | (572 | ) | (9,955 | ) | |||||||||||
Total operating expenses | $ | 390,174 | $ | 107,467 | $ | 110,401 | $ | 116,438 | $ | 121,963 | $ | 456,269 | |||||||||||
Change | |||||||||||||||||||||||
FY 2021 | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | FY 2022 | ||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Research and development | $ | 16,292 | $ | 3,985 | $ | 3,960 | $ | 4,311 | $ | 4,423 | $ | 16,679 | |||||||||||
Sales and marketing | 8,734 | 2,158 | 2,037 | 2,108 | 2,336 | 8,639 | |||||||||||||||||
General and administrative | (25,026 | ) | (6,143 | ) | (5,997 | ) | (6,419 | ) | (6,759 | ) | (25,318 | ) | |||||||||||
Amortization of intangible assets | — | — | — | — | — | — | |||||||||||||||||
Other operating income, net | — | — | — | — | — | — | |||||||||||||||||
Total operating expenses | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — |
Business Outlook
The following table provides a reconciliation of projected Non-GAAP net income to projected net loss, the most comparable GAAP financial measure:
(Unaudited) | |||||||||||||||
Three Months Ending September 30, 2023 |
Year Ending December 31, 2023 |
||||||||||||||
(in thousands) | Low | High | Low | High | |||||||||||
Net loss | $ | (22,800 | ) | $ | (20,900 | ) | $ | (15,300 | ) | $ | (5,600 | ) | |||
Stock-based compensation expense | 18,200 | 18,200 | 82,200 | 82,200 | |||||||||||
Amortization of intangible assets | 7,600 | 7,600 | 30,400 | 30,400 | |||||||||||
Non-cash interest expense | 500 | 500 | 1,800 | 1,800 | |||||||||||
Impact of non-GAAP tax rate(1) | (600 | ) | (1,000 | ) | (14,100 | ) | (16,400 | ) | |||||||
Special adjustments and other(2) | — | — | 4,900 | 4,900 | |||||||||||
Non-GAAP net income | $ | 2,900 | $ | 4,400 | $ | 89,900 | $ | 97,300 |
(1) | The Company uses a non-GAAP effective tax rate of 26%. |
(2) | The year ending December 31, 2023, includes $8.0 million loss from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition and $3.1 million currency gains on acquisition-related intercompany loans. |
The following table provides a reconciliation of projected Adjusted EBITDA to projected net loss, the most comparable GAAP financial measure:
(Unaudited) | |||||||||||||||
Three Months Ending September 30, 2023 |
Year Ending December 31, 2023 |
||||||||||||||
(in thousands) | Low | High | Low | High | |||||||||||
Net loss | $ | (22,800 | ) | $ | (20,900 | ) | $ | (15,300 | ) | $ | (5,600 | ) | |||
Income tax expense | 400 | 500 | 17,500 | 17,800 | |||||||||||
Stock-based compensation expense | 18,200 | 18,200 | 82,200 | 82,200 | |||||||||||
Interest (income) expense | (2,500 | ) | (2,500 | ) | (9,000 | ) | (9,000 | ) | |||||||
Depreciation and amortization | 9,700 | 9,700 | 38,700 | 38,700 | |||||||||||
Special adjustments and other(1) | — | — | 4,900 | 4,900 | |||||||||||
Adjusted EBITDA | $ | 3,000 | $ | 5,000 | $ | 119,000 | $ | 129,000 |
(1) | The year ending December 31, 2023, includes $8.0 million loss from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition and $3.1 million currency gains on acquisition-related intercompany loans. |
The following table provides a reconciliation of projected Free Cash Flow to projected net cash provided by operating activities, the most comparable GAAP financial measure:
(Unaudited) | |||||||
Year Ending December 31, 2023 |
|||||||
(in thousands) | Low | High | |||||
Net cash provided by operating activities | $ | 120,200 | $ | 128,200 | |||
Capital expenditures | (12,200 | ) | (12,200 | ) | |||
Free cash flow | $ | 108,000 | $ | 116,000 |
Artificial Intelligence
Gaming Innovation Group rebrands GiG Media to Gentoo Media
![gaming-innovation-group-rebrands-gig-media-to-gentoo-media](https://roboticulized.com/wp-content/uploads/2024/06/150284-gaming-innovation-group-rebrands-gig-media-to-gentoo-media.png)
ST. JULIAN’S, Malta, June 18, 2024 /PRNewswire/ — Gaming Innovation Group Inc. (GiG), a leader in digital marketing and media within the online gaming sector, today announced that GiG Media will be rebranding to Gentoo Media. The rebranding comes ahead of the planned split of the Company in Q3 2024 as previously announced. The change reflects the Company’s ongoing commitment to growing the business and building on the successful track record as a leading affiliate in the iGaming industry.
