It has been about a month since the last earnings report for Ansys (ANSS Quick QuoteANSS - Free Report) . Shares have lost about 2.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Ansys due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

ANSYS Q1 Earnings & Revenue Top Estimates, Rise Y/Y

ANSYS reported first-quarter 2022 earnings of $1.36 per share, which beat the Zacks Consensus Estimate by 19.3%. The bottom line increased 21.5% year over year.

Non-GAAP Revenues of $428.6 million surpassed the Zacks Consensus Estimate by 5.46%. The top line increased 15% (up 18% at constant-currency or cc) from the year-ago quarter.

Higher demand for advanced simulation tools for 5G, high-performance computing, IoT, and increasingly complicated chip designs boosted high-tech and semiconductor industry growth in the Americas and the Asia-Pacific regions. Deferred revenues and backlog were $1.203 billion, up 29% year over year.

Quarter in Details

Subscription lease revenues (21.4% of non-GAAP revenues) increased 40.9% at cc to $91.5 million. Perpetual licenses’ revenues (15.4%) increased 0.1% year over year at cc to $65.9 million.

Maintenance revenues (58.5%) increased 16.6% at cc to $250.7 million. Service revenues (4.8%) rose 23.1% year over year to $20.3 million.
Direct and indirect channels contributed 72.5% and 27.5%, respectively, to non-GAAP revenues.

Annual contract value or ACV increased 7.8% year over year (up 10.8% at cc) to $344.1 million.

On a geographic basis, non-GAAP revenues from the Americas, EMEA (comprising Germany, the U.K. and other EMEA) and the Asia-Pacific (Japan and Other Asia-Pacific) contributed 48.1%, 24.7% and 27.1% to non-GAAP revenues, respectively.

Non-GAAP revenues from the Americas were up 23.4% to $206.3 million at cc. Revenues from EMEA increased 7.9% to $105.9 million. Revenues from the Asia-Pacific increased 20.3% to $116.3 million.

Strength in the aerospace and defense, high-tech, and automotive sectors increased overall revenues.

Operating Details

The non-GAAP gross margin expanded 110 basis points (bps) on a year-over-year basis to 89.6%.

Total operating expenses increased 11.2% year over year to $279.1 million due to higher research and development, as well as selling, general and administrative expenses.

The non-GAAP operating margin expanded 120 bps on a year-over-year basis to 34.7%.

Balance Sheet & Cash Flow

As of Mar 31, 2022, cash and short-term investments amounted to $657.8 million compared with $668 million as of Dec 31, 2021.

As of Mar 31, 2022, the company’s long-term debt stood at $744.5 million compared with $753.6 million as of Dec 31, 2021.

The company generated cash from operations of $210.9 million compared with $171.1 million in the prior-year quarter.

The company repurchased 500,000 shares worth $155.6 million in the first quarter. As of Mar 31, 2022, it had 2 million shares remaining under the share buyback program.

Guidance

For second-quarter 2022, ANSYS expects non-GAAP earnings of $1.46-$1.64 per share.

Non-GAAP revenues are anticipated between $450 million and $475 million. Management projects a non-GAAP operating margin of 36-38.1%.

For 2022, ANSYS expects non-GAAP revenues of $2.005-$2.065 billion. Management expects a non-GAAP operating margin of 41-42% for 2022.

Non-GAAP earnings are envisioned to be $7.53-$7.94 per share.

ACV is anticipated between $1.96 billion and $2.02 billion, while the operating cash flow is projected between $570 million and $610 million for 2022.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

The consensus estimate has shifted -14.73% due to these changes.

VGM Scores

Currently, Ansys has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, 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.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Ansys has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Ansys is part of the Zacks Computer - Software industry. Over the past month, SAP (SAP Quick QuoteSAP - Free Report) , a stock from the same industry, has gained 2.3%. The company reported its results for the quarter ended March 2022 more than a month ago.

SAP reported revenues of $7.94 billion in the last reported quarter, representing a year-over-year change of +3.8%. EPS of $1.12 for the same period compares with $1.69 a year ago.

SAP is expected to post earnings of $1.22 per share for the current quarter, representing a year-over-year change of -42.2%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.

SAP has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.