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ANSYS Fourth Quarter Earnings Report ANSYS Exceeds Q4 Earnings Expectations with Revenue Surge

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At a time when the financial markets are akin to a tempestuous sea, ANSYS, Inc. (ANSS) has sailed through the storm, surpassing expectations and achieving a remarkable surge in revenues. The fourth-quarter 2023 earnings of $3.94 per share led ANSYS to beat the Zacks Consensus Estimate by 6.5%, marking an impressive 27.5% improvement compared to the previous year.

Aggressive Revenue Growth

Non-GAAP revenues rose to $805.1 million, beating the Zacks Consensus Estimate by 1.7% and reflecting a substantial 16% increase (or 15% at constant currency) year over year. The momentous success continued into the 2023 fiscal year, as the company reported revenues of $2.27 billion, signifying a substantial 9.5% increase compared to the previous year. This robust growth is akin to a surging river in full spate, sweeping away all obstacles in its path. A feat made even more staggering by the prevailing economic headwinds.

Acquisition Sparks a Frenzy

In a landmark move, ANSYS and Synopsys officially announced their entry into a definitive agreement in January 2024, setting the stage for Synopsys to acquire ANSS. As per the agreement, ANSS’ shareholders will receive $197 in cash, along with 0.3450 shares of Synopsys common stock for each Ansys share. With a deal valued at approximately $35 billion, this acquisition represents an implied premium of about 29% over Ansys’ closing stock price on December 21, 2023. The deal is further anticipated to culminate in the first half of 2025, subject to approvals by Ansys shareholders, regulatory bodies, and customary closing conditions. The market responded to the news with a frenzy that resembled a pack of wildebeests charging across the savannah in pursuit of greener pastures.

Breakdown of Quarterly Performance

The quarter’s performance was underpinned by a notable 22.4% increase in subscription lease revenues, along with a 14.8% rise in perpetual licenses revenues, demonstrating an unwavering momentum that is as fervid as a volcano in eruption. Undertaking a geographical lens, the Americas, EMEA, and the Asia-Pacific clocked in at 51%, 29.4%, and 19.6% contribution to non-GAAP revenues, respectively. ANSYS’ upward trajectory is further validated by the 16.8% year-over-year growth in annual contract value (ACV), reaching $955.2 million.

Robust Financial Foundation

Despite the prevailing economic turbulence, ANSYS has continued to fortify its financial foundation. The company now boasts a non-GAAP gross margin that expanded by 30 basis points on a year-over-year basis, reaching 94.3%. Notably, the operating margin also surged, expanding by 500 basis points to reach 53%, fueling the company’s financial fortress with an unprecedented level of might.

Financial Outlook

With the pending acquisition on the horizon, the company has taken a strategic decision to discontinue providing financial outlook, as it embarks on an exciting new chapter entwined with Synopsys’ fate.

Stocks to Consider

For investors eyeing the broader technology sector, Manhattan Associates (MANH), Watts Water Technologies (WTS), and Microsoft (MSFT) present as intriguing prospects. With their promising growth trajectories and influential market positions, these companies are akin to stars that shine brightly in the night sky. Manhattan Associates, in particular, has witnessed a meteoric surge of 66.9% in the past year.

With a Zacks Rank #3 (Hold), ANSYS continues to navigate through turbulent waters with remarkable fortitude, building a financial castle rooted in innovation and resilience.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.