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Altair Announces Fourth Quarter and Full Year 2023 Financial Results
Источник: Nasdaq GlobeNewswire / 22 фев 2024 16:05:01 America/New_York
TROY, Mich., Feb. 22, 2024 (GLOBE NEWSWIRE) -- Altair (Nasdaq: ALTR), a global leader in computational intelligence, today released its financial results for the fourth quarter and full year ended December 31, 2023.
"Altair finished 2023 with a strong fourth quarter, notching record-high revenue and profit for the quarter and full-year," said James R. Scapa, founder, chairman and chief executive officer of Altair. "We are seeing strong momentum across a number of verticals, where computational intelligence is becoming increasingly important. We are excited about our recent and upcoming product releases and believe that our investments in engineering AI are positioning us as a leader in this important and growing domain.”
"Our global team worked hard to achieve outstanding results for 2023, and we finished the year exceeding our profitability goals. We are thrilled to have surpassed the 20% adjusted EBITDA margin target for 2023 that we established three years ago," said Matt Brown, chief financial officer of Altair. “Our strong results despite somewhat difficult macroeconomic conditions demonstrate the importance of our products in solving our customers’ most important challenges. We are excited about the tremendous opportunity ahead of us as we continue to execute on our financial targets.”
Fourth Quarter 2023 Financial Highlights
- Software product revenue was $155.9 million compared to $145.0 million for the fourth quarter of 2022, an increase of 7.6% in reported currency and 6.7% in constant currency
- Total revenue was $171.5 million compared to $160.4 million for the fourth quarter of 2022, an increase of 6.9% in reported currency and 6.0% in constant currency
- Net income was $19.7 million compared to $12.1 million for the fourth quarter of 2022. Net income per share, diluted was $0.22 based on 89.0 million diluted weighted average common shares outstanding, compared to net income per share, diluted of $0.14 for the fourth quarter of 2022, based on 87.5 million diluted weighted average common shares outstanding. Net income margin was 11.5% compared to net income margin of 7.5% for the fourth quarter of 2022
- Non-GAAP net income was $41.1 million, compared to non-GAAP net income of $27.5 million for the fourth quarter of 2022, an increase of 49.2%. Non-GAAP net income per share, diluted was $0.46 based on 89.0 million non-GAAP diluted common shares outstanding, compared to non-GAAP net income per share, diluted of $0.31 for the fourth quarter of 2022, based on 87.5 million non-GAAP diluted common shares outstanding
- Adjusted EBITDA was $53.6 million compared to $38.7 million for the fourth quarter of 2022, an increase of 38.3%. Adjusted EBITDA margin was 31.2% compared to 24.1% for the fourth quarter of 2022
- Cash provided by operating activities was $21.7 million, compared to $13.0 million for the fourth quarter of 2022
- Free cash flow was $19.3 million, compared to $10.1 million for the fourth quarter of 2022.
Full Year 2023 Financial Highlights
- Software product revenue was $550.0 million compared to $506.5 million for the full year of 2022, an increase of 8.6% in reported currency and 9.8% in constant currency
- Total revenue was $612.7 million compared to $572.2 million for the full year of 2022, an increase of 7.1% in reported currency and 8.2% in constant currency
- Net loss was $(8.9) million compared to net loss of $(43.4) million for the full year of 2022. Net loss per share, diluted was $(0.11) based on 80.6 million diluted weighted average common shares outstanding, compared to net loss per share, diluted of $(0.55) for the full year of 2022, based on 79.5 million diluted weighted average common shares outstanding. Net loss margin was -1.5% compared to net loss margin of -7.6% for the full year of 2022
- Non-GAAP net income was $98.8 million, compared to non-GAAP net income of $75.6 million for the full year of 2022, an increase of 30.6%. Non-GAAP net income per share, diluted was $1.13 based on 87.6 million non-GAAP diluted common shares outstanding, compared to non-GAAP net income per share, diluted of $0.89 for the full year of 2022, based on 85.4 million non-GAAP diluted common shares outstanding
- Adjusted EBITDA was $129.1 million compared to $108.6 million for the full year of 2022, an increase of 18.9%. Adjusted EBITDA margin was 21.1% compared to 19.0% for the full year of 2022
- Cash provided by operating activities was $127.3 million, compared to $39.6 million for the full year of 2022
- Free cash flow was $117.1 million, compared to $29.9 million for the full year of 2022.
