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Altair Announces Second Quarter 2023 Financial Results
Источник: Nasdaq GlobeNewswire / 03 авг 2023 16:05:02 America/New_York
TROY, Mich., Aug. 03, 2023 (GLOBE NEWSWIRE) -- Altair (Nasdaq: ALTR), a global leader in computational science and artificial intelligence, today released its financial results for the second quarter and six months ended June 30, 2023.
“Altair had a solid second quarter of 2023, with software product revenue and total revenue above the high end of guidance,” said James Scapa, founder, chairman and chief executive officer of Altair. “Our Q2 performance aligns well with our guidance for the full year and demonstrates our continued success and strength.”
“We’re pleased with the outperformance we’ve seen in the first half of the year,” said Matt Brown, chief financial officer of Altair. “Our strong first half has been fueled by growth across a number of verticals and particularly in aerospace, defense, technology, and automotive, where demand for our products is robust.”
Second Quarter 2023 Financial Highlights
- Software product revenue was $125.3 million compared to $116.9 million for the second quarter of 2022, an increase of 7.2% in reported currency and 9.4% in constant currency
- Total revenue was $141.2 million compared to $132.7 million for the second quarter of 2022, an increase of 6.4% in reported currency and 8.4% in constant currency
- Net loss was $(22.3) million compared to net loss of $(33.8) million for the second quarter of 2022. Net loss per share, diluted was $(0.28) based on 80.0 million diluted weighted average common shares outstanding, compared to net loss per share, diluted of $(0.43) for the second quarter of 2022, based on 78.9 million diluted weighted average common shares outstanding. Net loss margin was -15.8% compared to net loss margin of -25.5% for the second quarter of 2022
- Non-GAAP net income was $13.2 million, compared to non-GAAP net income of $10.9 million for the second quarter of 2022, an increase of 21.6%. Non-GAAP net income per share, diluted was $0.15 based on 88.4 million non-GAAP diluted common shares outstanding, compared to non-GAAP net income per share, diluted of $0.13 for the second quarter of 2022, based on 86.3 million non-GAAP diluted common shares outstanding
- Adjusted EBITDA was $17.1 million compared to $16.4 million for the second quarter of 2022, an increase of 3.7%. Adjusted EBITDA margin was 12.1% compared to 12.4% for the second quarter of 2022
- Cash provided by operating activities was $30.0 million, compared to $12.3 million for the second quarter of 2022
- Free cash flow was $25.6 million, compared to $11.0 million for the second quarter of 2022.
Business Outlook
Based on information available as of today, Altair is issuing the following guidance for the third quarter and full year 2023:
(in millions, except %) Third Quarter 2023 Full Year 2023 Software Product Revenue $ 111 to $ 113 $ 548 to $ 558 Growth Rate 7.0 % 8.9 % 8.2 % 10.2 % Growth Rate - Constant Currency 5.8 % 7.7 % 9.1 % 11.0 % Total Revenue $ 126 $ 128 $ 611 $ 621 Growth Rate 5.6 % 7.2 % 6.8 % 8.5 % Growth Rate - Constant Currency 4.4 % 6.1 % 7.5 % 9.3 % Net Loss $ (22.8 ) $ (20.9 ) $ (15.3 ) $ (5.6 ) Non-GAAP Net Income $ 2.9 $ 4.4 $ 89.9 $ 97.3 Adjusted EBITDA $ 3 $ 5 $ 119 $ 129 Net Cash Provided by Operating Activities $ 120 $ 128 Free Cash Flow $ 108 $ 116 The following table provides a reconciliation of Full Year 2023 guidance to the last guidance provided in May:
(Unaudited) Full Year 2023 (in millions) Midpoint of
Guidance in
MayIncrease/
(Decrease)Currency
Fluctuations
from Prior
GuidanceMidpoint of
Guidance in