The new company name Gentoo Media pays a tribute to GiG Media’s Rebel Penguin heritage, as the Gentoo is an Antarctic penguin species known for prospering by coming together as a unit to survive and thrive. Furthermore, Gentoo symbolises the next generation of the Company’s legacy, stepping into a new chapter while continuing the path as a market leading affiliate, shaping the future of affiliation. The new brand encapsulates the Company’s commitment to deliver superior results for partners and to provide exceptional value to shareholders.
Jonas Warrer, CEO of GiG says: “The launch of our new brand is a big milestone for us in the process of separating GiG Media from Gaming Innovation Group. Gentoo has been created with all our partners and employees in mind, ensuring to communicate an accurate and genuine view of ourselves, the business and what we stand for and believe in. The launch of Gentoo marks a new era and we couldn’t be more excited for the future prospects of the business.”
Mikael Harstad, Chairman of the Board says: “The rebrand of GiG Media marks a pivotal moment in the separation of Gaming Innovation Group into two independent businesses, and is a vital step in the process of increasing shareholder value. The launch of Gentoo is a testament to the organisation’s dedication in delivering superior quality and results in every aspect of the business, and is setting the company off to a great start.”
For more information, please contact:Jonas Warrer, CEO of GiG, [email protected], +45 30788450
About Gaming Innovation Group (GiG)Gaming Innovation Group is a leading iGaming technology company that provides solutions, products, and services to iGaming Operators. Founded in 2012, Gaming Innovation Group’s vision is ‘To be the industry-leading platform, sportsbook and media provider delivering world-class solutions to our iGaming partners and their customers’. GiG’s mission is to drive sustainable growth and profitability of our partners through product innovation, scalable technology and quality of service. Gaming Innovation Group operates out of Malta and is dual-listed on the Oslo Stock Exchange under the ticker symbol GIG and on Nasdaq Stockholm under GIGSEK. www.gig.com
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Artificial Intelligence
Revolutionize Space Management with Milesight VS Series Occupancy & People Counting Solutions
![revolutionize-space-management-with-milesight-vs-series-occupancy-&-people-counting-solutions](https://roboticulized.com/wp-content/uploads/2024/06/150286-revolutionize-space-management-with-milesight-vs-series-occupancy-people-counting-solutions.jpg)
XIAMEN, China, June 18, 2024 /PRNewswire/ — In an era where data-driven decision-making is pivotal, understanding and optimizing the use of spaces has become a critical need for businesses, institutions, and public spaces. Milesight’s VS Series Occupancy & People Counting sensors stand at the forefront of this revolution, offering sophisticated, reliable, and precise solutions to monitor and manage people flow and space utilization.
What Are Milesight’s VS Series Sensors?Milesight’s VS Series encompasses a range of advanced sensors specifically designed to accurately count people and monitor occupancy levels in real-time. These sensors leverage cutting-edge AI algorithms and state-of-the-art technology to provide high accuracy and reliable data, catering to diverse environments such as offices, retail spaces, transportation hubs, and educational institutions.
Key Features and Benefits:Heat MapVisualize movement trends with heat maps.Group CountingRealizes group counting to gain deeper insights into customers’ behaviors and shopping preferences.Multi-Device StitchingSmoothly fuse multiple sensors to extend the covering area.Staff DetectionIdentify Staff by reflective strip or staff lanyard.Adults/Children DifferentiationDifferentiate adults and children by height setting.
Applications Across Industries:Corporate OfficesRetail and Shopping MallsTransportation Hubs
Success Stories1000+ People Counting Sensors Improve Business in 700+ Retail Stores in Europe The Milesight AI ToF People Counting Sensor VS133 has been successfully deployed in over 700 retail stores across Europe, with more than 1,000 devices installed. This project caters to a wide range of industries, including clothing, retail, jewelry, cosmetics, and more. Leading retail brands such as JOTT, Herno, Hawkers, and many others have benefited from this solution, achieving efficient operations and enhancing their overall performance.
