ANSYS (NASDAQ:ANSS) Q1: Beats On Revenue But Quarterly Guidance Underwhelms

Engineering simulation software provider Ansys (NASDAQ:ANSS) beat analyst expectations in Q1 FY2023 quarter, with revenue up 19.8% year on year to $509.4 million. Guidance for the full year also exceeded estimates, however the guidance for the next quarter was less impressive, coming in at $485.5 million, 7.04% below analyst estimates. ANSYS made a GAAP profit of $100.6 million, improving on its profit of $71 million, in the same quarter last year.

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“We again delivered robust double-digit ACV and revenue growth in the quarter and exceeded our financial guidance across all key metrics. Our performance was broad-based across geographies, customer types, and industries, again demonstrating the essential nature of simulation as well as our multiphysics product leadership. Given the strength of our results and the immense opportunity that lies ahead, I remain confident in our ability to deliver on our commitments in 2023 and beyond,” 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 unremarkable over the last two years, growing from quarterly revenue of $363.2 million in Q1 FY2021, to $509.4 million.

This quarter, ANSYS's quarterly revenue was once again up 19.8% year on year. But the revenue actually decreased by $184.7 million in Q1, compared to $221.6 million increase in Q4 2022. ANSYS's sales do seem to have a seasonal pattern to them, however the management is guiding for a further drop in revenue in the next quarter, so we think it is worth keeping an eye on the situation.

Guidance for the next quarter indicates ANSYS is expecting revenue to grow 2.46% year on year to $485.5 million, slowing down from the 6.09% year-over-year increase in revenue the company had recorded in the same quarter last year. Ahead of the earnings results the analysts covering the company were estimating sales to grow 8.38% over the next twelve months.

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Key Takeaways from ANSYS's Q1 Results

With a market capitalization of $26.8 billion and more than $507.9 million in cash, the company has the capacity to continue to prioritise growth.

It was good to see ANSYS outperform Wall St’s revenue expectations this quarter. That feature of these results really stood out as a positive. On the other hand, it was unfortunate to see that the revenue guidance for the next quarter missed analysts' expectations and gross margin deteriorated. Overall, this quarter's results could have been better. The company is down 0.94% on the results and currently trades at $305.09 per share.

ANSYS may have had a tough quarter, but does that actually create an opportunity to invest right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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