AugustSoftware Product Revenue $ 556.0 $ — $ (3.0 ) $ 553.0 Total Revenue $ 619.0 $ — $ (3.0 ) $ 616.0 Adjusted EBITDA $ 125.0 $ — $ (1.0 ) $ 124.0 Conference Call Information What: Altair’s Second Quarter 2023 Financial Results Conference Call When: Thursday, August 3, 2023 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 science and artificial intelligence (AI) 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. To learn more, please visit 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 third quarter and full year 2023, our statements regarding our expectations for 2023, 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 June 30, 2023 December 31, 2022 (In thousands) (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 418,338 $ 316,146 Accounts receivable, net 124,260 170,279 Income tax receivable 14,505 11,259 Prepaid expenses and other current assets 29,678 29,142 Total current assets 586,781 526,826 Property and equipment, net 39,107 37,517 Operating lease right of use assets 30,284 33,601 Goodwill 453,093 449,048 Other intangible assets, net 94,642 107,609 Deferred tax assets 8,183 9,727 Other long-term assets 43,717 40,410 TOTAL ASSETS $ 1,255,807 $ 1,204,738 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $ 4,682 $ 10,434 Accrued compensation and benefits 35,951 42,456 Current portion of operating lease liabilities 9,557 10,396 Other accrued expenses and current liabilities 66,044 56,371 Deferred revenue 121,853 113,081 Current portion of convertible senior notes, net 81,161 — Total current liabilities 319,248 232,738 Convertible senior notes, net 225,320 305,604 Operating lease liabilities, net of current portion 21,337 24,065 Deferred revenue, non-current 26,694 31,379 Other long-term liabilities 42,993 41,216 TOTAL LIABILITIES 635,592 635,002 Commitments and contingencies STOCKHOLDERS’ EQUITY: Preferred stock ($0.0001 par value), authorized 45,000 shares, none issued and outstanding — — Common stock ($0.0001 par value) Class A common stock, authorized 513,797 shares, issued and outstanding 53,951 and 52,277 shares as of June 30, 2023, and December 31, 2022, respectively 5 5 Class B common stock, authorized 41,203 shares, issued and outstanding 27,175 and 27,745 shares as of June 30, 2023, and December 31, 2022 3 3 Additional paid-in capital 790,184 721,307 Accumulated deficit (145,816 ) (121,577 ) Accumulated other comprehensive loss (24,161 ) (30,002 ) TOTAL STOCKHOLDERS’ EQUITY 620,215 569,736 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,255,807 $ 1,204,738 ALTAIR ENGINEERING INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended
June 30,Six Months Ended
June 30,(in thousands, except per share data) 2023 2022 2023 2022 Revenue License $ 87,738 $ 82,688 $ 200,147 $ 188,857 Maintenance and other services 37,583 34,205 74,817 68,933 Total software 125,321 116,893 274,964 257,790 Software related services 6,664 7,376 13,764 16,437 Total software and related services 131,985 124,269 288,728 274,227 Client engineering services 8,034 7,047 15,810 15,059 Other 1,142 1,340 2,657 3,151 Total revenue 141,161 132,656 307,195 292,437 Cost of revenue License 3,981 4,120 8,805 8,807 Maintenance and other services 13,639 12,884 28,065 25,603 Total software * 17,620 17,004 36,870 34,410 Software related services 5,308 5,464 10,924 11,499 Total software and related services 22,928 22,468 47,794 45,909 Client engineering services 6,767 5,914 13,391 12,555 Other 1,102 1,141 2,347 2,662 Total cost of revenue 30,797 29,523 63,532 61,126 Gross profit 110,364 103,133 243,663 231,311 Operating expenses: Research and development * 55,277 50,437 108,528 97,516 Sales and marketing * 44,982 41,153 88,474 78,993 General and administrative * 18,622 18,370 36,573 35,796 Amortization of intangible assets 7,625 6,208 15,439 12,111 Other operating expense (income), net 127 (5,767 ) 5,732 (6,548 ) Total operating expenses 126,633 110,401 254,746 217,868 Operating (loss) income (16,269 ) (7,268 ) (11,083 ) 13,443 Interest