Business Outlook
Based on information available as of today, Altair is issuing the following guidance for the first quarter and full year 2024:
(in millions, except %) First Quarter 2024 Full Year 2024 Software Product Revenue $ 152 to $ 155 $ 600 to $ 610 Growth Rate 1.6 % 3.6 % 9.1 % 10.9 % Growth Rate - Constant Currency 0.8 % 2.8 % 8.3 % 10.1 % Total Revenue $ 167 $ 170 $ 663 $ 673 Growth Rate 0.6 % 2.4 % 8.2 % 9.8 % Growth Rate - Constant Currency -0.1 % 1.7 % 7.5 % 9.1 % Net Income $ 8.0 $ 11.0 $ 30.0 $ 37.7 Non-GAAP Net Income $ 29.5 $ 31.7 $ 114.4 $ 120.4 Adjusted EBITDA $ 37 $ 40 $ 143 $ 151 Net Cash Provided by Operating Activities $ 140 $ 148 Free Cash Flow $ 129 $ 137 Conference Call Information What: Altair’s Fourth Quarter and Full Year 2023 Financial Results Conference Call When: Thursday, February 22, 2024 Time: 5 p.m. ET Webcast: http://investor.altair.com (live & replay) Non-GAAP Financial Measures
This press release contains the following non-GAAP financial measures: Non-GAAP Net Income, Non-GAAP Net Income Per Share, Billings, Adjusted EBITDA, Free Cash Flow, Non-GAAP Gross Profit and Non-GAAP Operating Expense.
Altair believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to its financial condition and results of operations. The Company’s management uses these non-GAAP measures to compare the Company’s performance to that of prior periods for trend analysis, for purposes of determining executive and senior management incentive compensation and for budgeting and planning purposes. The Company also believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company’s financial measures with other software companies, many of which present similar non-GAAP financial measures to investors.
Non-GAAP net income excludes stock-based compensation, amortization of intangible assets related to acquisitions, restructuring charges, asset impairment charges, non-cash interest expense, other special items as identified by management and described elsewhere in this press release, and the impact of non-GAAP tax rate to income tax expense, which approximates our tax rate excluding discrete items and other specific events that can fluctuate from period to period.
Non-GAAP diluted common shares includes the diluted weighted average shares outstanding per GAAP regardless of whether the Company is in a loss position.
Billings consists of total revenue plus the change in deferred revenue, excluding deferred revenue from acquisitions.
Adjusted EBITDA represents net income adjusted for income tax expense, interest expense, interest income and other, depreciation and amortization, stock-based compensation expense, restructuring charges, asset impairment charges and other special items as identified by management and described elsewhere in this press release.
Free cash flow consists of cash flow from operations less capital expenditures.
Non-GAAP gross profit represents gross profit adjusted for stock-based compensation expense, restructuring expense and other special items as identified by management and described elsewhere in this press release.
Non-GAAP operating expense represents operating expense excluding stock-based compensation expense, amortization, restructuring charges, asset impairment charges and other special items as identified by management and described elsewhere in this press release.
Company management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. Altair urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company’s business.
Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables at the end of this release.
About Altair
Altair is a global leader in computational intelligence that provides software and cloud solutions in simulation, high-performance computing (HPC), data analytics and AI. Altair enables organizations across all industries to compete more effectively and drive smarter decisions in an increasingly connected world – all while creating a greener, more sustainable future. For more information, visit https://www.altair.com/.
Cautionary Language Concerning Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, our guidance for the first quarter and full year 2024, our statements regarding our expectations for 2024, and our reconciliations of projected non-GAAP financial measures. These forward-looking statements are made as of the date of this release and are based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,” variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond Altair’s control. Altair’s actual results could differ materially from those stated or implied in our forward-looking statements due to a number of factors, including but not limited to, the risks detailed in Altair’s quarterly and annual reports filed with the Securities and Exchange Commission as well as other documents that may be filed by the Company from time to time with the Securities and Exchange Commission. Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent Altair’s views as of the date of this press release. The Company anticipates that subsequent events and developments will cause its views to change. Altair undertakes no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing Altair’s views as of any date subsequent to the date of this press release.
