day, and thank you for standing by. Welcome to the Altair Engineering Third Quarter 2021 Earnings Conference Call. At this time, all participants are in listen-only mode. After the presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star then one on your telephone keypad. Please be advised that today's conference may be recorded. If you require operator assistance during the call, please press star then zero. I'll now hand the conference over to your host today, Dave Simon, Chief Administrative Officer. Good afternoon. Welcome and thank you for attending Altair's Earnings Conference Call for the Third Quarter of 2021, ended September 30th, 2021. I'm Dave Simon, Chief Administrative Officer of Altair. With me on the call are Jim Scapa, Founder, Chairman, and CEO, and Matt Brown, Chief Financial Officer. After market close today, we issued a press release with details regarding our third quarter performance and guidance for the fourth quarter and the full year 2021, which can be accessed in the investor relations section of our website at investor.altair.com. This call is being recorded, and a replay will be available on the IR section of our website following the conclusion of this call. During today's call, we will make statements related to our business that may be considered forward-looking under federal securities laws. These statements reflect our views only as of today and should not be considered representative of our views as of any subsequent date. We disclaim any obligation to update any forward-looking statements or outlook. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from our expectations. These risks are summarized in the press release that we issued earlier today. For a fuller discussion of the material risks and other important factors that could affect our actual results, please refer to those contained in our quarterly and annual reports filed with the SEC, as well as other documents that we have filed or may file from time to time. During the course of today's call, we will refer to certain non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in our press release. Finally, at times in our prepared comments or responses to your questions, we may offer metrics that are incremental to our usual presentation to provide greater insight into the dynamics of our business or our quarterly results. Please be advised that we may or may not continue to provide this additional detail in the future. With that, let me turn the call over to Jim for his prepared remarks. Jim? Thank you, Dave, and welcome to everyone on the call. Altair had a strong third quarter 2021 with across-the-board momentum as customers invest for growth. Altair's products, services, and business models are clearly providing value, and we continue to increase our market share. We are pleased to report Q3 results with total revenue of $121.3 million. Software product revenue for the quarter was $102.3 million versus $87.8 million in Q3 of 2020, resulting in year-on-year software product revenue growth of 16.5%. Adjusted EBITDA was $14.8 million compared to $8.2 million in Q3 of 2020, an increase of more than 81% from the third quarter of 2020. All were above our guidance ranges. Software product revenue for the first nine months of 2021 continued a strong positive trend at 84.7% of total revenue compared to 82.6% during the first nine months of 2020. Our recurring software license rate remained high at 90% for the third quarter of 2021 and 91% year to date. To build awareness for our products throughout our target markets globally, we launched a series of virtual conferences. Registration and engagement numbers have been impressive, with more than 30,000 people signing up to attend. Attendees learned about technical trends and innovative use cases employing our solutions from a number of leading industry and academic guest speakers. Our response to these events has been overwhelmingly positive, and we are excited about the opportunities created. Positive growth trends for our business persist across verticals, technologies, and regions. Today, I will talk about new product releases, including an exciting new offering for electronics designers, our acquisition of S-FRAME in the AEC vertical, our just-released Corporate Social Responsibility report, and some customer successes. One area of ongoing customer success is the conversion of data analytics customers from traditional named-user licensing to Altair Units. A long-term perpetually licensed data preparation customer in the financial industry was recently converted to a six-figure annual subscription contract to deploy data analytics and visualization throughout their organization via Knowledge Studio and Panopticon. We continue to evolve our product portfolio with a combination of sustaining and disruptive innovations. Recently announced the 2021.2 product update. The 2021.2 release of Inspire, our Simulation-Driven Design platform, includes a large number of features, including a Python API, new geometry tools, and optimization algorithms for minimizing 3D printing time. SmartWorks 21.2 is a modern evolution of our desktop tools to harness the power of AI, analytics, and the Internet of Things in a cloud-native platform built on the experience we have gained in data analytics and smart product development. It's built from the ground up using the latest in open-source technologies to be performant, scalable, collaborative, and secure. We've