expense 1,528 700 3,054 1,285 Other (income) expense, net (4,195 ) 21,907 (7,808 ) 23,975 Loss before income taxes (13,602 ) (29,875 ) (6,329 ) (11,817 ) Income tax expense 8,678 3,899 17,910 10,429 Net loss $ (22,280 ) $ (33,774 ) $ (24,239 ) $ (22,246 ) Loss per share: Net loss per share attributable to common stockholders, basic and diluted $ (0.28 ) $ (0.43 ) $ (0.30 ) $ (0.28 ) Weighted average shares outstanding: Weighted average number of shares used in computing net loss per share, basic and diluted 79,986 78,948 80,088 79,204 * Amounts include stock-based compensation expense as follows (in thousands):
(Unaudited) Three Months Ended
June 30,Six Months Ended
June 30,(in thousands) 2023 2022 2023 2022 Cost of revenue – software $ 2,572 $ 2,030 $ 5,324 $ 3,933 Research and development 9,943 8,979 18,686 16,337 Sales and marketing 7,581 7,664 15,172 14,699 General and administrative 3,640 2,527 6,715 4,845 Total stock-based compensation expense $ 23,736 $ 21,200 $ 45,897 $ 39,814 (Unaudited) Three Months Ended
June 30,Six Months Ended
June 30,(in thousands) 2023 2022 2023 2022 Employee stock-based compensation plans $ 19,189 $ 14,873 $ 37,673 $ 28,132 Post combination expense in connection with acquisitions 4,547 6,327 8,224 11,682 Total stock-based compensation expense $ 23,736 $ 21,200 $ 45,897 $ 39,814 ALTAIR ENGINEERING INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited) Six Months Ended June 30, (In thousands) 2023 2022 OPERATING ACTIVITIES: Net loss $ (24,239 ) $ (22,246 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 19,488 15,819 Stock-based compensation expense 45,897 39,814 Amortization of debt issuance costs 930 829 Deferred income taxes 2,015 (64 ) Loss (gain) on mark-to-market adjustment of contingent consideration 7,987 (5,304 ) Expense on repurchase of convertible senior notes — 16,621 Other, net 405 229 Changes in assets and liabilities: Accounts receivable, net 45,077 29,270 Prepaid expenses and other current assets (3,166 ) 2,056 Other long-term assets (2,516 ) 4,397 Accounts payable (5,529 ) (2,070 ) Accrued compensation and benefits (6,591 ) (9,742 ) Other accrued expenses and current liabilities 4,857 (61,648 ) Deferred revenue 4,614 10,080 Net cash provided by operating activities 89,229 18,041 INVESTING ACTIVITIES: Capital expenditures (6,184 ) (3,457 ) Payments for acquisition of businesses, net of cash acquired (721 ) (37,660 ) Other investing activities, net (1,452 ) (322 ) Net cash used in investing activities (8,357 ) (41,439 ) FINANCING ACTIVITIES: Proceeds from the exercise of common stock options 23,507 1,689 Payments for repurchase and retirement of common stock (6,255 ) (4,387 ) Proceeds from employee stock purchase plan contributions 3,797 4,431 Proceeds from issuance of convertible senior notes, net of discounts and commissions — 224,265 Repurchase of convertible senior notes — (192,792 ) Payments of debt issuance costs — (1,157 ) Other financing activities (48 ) (131 ) Net cash provided by financing activities 21,001 31,918 Effect of exchange rate changes on cash, cash equivalents and restricted cash (44 ) (6,226 ) Net increase in cash, cash equivalents and restricted cash 101,829 2,294 Cash, cash equivalents and restricted cash at beginning of year 316,958 414,012 Cash, cash equivalents and restricted cash at end of period $ 418,787 $ 416,306 Financial Results
The following table provides a reconciliation of Non-GAAP net income and Non-GAAP net income per share – diluted, to net loss and net loss per share – diluted, the most comparable GAAP financial measures:
(Unaudited) Three Months Ended
June 30,Six Months Ended