Media Relations
Altair
Dave Simon
248-614-2400 ext. 332
dls@altair.comInvestor Relations
The Blueshirt Group
Monica Gould
212-871-3927
ir@altair.comALTAIR ENGINEERING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)December 31, (in thousands) 2023 2022 ASSETS CURRENT ASSETS Cash and cash equivalents $ 467,459 $ 316,146 Accounts receivable, net 190,461 170,279 Income tax receivable 16,650 11,259 Prepaid expenses and other current assets 26,053 29,142 Total current assets 700,623 526,826 Property and equipment, net 39,803 37,517 Operating lease right of use assets 30,759 33,601 Goodwill 458,125 449,048 Other intangible assets, net 83,550 107,609 Deferred tax assets 9,955 9,727 Other long-term assets 40,678 40,410 TOTAL ASSETS $ 1,363,493 $ 1,204,738 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Accounts payable $ 8,995 $ 10,434 Accrued compensation and benefits 45,081 42,456 Current portion of operating lease liabilities 8,825 10,396 Other accrued expenses and current liabilities 48,398 56,371 Deferred revenue 131,356 113,081 Current portion of convertible senior notes, net 81,455 — Total current liabilities 324,110 232,738 Convertible senior notes, net 225,929 305,604 Operating lease liabilities, net of current portion 22,625 24,065 Deferred revenue, non-current 32,347 31,379 Other long-term liabilities 47,151 41,216 TOTAL LIABILITIES 652,162 635,002 Commitments and contingencies STOCKHOLDERS’ EQUITY Preferred stock ($0.0001 par value), authorized 45,000 shares, none issued or outstanding — — Common stock ($0.0001 par value) Class A common stock, authorized 513,797 shares, issued and outstanding 55,240 and 52,277 shares as of December 31, 2023 and 2022, respectively 5 5 Class B common stock, authorized 41,203 shares, issued and outstanding 26,814 and 27,745 shares as of December 31, 2023 and 2022, respectively 3 3 Additional paid-in capital 864,135 721,307 Accumulated deficit (130,503 ) (121,577 ) Accumulated other comprehensive loss (22,309 ) (30,002 ) TOTAL STOCKHOLDERS’ EQUITY 711,331 569,736 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,363,493 $ 1,204,738 ALTAIR ENGINEERING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)Three Months Ended
December 31, 2023Year Ended
December 31, 2023(in thousands, except per share data) 2023 2022 2023 2022 Revenue License $ 113,172 $ 107,418 $ 393,144 $ 363,520 Maintenance and other services 42,761 37,535 156,830 142,988 Total software 155,933 144,953 549,974 506,508 Software related services 7,751 7,518 28,032 30,661 Total software and related services 163,684 152,471 578,006 537,169 Client engineering services 6,561 6,469 29,497 28,883 Other 1,258 1,493 5,198 6,169 Total revenue 171,503 160,433 612,701 572,221 Cost of revenue License 3,200 9,111 15,088 20,497 Maintenance and other services 14,340 13,318 56,094 51,946 Total software * 17,540 22,429 71,182 72,443 Software related services 5,655 5,119 21,830 21,858 Total software and related services 23,195 27,548 93,012 94,301 Client engineering services 5,129 5,187 24,450 23,577 Other 849 1,119 4,329 5,011 Total cost of revenue 29,173 33,854 121,791 122,889 Gross profit 142,330 126,579 490,910 449,332 Operating expenses: Research and development * 52,519 51,934 212,645 202,542 Sales and marketing * 43,595 43,539 176,138 163,884 General and administrative * 17,096 18,234 70,887 72,288 Amortization of intangible assets 7,708 8,828 30,851 27,510 Other operating (income) expense, net (1,178 ) (572 ) 146 (9,955 ) Total operating expenses 119,740 121,963 490,667 456,269 Operating income (loss) 22,590 4,616 243 (6,937 ) Interest expense 1,533 1,526 6,116 4,377 Other (income) loss, net (8,794 ) (9,183 ) (18,492 ) 16,899 Income (loss) before income taxes 29,851 12,273 12,619 (28,213 ) Income tax expense 10,176 208 21,545 15,216 Net income (loss) $ 19,675 $ 12,065 $ (8,926 ) $ (43,429 ) Income (loss) per share: Net income (loss) per share attributable to common stockholders, basic $ 0.24 $ 0.15 $ (0.11 ) $ (0.55 ) Net income (loss) per share attributable to common stockholders, diluted $ 0.22 $ 0.14 $ (0.11 ) $ (0.55 ) Weighted average shares outstanding: Weighted average number of shares used in computing net income (loss) per share, basic 81,760 80,266 80,596 79,472 Weighted average number of shares used in computing net income (loss) per share, diluted 88,977 87,498 80,596 79,472 * Amounts include stock-based compensation expense as follows (in thousands):
