ANSYS (NASDAQ:ANSS) Beats Q2 Sales Targets But Quarterly Guidance Underwhelms

Adam Hejl /
2023/08/02 4:33 pm EDT

Engineering simulation software provider Ansys (NASDAQ:ANSS) reported results ahead of analysts' expectations in Q2 FY2023, with revenue up 4.8% year on year to $496.6 million. Revenue guidance for the full year also exceeded analysts' estimates but next quarter's guidance of $463.7 million was less impressive, coming in 11.9% below expectations. ANSYS made a GAAP profit of $69.5 million, down from its profit of $98.8 million in the same quarter last year.

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ANSYS (ANSS) Q2 FY2023 Highlights:

  • Revenue: $496.6 million vs analyst estimates of $490.1 million (1.33% beat)
  • EPS (non-GAAP): $1.60 vs analyst estimates of $1.52 (5.25% beat)
  • Revenue Guidance for Q3 2023 is $463.7 million at the midpoint, below analyst estimates of $526.5 million
  • The company reconfirmed revenue guidance for the full year of $2.29 billion at the midpoint
  • Gross Margin (GAAP): 86.2%, down from 90.5% in the same quarter last year

“Ansys delivered another outstanding quarter, once again beating financial guidance across all key metrics.” said Ajei Gopal, Ansys president and CEO.

Used to help design the Mars Rover, Ansys (NASDAQ:ANSS) offers a software-as-a-service platform that enables simulation for engineering and design.

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Sales Growth

As you can see below, ANSYS's revenue growth has been over the last two years, growing from $446.7 million in Q2 FY2021 to $496.6 million this quarter.

ANSYS Total Revenue

ANSYS's quarterly revenue was only up 4.8% year on year, which isn't particularly great. On top of that, its revenue decreased again in Q2 by $12.8 million, following the same trend as its $184.7 million decrease in Q1 2023. While one-off fluctuations aren't always concerning, we have no doubt that shareholders would like to see its revenue rebound soon.

Next quarter, ANSYS is guiding for a 1.86% year-on-year revenue decline to $463.7 million, a further deceleration from the 7.1% year-on-year decrease it recorded in the same quarter last year. Ahead of the earnings results announcement, the analysts covering the company were expecting sales to grow 9.97% over the next 12 months.

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Key Takeaways from ANSYS's Q2 Results

With a market capitalization of $29.2 billion and more than $478 million in cash on hand, ANSYS can continue prioritizing growth.

It was comforting to see that ANSYS topped analysts' revenue expectations this quarter, even if just narrowly. That really stood out as a positive in these results. On the other hand, its underwhelming revenue guidance for next quarter was disappointing and its gross margin declined. Overall, the results could have been better. The stock is flat after reporting and currently trades at $325.67 per share.

ANSYS may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.

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The author has no position in any of the stocks mentioned in this report.