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ANSYS (ANSS) Up 7% Since Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for ANSYS, Inc. (ANSS - Free Report) . Shares have added about 7% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Recent Earnings
ANSYS reported first-quarter 2017 non-GAAP earnings (excluding stock-based compensation) of $0.89 per share, up 15.6% year over year. Earnings (including stock-based compensation) were $0.81, which beat the Zacks Consensus Estimate by $0.04.
Revenues increased 12.2% (13% at constant currency) from the year-ago quarter to $253.5 million, surpassing the Zacks Consensus Estimate of $242 million.
Segment Revenue Details
At constant currency, lease license revenues grew 15.5% to $93.8 million, while maintenance revenues increased 12.3% to $104.4 million in the reported quarter. Perpetual license revenues grew 9.4% to nearly $48.3 million in the quarter. Service revenues increased 15.1% to $7.1 million.
Direct and indirect businesses contributed 76% and 24%, respectively, to the quarterly revenues. During the quarter, the company had 31 customers with orders in excess of $1 million, including five customers with orders in excess of $5 million.
Recurring revenue base was 78%. Bookings surged 19.4% year over year to $263.9 million.
Region wise, North America, Europe and Asia-Pacific revenues increased 17.3%, 5.3% and 15.1%, 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 30 basis points (bps) from the year-ago quarter to 89%.
Operating expenses (excluding amortization) as a percentage of revenues increased 510 bps from the year-ago quarter driven by higher research & development (up 170 bps) and selling, general & administrative (up 340 bps) expenses.
Consequently, non-GAAP operating margin (including stock-based compensation) contracted 100 bps on a year-over-year basis to 42.3% in the reported quarter.
Balance Sheet & Cash Flow
ANSYS exited the quarter with cash and short-term investments of $866.6 million (of which 72% was held in the U.S.), up from $822.9 million in the previous quarter. The company generated cash from operations of $125.9 million as compared with $96.2 million in the quarter.
Further, ANSYS repurchased 1 million shares in the reported quarter. As of Mar 31, 2017, the company had 4.5 million shares remaining in the authorized share repurchase program.
Guidance
For second-quarter 2017, ANSYS expects non-GAAP earnings in the range of 88–93 cents per share. The company expects to incur additional charges of $2–$4 million ($1.3–$2.8 million, net of tax), primarily in the quarter, related to additional realignment charges.
Net revenue is anticipated in the range of $254–$263 million. ANSYS expect gross margin in the range of 88–89% and operating margin between 45% and 46% for the second quarter.
For full-year 2017, ANSYS now anticipates revenues of $1.030–$1.058 billion (up from $1.010–$1.045 billion) and earnings in the range of $3.68–$3.85 (up from $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.
ANSYS currently plans on total capital expenditure in the range of $15–$20 million for 2017.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been four revisions lower for the current quarter.
At this time, ANSYS' stock has a nice Growth Score of 'B' while it is lagging a bit on the momentum front with 'C'. However, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is more suitable for growth investors than momentum investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.
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ANSYS (ANSS) Up 7% Since Earnings Report: Can It Continue?
A month has gone by since the last earnings report for ANSYS, Inc. (ANSS - Free Report) . Shares have added about 7% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Recent Earnings
ANSYS reported first-quarter 2017 non-GAAP earnings (excluding stock-based compensation) of $0.89 per share, up 15.6% year over year. Earnings (including stock-based compensation) were $0.81, which beat the Zacks Consensus Estimate by $0.04.
Revenues increased 12.2% (13% at constant currency) from the year-ago quarter to $253.5 million, surpassing the Zacks Consensus Estimate of $242 million.
Segment Revenue Details
At constant currency, lease license revenues grew 15.5% to $93.8 million, while maintenance revenues increased 12.3% to $104.4 million in the reported quarter. Perpetual license revenues grew 9.4% to nearly $48.3 million in the quarter. Service revenues increased 15.1% to $7.1 million.
Direct and indirect businesses contributed 76% and 24%, respectively, to the quarterly revenues. During the quarter, the company had 31 customers with orders in excess of $1 million, including five customers with orders in excess of $5 million.
Recurring revenue base was 78%. Bookings surged 19.4% year over year to $263.9 million.
Region wise, North America, Europe and Asia-Pacific revenues increased 17.3%, 5.3% and 15.1%, 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 30 basis points (bps) from the year-ago quarter to 89%.
Operating expenses (excluding amortization) as a percentage of revenues increased 510 bps from the year-ago quarter driven by higher research & development (up 170 bps) and selling, general & administrative (up 340 bps) expenses.
Consequently, non-GAAP operating margin (including stock-based compensation) contracted 100 bps on a year-over-year basis to 42.3% in the reported quarter.
Balance Sheet & Cash Flow
ANSYS exited the quarter with cash and short-term investments of $866.6 million (of which 72% was held in the U.S.), up from $822.9 million in the previous quarter. The company generated cash from operations of $125.9 million as compared with $96.2 million in the quarter.
Further, ANSYS repurchased 1 million shares in the reported quarter. As of Mar 31, 2017, the company had 4.5 million shares remaining in the authorized share repurchase program.
Guidance
For second-quarter 2017, ANSYS expects non-GAAP earnings in the range of 88–93 cents per share. The company expects to incur additional charges of $2–$4 million ($1.3–$2.8 million, net of tax), primarily in the quarter, related to additional realignment charges.
Net revenue is anticipated in the range of $254–$263 million. ANSYS expect gross margin in the range of 88–89% and operating margin between 45% and 46% for the second quarter.
For full-year 2017, ANSYS now anticipates revenues of $1.030–$1.058 billion (up from $1.010–$1.045 billion) and earnings in the range of $3.68–$3.85 (up from $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.
ANSYS currently plans on total capital expenditure in the range of $15–$20 million for 2017.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been four revisions lower for the current quarter.
ANSYS, Inc. Price and Consensus
ANSYS, Inc. Price and Consensus | ANSYS, Inc. Quote
VGM Scores
At this time, ANSYS' stock has a nice Growth Score of 'B' while it is lagging a bit on the momentum front with 'C'. However, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is more suitable for growth investors than momentum investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.