been able to build on top of today's best component technologies, including Kubernetes and an event-driven microservices architecture. We leverage robust standardized interfaces like REST, OpenAPI, and GraphQL. Security is inherent in the platform design, and we provide native support for big data engines, GPUs, and open-source data processing. The SmartWorks platform is edge-optimized to accelerate development at the edge and includes tools that help build, manage, and scale automation and intelligence. The management console helps to assemble, deploy, monitor, and continuously improve applications at the edge. SmartWorks enables a contextual digital twin of entities in the applications universe and automatically gives internal automation and external applications secure interfaces to access those entities. As an example of the power of our IoT solutions, we announced the launch of Toggled iQ. This offering leverages the SmartWorks platform and stems from our experience in LED lighting, and is part of the transformation of that business toward a software focus. Toggled iQ helps businesses optimize their building environments by streamlining operations, improving energy efficiency, saving money, and reducing their carbon footprint through the connection of smart connected lighting with wireless sensors, controls, and intuitive analytics. Last month, Altair announced an offering of a free edition of Altair PollEx, our electronic system design software tool for the Altium user community to allow printed circuit board designers on-demand access to all the tools they need in one workspace. This unique edition of Altair PollEx makes board-level simulation and design verification features seamlessly accessible to Altium Designer users. We are excited to provide Altium users the ability to identify and correct errors before circuit boards receive sign-off and enter production, and we plan to explore similar versions for other ECAD vendors. The power of PollEx is gaining excellent momentum, including a recent six-figure win in aerospace, in addition to driving important growth in the semiconductor and automotive industries. Applications in automotive include power electronics, sensors, and ADAS systems. The 2021.2 update of FluxMotor, an exciting solution for electronic motor design across transportation and other industries, includes added transient thermal computation abilities and improved representation of solid conductors to simulate winding AC power losses. We believe the breadth of our manufacturing simulation offering continues to distinguish Altair as the leading player for modeling and simulation of production processes. Among the many new capabilities added, we recently launched a new Solver and Environment to simulate binder jet additive manufacturing, and a new release of Inspire Cast, where users can now predict thermomechanical stresses and warpage during solidification. Altair recently announced the acquisition of S-FRAME, an innovator for more than 30 years with integrated solutions to analyze, design, and detail architectural and civil structures constructed from steel, concrete, composites, and timber. S-FRAME's structural analysis and support for civil engineering codes across many countries and regions, together with Altair's state-of-the-art simulation and optimization technology, will allow architects and civil engineers to innovate and bring their visions to life while adhering to local code requirements. In addition to S-FRAME's technology, we brought on board a great technical team. They have quickly integrated into Altair and are making an impact on how we package, position, and develop solutions for the architecture, engineering, and construction, or AEC market, which according to some data, will be one of the fastest-growing segments of the PLM market, with a 14.7% CAGR to $11 billion in 2025. In the third quarter, Altair was awarded a significant contract in EMEA for the optimization of railway stations and other infrastructure. This project requires multiple material families to be addressed, including steel, concrete, and soil, and we believe it can be a significant driver toward more innovation and sustainable building practices. Last month, we published our first Corporate Social Responsibility, or CSR report. At Altair, we have always worked hard to do the right things, which has created a unique workplace. For over 30 years, we have defined Altair's culture as one of innovation, where we envision the future, communicate honestly and broadly, seek technology and business firsts, and embrace diversity and risk-taking. We achieved much success by staying true to who we are, and this has translated to success for our employees, customers, partners, and shareholders, while also helping us contribute to a more sustainable future. We look at our CSR report as a living document, and we'll update it regularly. Aligned with our CSR focus, we are delighted to have been recently named one of Newsweek's Top 100 Most Loved Workplaces 2021. We are humbled by this award, but also accept the challenge to get better. We are at an exciting time in our history for our technology, software products, and people. Our ability to have a positive impact on global issues like sustainability, diversity, and increased opportunity for underrepresented groups will continue to grow as we do. We are determined and committed to help the world be a better place. In addition to the