June 30,(in thousands, except per share amounts) 2023 2022 2023 2022 Net loss $ (22,280 ) $ (33,774 ) $ (24,239 ) $ (22,246 ) Stock-based compensation expense 23,736 21,200 45,897 39,814 Amortization of intangible assets 7,625 6,208 15,439 12,111 Non-cash interest expense 465 422 930 839 Impact of non-GAAP tax rate(1) 4,033 79 2,100 (4,957 ) Special adjustments and other(2) (361 ) 16,737 4,870 18,229 Non-GAAP net income $ 13,218 $ 10,872 $ 44,997 $ 43,790 Net loss per share, diluted $ (0.28 ) $ (0.43 ) $ (0.30 ) $ (0.28 ) Non-GAAP net income per share, diluted $ 0.15 $ 0.13 $ 0.51 $ 0.51 GAAP diluted shares outstanding 79,986 78,948 80,088 79,204 Non-GAAP diluted shares outstanding 88,383 86,281 88,735 86,516 (1) The Company uses a non-GAAP effective tax rate of 26%. (2) The three months ended June 30, 2023, includes $1.0 million loss from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition and $1.3 million currency gains on acquisition-related intercompany loans. The three months ended June 30, 2022, includes $16.6 million expense on repurchase of convertible senior notes, $5.4 million currency losses on acquisition-related intercompany loans, and a $5.3 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. The six months ended June 30, 2023, includes $8.0 million loss from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition and $3.1 million currency gains on acquisition-related intercompany loans. The six months ended June 30, 2022, includes $16.6 million expense on repurchase of convertible senior notes, $6.9 million currency losses on acquisition-related intercompany loans and a $5.3 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 loss, the most comparable GAAP financial measure:
(Unaudited) Three Months Ended
June 30,Six Months Ended
June 30,(in thousands) 2023 2022 2023 2022 Net loss $ (22,280 ) $ (33,774 ) $ (24,239 ) $ (22,246 ) Income tax expense 8,678 3,899 17,910 10,429 Stock-based compensation expense 23,736 21,200 45,897 39,814 Interest expense 1,528 700 3,054 1,285 Depreciation and amortization 9,738 8,133 19,488 15,819 Special adjustments, interest income and other(1) (4,344 ) 16,282 (1,999 ) 17,929 Adjusted EBITDA $ 17,056 $ 16,440 $ 60,111 $ 63,030 (1) The three months ended June 30, 2023, includes $1.0 million loss from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, $4.0 million of interest income, and $1.3 million currency gains on acquisition-related intercompany loans. The three months ended June 30, 2022, includes $16.6 million expense on repurchase of convertible senior notes, $5.4 million currency losses on acquisition-related intercompany loans, and a $5.3 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. The six months ended June 30, 2023, includes $8.0 million loss from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, $6.9 million of interest income, and $3.1 million currency gains on acquisition-related intercompany loans. The six months ended June 30, 2022, includes $16.6 million expense on repurchase of convertible senior notes, $6.9 million currency losses on acquisition-related intercompany loans and a $5.3 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. 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
June 30,Six Months Ended
June 30,(in thousands) 2023 2022 2023 2022 Net cash provided by operating activities(1) $ 30,030 $ 12,255 $ 89,229 $ 18,041 Capital expenditures (4,457 ) (1,267 ) (6,184 ) (3,457 ) Free cash flow(1) $ 25,573 $ 10,988 $ 83,045 $ 14,584 (1) The six months ended June 30, 2022, includes a $65.9 million payment in January 2022 for a damages judgement assumed as part of an acquisition in December 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
June 30,Six Months Ended
June 30,(in thousands) 2023 2022 2023 2022 Gross profit $ 110,364 $ 103,133 $ 243,663 $ 231,311 Stock-based compensation expense 2,572 2,030 5,324 3,933 Non-GAAP gross profit $ 112,936 $ 105,163 $ 248,987 $ 235,244 Gross profit margin 78.2 % 77.7 % 79.3 % 79.1 % Non-GAAP gross margin 80.0 % 79.3 % 81.1 % 80.4 % 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