(Unaudited) Three Months Ended
December 31,Year Ended
December 31,(in thousands) 2023 2022 2023 2022 Cost of revenue – software $ 2,303 $ 2,086 $ 10,095 $ 8,351 Research and development 7,332 9,670 33,842 36,250 Sales and marketing 6,271 7,865 28,376 30,370 General and administrative 3,252 2,642 13,268 9,816 Total stock-based compensation expense $ 19,158 $ 22,263 $ 85,581 $ 84,787 (Unaudited) Three Months Ended
December 31,Year Ended
December 31,(in thousands) 2023 2022 2023 2022 Employee stock-based compensation plans $ 16,688 $ 15,933 $ 73,548 $ 59,555 Post combination expense in connection with acquisitions 2,470 6,330 12,033 25,232 Total stock-based compensation expense $ 19,158 $ 22,263 $ 85,581 $ 84,787 ALTAIR ENGINEERING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)Year Ended December 31, (in thousands) 2023 2022 2021 OPERATING ACTIVITIES: Net loss $ (8,926 ) $ (43,429 ) $ (8,794 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 39,124 35,504 25,644 Amortization of debt discount and issuance costs 1,869 1,792 11,428 Stock-based compensation expense 85,581 84,787 44,549 Deferred income taxes (2,319 ) (4,164 ) (1,502 ) Loss (gain) on mark-to-market adjustment of contingent consideration 5,706 (7,153 ) — Expense on repurchase of convertible senior notes — 16,621 — Other, net 74 387 1,271 Changes in assets and liabilities: Accounts receivable (19,141 ) (34,175 ) (15,645 ) Prepaid expenses and other current assets (1,915 ) 1,014 (9,026 ) Other long-term assets (52 ) 2,852 (6,682 ) Accounts payable (1,878 ) 3,771 (3,857 ) Accrued compensation and benefits 1,783 280 7,761 Other accrued expenses and current liabilities 9,068 (59,463 ) 6,365 Deferred revenue 18,333 40,946 10,111 Net cash provided by operating activities 127,307 39,570 61,623 INVESTING ACTIVITIES: Capital expenditures (10,193 ) (9,648 ) (7,849 ) Payments for acquisition of businesses, net of cash acquired (3,236 ) (134,541 ) (53,983 ) Other investing activities, net (2,423 ) (10,322 ) (650 ) Net cash used in investing activities (15,852 ) (154,511 ) (62,482 ) FINANCING ACTIVITIES: Proceeds from the exercise of common stock options 36,140 3,577 2,262 Proceeds from employee stock purchase plan contributions 7,978 8,976 4,222 Payments for repurchase and retirement of common stock (6,255 ) (19,659 ) — Proceeds from issuance of convertible senior notes, net of underwriters' discounts and commissions — 224,265 — Repurchase of convertible senior notes — (192,422 ) — Payments for issuance costs of convertible senior notes — (1,523 ) — Proceeds from private placement of common stock — — 200,000 Payments on revolving commitment — — (30,000 ) Other financing activities (97 ) (233 ) (537 ) Net cash provided by financing activities 37,766 22,981 175,947 Effect of exchange rate changes on cash, cash equivalents and restricted cash 1,397 (5,094 ) (2,623 ) Net increase (decrease) in cash, cash equivalents and restricted cash 150,618 (97,054 ) 172,465 Cash, cash equivalents and restricted cash at beginning of year 316,958 414,012 241,547 Cash, cash equivalents and restricted cash at end of period $ 467,576 $ 316,958 $ 414,012 Financial Results
The following table provides a reconciliation of Non-GAAP net income and Non-GAAP net income per share – diluted, to net income (loss) and net income (loss) per share – diluted, the most comparable GAAP financial measures:
(Unaudited) Three Months Ended
December 31,Year Ended
