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Q2 2011 Earnings Call
August 04, 2011 10:30 am ET
James Cashman - Chief Executive Officer, President and Director
Unknown Executive -
Maria Shields - Chief Financial Officer, Principal Accounting Officer and Vice President of Finance & Administration
Andrew Yang - Co-Founder, Chairman of the Board and Chief Executive Officer
Richard Davis - Canaccord Genuity
Ross MacMillan - Jefferies & Company
Saket Kalia - JP Morgan Chase & Co
Gregory Halter - Great Lake Review
Daniel Cummins - ThinkEquity LLC
Jay Vleeschhouwer - Griffin Securities, Inc.
Steven Ashley - Robert W. Baird & Co. Incorporated
Barbara Coffey - Brigantine Advisors LLC
Blair Abernethy - Stifel, Nicolaus & Co., Inc.
Steven Koenig - Longbow Research LLC
Previous Statements by ANSS
» ANSYS, Inc., Q4 2008 Earnings Call Transcript
» Ansys Inc. Q3 2008 Earnings Call Transcript
» Ansys Inc. Q2 2008 Earnings Call Transcript
Okay. Good morning, and again thanks to everybody for joining us to discuss our 2011 second quarter financial results. So again consistent with our previous Q1 protocol, the general information and key topics relative to Q2's business results are included in the earnings release and in the prepared remarks that we posted on the homepage of our Investor Relations website this morning.
Also as you heard in the operator's introduction, we have a special guest joining us this morning. And I'd like to welcome Dr. Andrew Yang, the Cofounder and President of Apache. And the newest number who joined the ANSYS executive management team, and he'll be joining us for the call. So before we get started, I'm going to introduce Maria Shields, our CFO, and for our Safe Harbor statement. Maria?
Okay. Thanks, Jim, and good morning, everyone. I'd like to remind you that in addition to any risks and uncertainties that we highlight during the course of this call, important factors that may affect our future results are discussed at length in our public filings with the SEC, all of which are also available via our website. Additionally, the company's reported results should not be considered an indication of future performance, as there are risks and uncertainties that could impact our business in the future. These statements are based upon our view of the world and our business as of today. And we undertake no obligation to update any such information, unless we do so in a public forum.
Consistent with our standard practice, during the course of this call and in the prepared remarks, we will be making reference to non-GAAP financial measures. A discussion of the various items that are excluded and a full reconciliation of GAAP to comparable non-GAAP measures are included in this morning's earnings release, the related prepared remarks in the Form 8-K.
So Jim, I'll turn it back over to you for some opening commentary.
Okay. Thanks, Maria. So again before we open up the call for Q&A, I'd like to briefly highlight a few points about our future results and the updated 2011 outlook.
So let me begin by saying that Q2 was a strong quarter and ended better than we originally expected and with the added milestone of the Apache announcement that we made on the last day of the quarter. We continue to see momentum that's been building over the past several quarters. And as a result, we exceeded the upper end of guidance for revenue, which drove operating leverage and earnings beyond what we had guided.
Overall, we maintained all of the historical strength of ANSYS over a multiyear period with double-digit growth in both software license and maintenance revenue, including reaching a new all-time high deferred balance, and this, in turn, yielded strong margins and cash flows. And consistent with last quarter, our industry composition remains diverse. We're continuing success in areas such as energy, automotive, aerospace and electronics.
Most importantly, this was accomplished while we maintain the core tenets of our long-term vision, including the recent addition of Apache to our portfolio. Many of you may recall that when we met in early March at our Investor Day in New York City, we laid out some of the key themes of our long-term strategy, including opportunities that lay ahead of us for the future of Simulation Driven Product Development. This acquisition is yet another step forward that enabled us to respond to our customers' new reality, a business environment where they simply can't afford to compromise on depth, breadth or quality of the simulation tools that they use to solve their increasingly complex design challenges. It also uniquely positioned us to provide end-to-end simulation solutions for the explosive market around mobile devices and computing power.
The obvious result of all this has been we updated our outlook on revenue and EPS for Q3 in 2011 as discussed in our earnings release. So I'd like to maybe provide some qualitative context around the guidance we provided for Q3 and the remainder of 2011.
First, we are raising the core organic outlook for the year. Second, we've added in, of course, the over performance in the core business in Q2. Third, we've added the impact of Apache for Q3 in the fiscal year 2011. And then lastly, we've updated our currency rates in line with the current rate environment. However, we will be able to [indiscernible] to continue to counter balance or offset with some caution around macro environment. Also as Japan, our second largest market in the world, continues to work its way through the catastrophic events of Q1. Not unlike what others are seeing in their Japanese business, the uncertainty, at least in the next several quarters around the predictability and timing of deal closings, is a reality that we have to be cognizant of and we'd build into our guidance.