DEFA14A: Altair Engineering to be Acquired by Siemens Subsidiary; Reports Strong Q3 2024 Financial Results

Altair Engineering Inc. announces its acquisition by a Siemens subsidiary alongside its Q3 2024 financial results, showcasing revenue growth and improved profitability.

Summary

• Altair Engineering Inc. reported its Q3 2024 financial results, revealing a merger agreement with a Siemens subsidiary.
• Software revenue increased by 16.5% to $138.7 million compared to $119.1 million in Q3 2023.
• Total revenue rose by 13.0% to $151.5 million from $134.0 million in the same period last year.
• Net income improved to $1.8 million, a $6.2 million increase from the $(4.4) million net loss in Q3 2023.
• Non-GAAP net income increased by $8.5 million to $21.2 million compared to $12.7 million in Q3 2023.
• Adjusted EBITDA saw a significant increase of 66.3% to $25.7 million from $15.5 million in Q3 2023.
• Cash provided by operating activities was $14.5 million, slightly lower than the $16.4 million in Q3 2023.
• Free cash flow decreased to $9.8 million from $14.7 million in the prior year's quarter.
• The company is suspending quarterly financial results conference calls and guidance due to the proposed transaction with Siemens.

Sentiment

Score: 7

Explanation: The sentiment is positive due to strong Q3 results and the acquisition by Siemens, which typically provides a premium to shareholders. However, the suspension of guidance and potential integration risks temper the overall outlook.

Positives

• Software revenue saw a substantial increase of 16.5%, reaching $138.7 million.
• Total revenue increased by 13.0% to $151.5 million.
• The company moved from a net loss of $(4.4) million to a net income of $1.8 million.
• Adjusted EBITDA increased significantly by 66.3% to $25.7 million.
• Non-GAAP net income increased by $8.5 million to $21.2 million.

Negatives

• Cash provided by operating activities decreased slightly to $14.5 million from $16.4 million.
• Free cash flow decreased to $9.8 million from $14.7 million.
• The company is suspending quarterly financial results conference calls and guidance.

Risks

• The proposed transaction with Siemens is subject to risks and uncertainties, including regulatory approvals and potential impacts on customer and employee retention.
• Worldwide economic or political changes could affect demand for Altair's products and impact profitability.
• Disruptions in global credit and financial markets, including diminished liquidity and credit availability, could pose risks.
• Cyber-security vulnerabilities and foreign currency volatility are potential challenges.
• The company faces risks related to retention of key employees and outcomes of legal proceedings, claims, and investigations.

Future Outlook

Due to the proposed transaction with Siemens, Altair is suspending quarterly financial results conference calls and its quarterly and annual guidance.

Industry Context

The acquisition of Altair by Siemens reflects a trend of consolidation in the software industry, where larger companies are acquiring specialized firms to expand their product offerings and market reach.

Comparison to Industry Standards

• Comparing Altair's growth to companies like Ansys and Autodesk, which also operate in the simulation and design software space, Altair's revenue growth of 13% is competitive.
• However, the 66.3% increase in Adjusted EBITDA suggests significant operational improvements compared to industry averages.
• The acquisition by Siemens is similar to Dassault Systèmes' acquisition of smaller players to bolster their portfolio.

Stakeholder Impact

• Shareholders are expected to receive cash merger consideration as part of the acquisition.
• The acquisition could impact employees through potential integration and restructuring activities.
• Customers may experience changes in product offerings and support as a result of the acquisition.
• Suppliers may need to adjust to new procurement processes under Siemens' ownership.

Next Steps

• The company will file a proxy statement on Schedule 14A with the SEC regarding the proposed transaction with Siemens.
• Stockholders of Altair will be mailed the definitive proxy statement.
• Investors and security holders are urged to read the proxy statement and other documents filed with the SEC carefully.

Key Dates

Keywords

acquisition, Siemens, financial results, software, revenue, EBITDA, Altair