December 31,(in thousands, except per share amounts) 2023 2022 2023 2022 Net income (loss) $ 19,675 $ 12,065 $ (8,926 ) $ (43,429 ) Stock-based compensation expense 19,158 22,263 85,581 84,787 Amortization of intangible assets 7,708 8,828 30,851 27,510 Non-cash interest expense 470 467 1,869 1,806 Impact of non-GAAP tax rate(1) (4,261 ) (9,468 ) (13,158 ) (11,346 ) Special adjustments and other(2) (1,659 ) (6,614 ) 2,553 16,272 Non-GAAP net income $ 41,091 $ 27,541 $ 98,770 $ 75,600 Net income (loss) per share, diluted $ 0.22 $ 0.14 $ (0.11 ) $ (0.55 ) Non-GAAP net income per share, diluted $ 0.46 $ 0.31 $ 1.13 $ 0.89 GAAP diluted shares outstanding: 88,977 87,498 80,596 79,472 Non-GAAP diluted shares outstanding: 88,977 87,498 87,642 85,392 (1) The Company uses a non-GAAP effective tax rate of 26%.
(2) The three months ended December 31, 2023, includes a $1.2 million loss from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition and $2.9 million currency gains on acquisition-related intercompany loans. The three months ended December 31, 2022, includes $6.9 million currency gains on acquisition-related intercompany loans and a $0.3 million loss from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. The twelve months ended December 31, 2023, includes a $5.7 million loss from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition and $3.2 million currency gains on acquisition-related intercompany loans. The twelve months ended December 31, 2022, includes $16.6 million expense on repurchase of convertible senior notes, $6.8 million currency losses on acquisition-related intercompany loans, and a $7.2 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition.
The following table provides a reconciliation of Adjusted EBITDA to net income (loss), the most comparable GAAP financial measure:
(Unaudited) Three Months Ended
December 31,Year Ended
December 31,(in thousands) 2023 2022 2023 2022 Net income (loss) $ 19,675 $ 12,065 $ (8,926 ) $ (43,429 ) Income tax expense 10,176 208 21,545 15,216 Stock-based compensation expense 19,158 22,263 85,581 84,787 Interest expense 1,533 1,526 6,116 4,377 Depreciation and amortization 9,853 11,412 39,124 35,504 Special adjustments, interest income and other(1) (6,822 ) (8,733 ) (14,302 ) 12,145 Adjusted EBITDA $ 53,573 $ 38,741 $ 129,138 $ 108,600 (1) The three months ended December 31, 2023, includes a $1.2 million loss from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, $2.9 million currency gains on acquisition-related intercompany loans, and $5.2 million of interest income. The three months ended December 31, 2022, includes $6.9 million currency gains on acquisition-related intercompany loans, a $0.3 million loss from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, and $2.1 million of interest income. The twelve months ended December 31, 2023, includes a $5.7 million loss from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, $3.2 million currency gains on acquisition-related intercompany loans, and $16.9 million of interest income. The twelve months ended December 31, 2022, includes $16.6 million expense on repurchase of convertible senior notes, $6.8 million currency losses on acquisition-related intercompany loans, a $7.2 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, and $4.1 million of interest income.
The following table provides a reconciliation of Free Cash Flow to net cash provided by operating activities, the most comparable GAAP financial measure:
(Unaudited) Three Months Ended
December 31,Year Ended
December 31,(in thousands) 2023 2022 2023 2022 Net cash provided by operating activities(1) $ 21,651 $ 13,036 $ 127,307 $ 39,570 Capital expenditures (2,311 ) (2,927 ) (10,193 ) (9,648 ) Free Cash Flow(1) $ 19,340 $ 10,109 $ 117,114 $ 29,922 (1) The twelve months ended December 31, 2022, includes a $65.9 million payment in January 2022 for a damages judgment assumed as part of an acquisition in 2021.
