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Ansys (ANSS) Q4 Earnings & Revenues Beat; Revises View

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Ansys Inc. (ANSS - Free Report) reported fourth-quarter fiscal 2016 non-GAAP earnings (excluding stock-based compensation) of 98 cents per share, up 7.7% year over year. Earnings (including stock-based compensation) were 92 cents, which beat the Zacks Consensus Estimate by couple of cents.

Revenues increased 7.4% (8% at constant currency) from the year-ago quarter to $270.6 million, which beat the Zacks Consensus Estimate of $269 million.

Revenues increased 5% in both reported and constant currency to $988.6 million in full-year 2016. Non-GAAP earnings grew 6% over 2015 to $3.63 per share. Deferred revenue and backlog balance surged 26.5% from year-ago period to $637.8 million in fiscal 2016.
 

ANSYS, Inc. Price, Consensus and EPS Surprise

 

ANSYS, Inc. Price, Consensus and EPS Surprise | ANSYS, Inc. Quote

Further, Ansys revised full-year 2017 guidance owing to 9% weakening of the Japanese yen.

However, despite the strong yearly results, we note that Ansys has underperformed the Zacks Computer Software industry in the last one year. While the stock gained 16.8%, the industry witnessed an increase of 27%.



Segment Revenue Details

At constant currency, lease license revenues grew 9% to $89.6 million, while maintenance revenues increased 7.7% to almost $102 million in the reported quarter. Perpetual license revenues grew 6.7% to nearly $72 million in the quarter. Service revenues increased 1.5% to $7.2 million.

Direct and indirect businesses contributed 75% and 25%, respectively, to the quarterly revenues. During the quarter, the company had 37 customers with orders in excess of $1 million, including seven customers with orders in excess of $10 million.

Recurring revenue base was 71%. Bookings surged 35.7% year over year to $433.9 million.

Region wise, North America, Europe and Asia-Pacific revenues increased 10%, 0.5% and 12%, respectively, at constant currency. North America had 20 deals above $1 million closed in the quarter, the majority of which were lease transactions.

Operating Details

Gross margin excluding amortization contracted 20 basis points (bps) from the year-ago quarter to 89.1%.
 

 

Operating expenses (excluding amortization) as a percentage of revenues increased 350 bps from the year-ago quarter driven by higher research & development (up 320 bps) and research & development (up 40 bps).

Consequently, non-GAAP operating margin (including stock-based compensation) contracted 260 bps on a year-over-year basis to 41.9% in the reported quarter.

Balance Sheet & Cash Flow

Ansys exited the quarter with cash and short-term investments of $822.9 million, of which 72% was held in the U.S. The company generated cash from operations of $96.2 million during the quarter.

Further, Ansys repurchased shares worth $1 million in the reported quarter. The company also enhanced share repurchase program to 5 million shares.

Guidance

For first-quarter fiscal 2017, Ansys expects non-GAAP earnings in the range of 81–85 cents per share. The company expects to incur additional charges of $10–$15 million ($7–$11 million, net of tax), primarily in the quarter, related to additional realignment charges.

Net revenue is anticipated in the range of $237–$246 million. Ansys expect gross margin in the range of 88–89% and operating margin between 45% and 46% for the first quarter.

For full-year 2017, Ansys now expects revenues of $ 1.010–$1.045 billion and earnings in the range of $3.63–$3.83 per share.

Gross margin is anticipated in the range of 88–89% and operating margin between 46% and 47% for the full year.

Zacks Rank & Key Picks

Ansys carries a Zacks Rank #3 (Hold). Aspen Technology (AZPN - Free Report) , Check Point Software (CHKP - Free Report) and Dassault (DASTY - Free Report) are better-ranked stocks worth looking in the sector. All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Aspen, Check Point and Dassault are pegged at 13%, 10% and 12.3%, respectively.

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