June 30,Six Months Ended
June 30,(in thousands) 2023 2022 2023 2022 Total operating expense $ 126,633 $ 110,401 $ 254,746 $ 217,868 Stock-based compensation expense (21,164 ) (19,170 ) (40,573 ) (35,881 ) Amortization (7,625 ) (6,208 ) (15,439 ) (12,111 ) (Loss) gain on mark-to-market adjustment of contingent consideration (981 ) 5,304 (7,987 ) 5,304 Non-GAAP operating expense $ 96,863 $ 90,327 $ 190,747 $ 175,180 The following table provides a reconciliation of Billings to revenue, the most comparable GAAP financial measure:
(Unaudited) Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2023 2022 2023 2022 Revenue $ 141,161 $ 132,656 $ 307,195 $ 292,437 Ending deferred revenue 148,547 112,926 148,547 112,926 Beginning deferred revenue (141,943 ) (118,403 ) (144,460 ) (106,032 ) Deferred revenue acquired — (1,756 ) — (2,572 ) Billings $ 147,765 $ 125,423 $ 311,282 $ 296,759 The following table provides revenue, Billings and Adjusted EBITDA on a constant currency basis:
(Unaudited) Three Months Ended
June 30, 2023Three Months
Ended June 30,
2022Increase/
(Decrease) %(in thousands) As reported Currency
changesAs adjusted for
constant currencyAs reported As reported As adjusted for
constant
currencySoftware revenue $ 125.3 $ 2.6 $ 127.9 $ 116.9 7.2 % 9.4 % Total revenue $ 141.2 $ 2.7 $ 143.9 $ 132.7 6.4 % 8.4 % Billings $ 147.8 $ 2.3 $ 150.1 $ 125.4 17.8 % 19.6 % Adjusted EBITDA $ 17.1 $ 1.4 $ 18.5 $ 16.4 3.7 % 12.8 % (Unaudited) Six Months Ended
June 30, 2023Six Months
Ended June 30,
2022Increase/
(Decrease) %(in thousands) As reported Currency
changesAs adjusted for
constant currencyAs reported As reported As adjusted for
constant
currencySoftware revenue $ 275.0 $ 7.9 $ 282.9 $ 257.8 6.7 % 9.7 % Total revenue $ 307.2 $ 8.5 $ 315.7 $ 292.4 5.0 % 7.9 % Billings $ 311.3 $ 8.6 $ 319.9 $ 296.8 4.9 % 7.8 % Adjusted EBITDA $ 60.1 $ 3.8 $ 63.9 $ 63.0 -4.6 % 1.5 % 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 loss, the most comparable GAAP financial measure:
(Unaudited) Three Months Ending
September 30, 2023Year Ending
December 31, 2023(in thousands) Low High Low High Net loss $ (22,800 ) $ (20,900 ) $ (15,300 ) $ (5,600 ) Stock-based compensation expense 18,200 18,200 82,200 82,200 Amortization of intangible assets 7,600 7,600 30,400 30,400 Non-cash interest expense 500 500 1,800 1,800 Impact of non-GAAP tax rate(1) (600 ) (1,000 ) (14,100 ) (16,400 ) Special adjustments and other(2) — — 4,900 4,900 Non-GAAP net income $ 2,900 $ 4,400 $ 89,900 $ 97,300 (1) The Company uses a non-GAAP effective tax rate of 26%. (2) The year ending December 31, 2023, includes $8.0 million loss from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition and $3.1 million currency gains on acquisition-related intercompany loans. The following table provides a reconciliation of projected Adjusted EBITDA to projected net loss, the most comparable GAAP financial measure:
(Unaudited) Three Months Ending
September 30, 2023Year Ending
December 31, 2023(in thousands) Low High Low High Net loss $ (22,800 ) $ (20,900 ) $ (15,300 ) $ (5,600 ) Income tax expense 400 500 17,500 17,800 Stock-based compensation expense 18,200 18,200 82,200 82,200 Interest (income) expense (2,500 ) (2,500 ) (9,000 ) (9,000 ) Depreciation and amortization 9,700 9,700 38,700 38,700 Special adjustments and other(1) — — 4,900 4,900 Adjusted EBITDA $ 3,000 $ 5,000 $ 119,000 $ 129,000 (1) The year ending December 31, 2023, includes $8.0 million loss from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition and $3.1 million currency gains on acquisition-related intercompany loans. 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, 2023(in thousands) Low High Net cash provided by operating activities $ 120,200 $ 128,200 Capital expenditures (12,200 ) (12,200 ) Free cash flow $ 108,000 $ 116,000