The following table provides a reconciliation of Non-GAAP gross profit to gross profit, the most comparable GAAP financial measure, and a comparison of Non-GAAP gross margin (Non-GAAP gross profit as a percentage of total revenue) to gross margin (gross profit as a percentage of total revenue), the most comparable GAAP financial measure:
(Unaudited) Three Months Ended
December 31, 2023Year Ended
December 31,(in thousands) 2023 2022 2023 2022 Gross profit $ 142,330 $ 126,579 $ 490,910 $ 449,332 Stock-based compensation expense 2,303 2,086 10,095 8,351 Non-GAAP gross profit $ 144,633 $ 128,665 $ 501,005 $ 457,683 Gross profit margin 83.0 % 78.9 % 80.1 % 78.5 % Non-GAAP gross margin 84.3 % 80.2 % 81.8 % 80.0 % The following table provides a reconciliation of Non-GAAP operating expense to Total operating expense, the most comparable GAAP financial measure:
(Unaudited) Three Months Ended
December 31, 2023Year Ended
December 31,(in thousands) 2023 2022 2023 2022 Total operating expense $ 119,740 $ 121,963 $ 490,667 $ 456,269 Stock-based compensation expense (16,855 ) (20,177 ) (75,486 ) (76,436 ) Amortization (7,708 ) (8,828 ) (30,851 ) (27,510 ) (Gain) loss on mark-to-market adjustment of contingent consideration (1,212 ) (329 ) (5,706 ) 7,153 Non-GAAP operating expense $ 93,965 $ 92,629 $ 378,624 $ 359,476 The following table provides a reconciliation of Billings to revenue, the most comparable GAAP financial measure:
(Unaudited) Three Months Ended
December 31,Year Ended
December 31,(in thousands) 2023 2022 2023 2022 Revenue $ 171,503 $ 160,433 $ 612,701 $ 572,221 Ending deferred revenue 163,703 144,460 163,703 144,460 Beginning deferred revenue (138,933 ) (116,540 ) (144,460 ) (106,032 ) Deferred revenue acquired (149 ) (449 ) (149 ) (3,047 ) Billings $ 196,124 $ 187,904 $ 631,795 $ 607,602 The following table provides revenue, Billings and Adjusted EBITDA on a constant currency basis:
(Unaudited) Three Months Ended
December 31, 2023Three Months Ended December 31, 2022 Increase/
(Decrease) %(in thousands) As reported Currency changes As adjusted for constant currency As reported As reported As adjusted for constant currency Software revenue $ 155.9 $ (1.3 ) $ 154.6 $ 145.0 7.6 % 6.7 % Total revenue $ 171.5 $ (1.5 ) $ 170.0 $ 160.4 6.9 % 6.0 % Billings $ 196.1 $ (1.4 ) $ 194.7 $ 187.9 4.4 % 3.6 % Adjusted EBITDA $ 53.6 $ 0.3 $ 53.9 $ 38.7 38.3 % 39.1 % (Unaudited) Year Ended
December 31, 2023Year Ended December 31, 2022 Increase/
(Decrease) %(in thousands) As reported Currency changes As adjusted for constant currency As reported As reported As adjusted for constant currency Software revenue $ 550.0 $ 6.4 $ 556.4 $ 506.5 8.6 % 9.8 % Total revenue $ 612.7 $ 6.6 $ 619.3 $ 572.2 7.1 % 8.2 % Billings $ 631.8 $ 5.1 $ 636.9 $ 607.6 4.0 % 4.8 % Adjusted EBITDA $ 129.1 $ 5.2 $ 134.3 $ 108.6 18.9 % 23.7 % Change in Classification of Indirect Costs
Beginning in the first quarter of 2023, the Company refined its classification of certain indirect costs to reflect the way management is now reviewing the information in decision making and to improve comparability with peers. These indirect costs include certain IT, facilities, and depreciation expenses that were previously reported primarily in General and administrative expense. These indirect costs have now been reclassified to Research and development, Sales and marketing, and General and administrative expenses based on global headcount. Management believes this refined methodology better reflects the nature of the costs and financial performance of the Company.
As a result, the Company’s consolidated statements of operations have been recast for prior periods presented to reflect the effects of the changes to Research and development, Sales and marketing, and General and administrative expense. There was no net impact to total operating expenses, income from operations, net income or net income per share for any periods presented. The consolidated balance sheets, consolidated statements of comprehensive income, consolidated statements of changes in stockholders’ equity, and the consolidated statements of cash flows were not affected by changes in the presentation of these costs.