Most Loved Workplaces award from Newsweek, a few days ago, Altair was named to Inc.'s first annual list of Best-Led Companies. The selection algorithm included four key areas, performance and value creation, market penetration and customer engagement, talent, and leadership team. Our senior leadership team is intent on achieving success for the company by upholding our Core Cultural Values, and this recognition of their Focus, Effort, and Achievement is a great team win. Our software technology and consulting services are key to designing a healthier and more sustainable future for humanity. OptiStruct usage increased tenfold between 2013 and 2020. As the world's leading tool for material optimization and weight reduction, this continuing trend bodes well for reductions in material usage, fuel consumption, and CO2 emissions, all aligned with the goals of the International Energy Agency and other global organizations. I am truly grateful to the entire Altair team for working so hard to sustain the type of company we can feel proud about being a part of. One newly published customer case study exemplifies that pride. Johnson & Johnson, the world's largest healthcare business and a Fortune 50 company, produces pharmaceuticals, medical devices, and consumer goods that benefit a billion people worldwide. Johnson & Johnson owns Janssen Pharmaceuticals, a company fighting sickness with science. Janssen created the one-dose Johnson & Johnson COVID-19 vaccine that the World Health Organization approved to prevent infection and save lives. This research-driven organization relies on High-Performance Computing, or HPC, to power the discovery and production of effective, broadly available pharmaceuticals. Their HPC solution, including Altair Grid Engine and NavOps, enabled them to scale in the cloud and grow their HPC infrastructure to support critical science and research, including COVID-19 vaccine development. NavOps creates and scales Altair Grid Engine clusters dynamically, allowing Johnson & Johnson to continue innovating. Scalability limits from Janssen's previous configuration were removed with the Altair solution, and their clusters are now running at three times the size of the previous implementation. With increased scalability and improved agility in operations, deployment, and management of HPC infrastructure, the team can perform science on demand with the flexibility to tackle events like COVID-19 at an enterprise level. This is the sort of technology application that keeps us truly excited to keep innovating forward. Altair performed well in the third quarter, and we believe we can carry good momentum through the remainder of the year. Global challenges, including COVID-19 and supply chain issues, remain as negative effects on the macroeconomy, but we remain positive about our ability to help our customers drive more innovation into their products and services. Now I will turn the call over to Matt to provide more details on our financial performance and our guidance for the fourth quarter and full year of 2021. Matt? Thank you, Jim, and hello to everyone on the call. Thank you for joining us. We are extremely pleased with our third quarter 2021 financial results, achieving record high revenue and EBITDA for any third quarter in the company's history. Demand for our products continues to be strong, once again, generating results above the high end of the range on every metric we guided to for the quarter. Total billings for the quarter were $117.2 million, an increase of 8.8% compared to Q3 2020. As with the past couple of quarters, our software billing strength relative to prior year was driven by strong new and expansion opportunities and high retention on our renewal base. Again, we saw broad success across all three geographic regions and across our product offerings. We've continued to enhance the capabilities across our product portfolio with important product releases this quarter in Inspire, SmartWorks, and FluxMotor, and have expanded into the AEC market with the acquisition of S-FRAME, which closed in August. Services and other billings were on track for the quarter, up slightly from Q3 in the prior year. In total, the strength in billings resulted in software product and total revenue exceeding our expectations for the third quarter. Software product revenue was $102.3 million, or an increase of 16.5% compared to Q3 2020. Total revenue, which includes services and other revenue, was $121.3 million, or an increase of 14.0% compared to Q3 2020. Our recurring software license rate, which is the percentage of software product billings that are recurring, continues to be strong at approximately 91% year to date. As a reminder, a significant portion of our revenues are billed in currencies other than the US dollar and are therefore impacted by changes in FX rates. Relative to Q3 2020, our revenues were favorably impacted by changes in FX rates of approximately $1 million during the quarter. Non-GAAP gross margin, which excludes stock-based compensation and restructuring expense, was 75.2% in the third quarter, compared to 73.4% in the prior year, an increase of 180 basis points as our software revenue mix, which carries higher gross margin, increased as a percentage of total revenue. Software revenue was 84.3% of total revenue in Q3 2021, compared to 82.5% in the prior year. Over the long term, we continue to expect a general mix shift toward software product revenue