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Ansys (ANSS) Up 22.4% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Ansys (ANSS - Free Report) . Shares have added about 22.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Ansys 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.

ANSYS Q3 Earnings Beat Estimates, Revenues Up Y/Y

ANSYS reported third-quarter 2022 earnings of $1.77 per share, beating the Zacks Consensus Estimate by 9.26%. The bottom line increased 11.3% year over year.

Non-GAAP revenues of $473.7 million surpassed the Zacks Consensus Estimate by 1.44%. The top line increased 6.3% (up 15% at constant currency or cc) from the year-ago quarter.

The company’s multiphysics solutions boosted high-tech industry growth in the Americas, along with several deals in the EMEA and Asia-Pacific markets. The company saw double-digit growth for its healthcare segment in the Americas and the EMEA region. Deferred revenues and backlogs were $1.108 billion, up 23.3% year over year.

Quarter in Detail

Subscription lease revenues (28.8% of non-GAAP revenues) increased 25.6% at cc to $136.5 million. Perpetual licenses’ revenues (15.3%) decreased 4.3% year over year at cc to $72.4 million.

Maintenance revenues (52.5%) increased 17.3% at cc to $248.8 million. Service revenues (3.4%) declined 1.2% year over year to $15.9 million.

Direct and indirect channels contributed 74.8% and 25.2%, respectively, to non-GAAP revenues.

Annual contract value or ACV increased 12% year over year (up 20.2% at cc) to $409.3 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 44.3%, 25.4% and 30.2% to non-GAAP revenues, respectively.

Non-GAAP revenues from the Americas were down 5.8% to $209.9 million at cc. Revenues from EMEA increased 36% to $120.4 million at cc. Revenues from the Asia-Pacific increased 35.7% to $143.2 million at cc.

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

Operating Details

The non-GAAP gross margin expanded 120 basis points (bps) on a year-over-year basis to 91.1%.

Total operating expenses increased 6.1% year over year to $287.2 million due to higher research and development; and selling, general and administrative expenses.

The non-GAAP operating margin expanded 130 bps on a year-over-year basis to 41%.

Balance Sheet & Cash Flow

As of Sep 30, 2022, cash and short-term investments amounted to $632.7 million compared with $517.6 million as of Jun 30, 2022.

As of Sep 30, 2022, the company’s long-term debt stood at $753.5 million compared with $753.4 million as of Jun 30, 2022.

In the quarter under review, cash from operations decreased 19.4% year over year to $127.2 million.

In the quarter under review, the company did not repurchase shares. As of Sep 30, 2022, it had 2 million shares remaining under the share buyback program.

Guidance

For fourth-quarter 2022, ANSYS expects non-GAAP earnings of $2.58-$2.90 per share.

Non-GAAP revenues are anticipated to be between $621.8 million and $656.8 million. Management projects a non-GAAP operating margin of 45.6-48.5%.

For 2022, ANSYS expects non-GAAP revenues of $2 -$2.035 billion.

Management expects a non-GAAP operating margin of 41-42% for 2022.

Non-GAAP earnings are envisioned to be $7.48-$7.80 per share.

ACV is anticipated to be between $1.975 billion and $2 billion, while the operating cash flow is projected between $570 million and $600 million for 2022.

How Have Estimates Been Moving Since Then?

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

The consensus estimate has shifted -5.89% due to these changes.

VGM Scores

At this time, Ansys has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, 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 D. 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, Blackbaud (BLKB - Free Report) , a stock from the same industry, has gained 5.7%. The company reported its results for the quarter ended September 2022 more than a month ago.

Blackbaud reported revenues of $261.3 million in the last reported quarter, representing a year-over-year change of +13%. EPS of $0.69 for the same period compares with $0.78 a year ago.

For the current quarter, Blackbaud is expected to post earnings of $0.58 per share, indicating a change of -22.7% from the year-ago quarter. The Zacks Consensus Estimate has changed -14.8% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Blackbaud. Also, the stock has a VGM Score of B.


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