Each prior period that will be presented in the forthcoming Form 10-Q and Form 10-K filings will be recast to conform to current period presentation. The following tables provide the relevant financial results as previously reported, as recast for the current period and forthcoming filings, and the associated impacts of the changes. Within these tables, the references to periods such as “FY 2021” and “Q1 2022” refer to the corresponding periods as reported in the applicable Form 10-K, Form 10-Q, or Form 8-K filings.
The following table summarizes the changes made to the consolidated statements of operations (in thousands):
Previously Reported FY 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022 Operating expenses: Research and development $ 151,049 $ 43,094 $ 46,477 $ 48,781 $ 47,511 $ 185,863 Sales and marketing 132,750 35,682 39,116 39,244 41,203 155,245 General and administrative 91,500 23,569 24,367 24,677 24,993 97,606 Amortization of intangible assets 18,357 5,903 6,208 6,571 8,828 27,510 Other operating income, net (3,482 ) (781 ) (5,767 ) (2,835 ) (572 ) (9,955 ) Total operating expenses $ 390,174 $ 107,467 $ 110,401 $ 116,438 $ 121,963 $ 456,269 Recast FY 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022 Operating expenses: Research and development $ 167,341 $ 47,079 $ 50,437 $ 53,092 $ 51,934 $ 202,542 Sales and marketing 141,484 37,840 41,153 41,352 43,539 163,884 General and administrative 66,474 17,426 18,370 18,258 18,234 72,288 Amortization of intangible assets 18,357 5,903 6,208 6,571 8,828 27,510 Other operating income, net (3,482 ) (781 ) (5,767 ) (2,835 ) (572 ) (9,955 ) Total operating expenses $ 390,174 $ 107,467 $ 110,401 $ 116,438 $ 121,963 $ 456,269 Change FY 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022 Operating expenses: Research and development $ 16,292 $ 3,985 $ 3,960 $ 4,311 $ 4,423 $ 16,679 Sales and marketing 8,734 2,158 2,037 2,108 2,336 8,639 General and administrative (25,026 ) (6,143 ) (5,997 ) (6,419 ) (6,759 ) (25,318 ) Amortization of intangible assets — — — — — — Other operating income, net — — — — — — Total operating expenses $ — $ — $ — $ — $ — $ — Business Outlook
The following table provides a reconciliation of projected Non-GAAP net income to projected net income, the most comparable GAAP financial measure:
(Unaudited) Three Months Ending
March 31, 2024Year Ending
December 31, 2024(in thousands) Low High Low High Net income $ 8,000 $ 11,000 $ 30,000 $ 37,700 Stock-based compensation expense 18,900 18,900 74,500 74,500 Amortization of intangible assets 7,400 7,400 28,800 28,800 Non-cash interest expense 500 500 1,500 1,500 Impact of non-GAAP tax rate(1) (5,300 ) (6,100 ) (20,400 ) (22,100 ) Non-GAAP net income $ 29,500 $ 31,700 $ 114,400 $ 120,400 (1) The Company uses a non-GAAP effective tax rate of 25%.
The following table provides a reconciliation of projected Adjusted EBITDA to projected net income, the most comparable GAAP financial measure:(Unaudited) Three Months Ending
March 31, 2024Year Ending
December 31, 2024(in thousands) Low High Low High Net income $ 8,000 $ 11,000 $ 30,000 $ 37,700 Income tax expense 4,500 4,500 17,700 18,000 Stock-based compensation expense 18,900 18,900 74,500 74,500 Interest (income) expense, net (3,900 ) (3,900 ) (16,600 ) (16,600 ) Depreciation and amortization 9,500 9,500 37,400 37,400 Adjusted EBITDA $ 37,000 $ 40,000 $ 143,000 $ 151,000 The following table provides a reconciliation of projected Free Cash Flow to projected net cash provided by operating activities, the most comparable GAAP financial measure:
(Unaudited) Year Ending
December 31, 2024(in thousands) Low High Net cash provided by operating activities $ 140,000 $ 148,000 Capital expenditures (11,000 ) (11,000 ) Free cash flow $ 129,000 $ 137,000