Ansys Surpasses Q4 2024 Expectations with Strong Demand for AI-Enhanced Simulation Software

Ansys Exceeds Revenue, EPS Estimates

Ansys delivered strong earnings for Q4 2024, surpassing expectations amid regulatory and geopolitical challenges. Ansys (ANSS -0.54%), a leader in simulation software, reported its fourth-quarter earnings on Dec. 31. Revenue reached $882.2 million, topping analysts' projections of $867 million. The company achieved a non-GAAP earnings per share (EPS) of $4.44, beating the estimate of $3.95. Overall, the quarter reflected strong performance, notwithstanding some concern over regulatory issues and geopolitical risks. Source: Analyst estimates for the quarter provided by FactSet. Overview of Ansys's Business Ansys is a powerhouse in engineering simulation, offering modeling and simulation solutions crucial for industries such as high-tech, aerospace, automotive, and healthcare. It focuses on creating cutting-edge software that allows businesses to simulate how their products will operate in the real world without employing physical prototypes. Central to its strategy are technological leadership and innovation. Ansys invests heavily in research and development (R&D), spending $528 million in 2024 to sustain this edge. Recent innovations, like Ansys SimAI, highlight its commitment to advancing the simulation field. Strategic mergers, such as the pending one with Synopsys should further its capabilities despite some regulatory hurdles anticipated from E.U. authorities. Market expansion remains a focal point, with growth driven by automotive sector demands for electrification and autonomous technologies. Quarterly Highlights During Q4 2024, Ansys exceeded revenue expectations. Sales rose 9.6% year-over-year, reaching $882.2 million, surpassing forecasts. This was partly due to a significant increase in its annual contract value (ACV), which grew by 14.6% to $1,094.6 million. Revenue was boosted by demand from automotive and aerospace sectors, driven by innovations in electrification and autonomy. Non-GAAP EPS saw a notable 12.7% increase from the previous year, at $4.44, exceeding analyst predictions significantly. This leap in profitability can be attributed to operational efficiency and robust segment demand. Furthermore, operating margins showed a slight improvement, reaching 53.3% compared to 53.0% a year ago. Investment in R&D remained unchanged at the core of operations, with $528 million spent during the fiscal year. This supports strategic product enhancements, reinforcing their competitive advantage. Additionally, Ansys's cloud and high-performance computing capabilities saw continued development, allowing sophisticated simulations to be conducted efficiently. Despite the positive financial outcomes, concerns linger over regulatory and geopolitical issues. Ansys faces scrutiny with its Synopsys merger, particularly from EU regulators. Moreover, export restrictions to China impacted revenue, revealing growth challenges in this market. Future Outlook Ansys has not provided specific forward guidance due to its pending merger with Synopsys. However, management expects a strong double-digit growth in ACV for 2025 thanks to its focus on AI and machine learning technologies. This strategic initiative, coupled with consistent R&D investment, is expected to align with its goal of maintaining technological leadership. Looking forward, investors should monitor any updates regarding the Synopsys merger. The anticipated synergies may expand the company's footprint in semiconductor design and enhance overall technological integration. Continued geopolitical concerns, namely the impact of export restrictions on Chinese operations, should also be closely observed.

Ansys Beats Fourth-Quarter Estimates on Simulation Software Demand

(Reuters) - Ansys beat analysts' estimates for fourth-quarter revenue and profit on Wednesday, indicating strength in demand for its artificial intelligence-based tools and engineering software solutions, sending its shares up 2% after the bell. Simulation software is used by engineers, researchers and chip designers across industries for a quick and effective way to analyze products virtually before their market launch. Adding generative AI into the design process helps users save time and costs. Ansys, which makes software used in creating products from airplanes to tennis rackets of players such as Novak Djokovic, reported revenue of $882.2 million for the quarter ended December 31. Analysts, on average, estimated revenue at $863.5 million, according to data compiled by LSEG. The Pennsylvania-based company offers AI solutions such as its customer support chatbot AnsysGPT and a cloud-enabled product SimAI, which uses simulation results to assess the performance of a new design within minutes. Ansys' products compete with Autodesk's Fusion 360, AutoCAD and Dassault Systemes' Solidworks. Excluding items, the company earned $4.44 per share in the fourth quarter, compared with the estimate of $3.93 per share. Last month, the European Commission approved Ansys' takeover by chip design software maker Synopsys, with conditions to the $35 billion cash-and-stock deal announced in January 2024. To relieve competition concerns resulting from the deal, the commission said both companies have agreed to divest Synopsys' optics and photonics software and Ansys' PowerArtist software. Ansys agreed to sell PowerArtist -- a tool used to analyze and reduce power to enable power-efficient design -- to electronic equipment maker Keysight Technologies this January. (Reporting by Juby Babu in Mexico City; Editing by Shilpi Majumdar)