Product HighlightsVS135 Ultra ToF People CounterVS351 Mini Al Thermopile People CounterVS360 IR Breakbeam People CounterVS133 Al ToF People Counting Sensor VS350 Passage People Counter VS330 Cubicle Occupancy Sensor VS121 Al Workplace Occupancy Sensor VS34x Desk & Seat Occupancy Sensor
Milesight’s VS Series Occupancy & People Counting sensors are revolutionizing how spaces are managed. By providing precise, real-time data, these sensors enable better decision-making, enhanced safety, and improved efficiency. Whether you are looking to optimize a small office or manage a large public space, Milesight’s VS Series offers the tools you need to succeed.
Contact: [email protected]
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Artificial Intelligence
Nota AI®, Leading AI Optimization Company, Secures $19.9 Million Series C Funding to Pioneer On-Device Generative AI
![nota-ai,-leading-ai-optimization-company,-secures-$19.9-million-series-c-funding-to-pioneer-on-device-generative-ai](https://roboticulized.com/wp-content/uploads/2024/06/150288-nota-ai-leading-ai-optimization-company-secures-19-9-million-series-c-funding-to-pioneer-on-device-generative-ai.jpg)
Cumulative funding reaches approximately $42.6 million since inception, solidifying Nota AI’s position as Korea’s leading on-device AI innovatorIPO preparations for 2025 are underway with strong backing from lead underwriterParticipation from global AI semiconductor CVC and major AI semiconductor company as strategic investorsSEOUL, South Korea, June 18, 2024 /PRNewswire/ — Nota AI, a leading South Korean startup specializing in AI optimization and lightweighting technology, has successfully raised $19.9 million (25.8 billion KRW) in its Series C funding round. This brings the total investment raised since its founding to approximately $42.6 million (53.2 billion KRW). The round was led by STIC Ventures and LB Investment, with new investments from STIC Ventures, Korea Development Bank, and Mirae Asset Securities. Existing investors Stonebridge Ventures, LB Investment, InterVest, and DS Investment Partners also contributed additional funds, alongside a key AI semiconductor CVC participating as a strategic investor.
Founded in 2015, Nota AI specializes in edge and on-device generative AI technology. Early recognition of its potential came with initial investments from Naver D2SF. Since then, Nota AI has rapidly expanded its customer base both domestically and internationally, securing continuous investments from Stonebridge Ventures and LB Investment.
Leveraging this new funding, Nota AI plans to actively recruit top AI optimization talent and enhance collaborations with global AI semiconductor companies to expand its business. Nota AI is already engaged in significant contracts to provide generative AI optimization technology to leading AI semiconductor firms.
Looking ahead, Nota AI aims to extend its high-performance generative AI model optimization technology to various industries such as robotics and mobility, allowing broader applications of generative AI in daily life. Additionally, Nota AI plans to strengthen AI optimization technology collaborations with strategic investors targeting AI semiconductors.
Nota AI intends to file for an IPO early next year, with Mirae Asset Securities as the lead underwriter, indicating strong preparation for a stable listing. Mirae Asset Securities, participating in this investment round, has expressed high expectations for Nota AI’s successful IPO.
Myungsu Chae, CEO of Nota AI, stated, “Our sales for the first half of this year are expected to exceed the total sales of 2023, and we anticipate a 300% increase in sales for 2024 compared to the previous year. With this investment, we will actively pursue strategic collaborations with partners and expand our overseas business to establish ourselves as a global leader in on-device AI.”
Jae Won Do, Director at STIC Ventures, who led this investment round, commented, “Nota AI is evaluated as a company that can popularize evolving and sophisticated AI models across various devices. We expect that, alongside big tech companies like NVIDIA and ARM, Nota AI will play a key role in the spread of on-device AI.”
Nota AI’s platform, ‘NetsPresso,’ optimizes AI models for device compatibility, allowing AI models to run directly on the device. Nota AI has established official partnerships with global tech companies such as NVIDIA, ARM, Intel, STMicroelectronics, and Renesas, maintaining close collaborations.
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