as growth there will outpace services and other revenue. Non-GAAP operating expenses, which excludes stock-based compensation expense, amortization of intangible assets, and restructuring charges, were $77.9 million, compared to $72.4 million in the year ago period. As a reminder, operating expenses in Q3 of last year were impacted by COVID-19 as a result of temporary salary reductions and significantly reduced marketing and travel costs. Adjusted EBITDA in Q3 2021 was $14.8 million or 12.2% of total revenue, compared to $8.2 million or 7.7% in the prior year quarter, an increase of 81.4%. This increase compared to the prior year quarter as well as relative to our expectations, was driven by the increase in revenue in the quarter combined with our disciplined spending. We are now seeing the full benefit and impact of the cost reduction efforts we initiated in Q1 and Q2 of this year. In addition, travel expenses remain significantly below historical levels and below our expectations for the quarter as COVID-19 has continued to impact travel, particularly internationally. I'm extremely pleased with our ability to drive margin expansion and realize growth in Adjusted EBITDA, even outpacing our strong top-line revenue growth. Turning to the balance sheet. We ended the third quarter with $456 million in cash and cash equivalents, an increase of almost $196 million from the prior quarter. The quarter-over-quarter increase is primarily due to the $200 million private placement from Matrix Capital during the quarter, which we announced in late September. Matrix Capital is one of our largest shareholders and we appreciate their vote of confidence and investment in our ongoing success. In addition, free cash flow during the quarter was negative $0.5 million, compared to negative free cash flow of $7.5 million in Q3 2020. As a reminder, our cash flows throughout the year are seasonal in nature, typically with Q1 being our most significant cash flow quarter, followed by Q2. Turning to guidance for Q4 and the full year 2021. For Q4 and full year 2021, we are looking to close out a very strong year on a high note. We are expecting software product revenue for Q4 in the range of $106 million-$109 million, and we're raising the midpoint of our full year 2021 software product revenue guidance to a range of $437 million-$440 million, or a year-over-year growth of 11.6%-12.3%. We continue to expect services and other revenue to be approximately flat in 2021 compared to 2020, consistent with our previous guidance. As a result, we expect total revenue for Q4 2021 in the range of $124 million-$127 million. We are raising the midpoint of our full year 2021 total revenue guidance to a range of $515 million-$518 million, or a year-over-year growth of 9.6%-10.2%. From a cost perspective, we've been successful in our disciplined approach to spending and expect to continue that approach into Q4. In fact, we now expect our overall cost structure to be better than expected just a quarter ago, including travel-related expenses that we had originally anticipated being higher in the second half. For Q4 2021, we expect Adjusted EBITDA in the range of $11 million-$14 million or 8.9%-11.0% of total revenue, compared to $21.7 million or 16.3% of total revenue in the year ago period. For full year 2021, we are raising our Adjusted EBITDA range to $72 million-$75 million or 14.0%-14.5% of total revenue, compared to $57.3 million or 12.2% of total revenue in 2020. We are also raising our full year 2021 free cash flow guidance to a range of $41 million-$44 million. As a reminder, our cash flow expectations are sensitive to billings and collection patterns, which fluctuate seasonally. In particular, our historical pattern has shown free cash inflow in the first half of the year, primarily from collections on billings from Q4 and Q1, and a smaller free cash outflow in the second half of the year. We're expecting that pattern to continue this year. We've provided detailed guidance tables in our earnings press release, including reconciliations to comparable GAAP amounts, which was issued after close of market today. This was another quarter of solid execution by the entire team at Altair, and I couldn't be prouder to be a part of this team. We were once again able to exceed expectations on our top line organic revenue growth by providing the best products and services to our customers and driving margin expansion through our disciplined approach to spending. With that, we'd be happy to take your questions. Operator? Our first question comes from Bhavan Suri with William Blair. Hey, guys. This is Dylan Becker on for Bhavan Suri. Congrats on the quarter here. I guess I wanted to just start. You touched on some of the chip shortage impacts, some COVID, obviously a tight kind of labor environment here. But those kind of seem maybe more near-term in nature relative to some of these kind of transformational R&D projects that you guys kind of support with your simulation capability. I guess the inherent question is trying to get a level, a sense of conservatism here. It sounds like momentum across the business remains strong. But if we look to kind of the Q4 guide, at least from a historical kind of sequential perspective, it seems like there's a nice layer of conservatism there. Matt, you want me to answer this one? Yeah. Why- So, uh- Don't you talk about the macro environment, and then I can talk about the guidance. Yeah. Okay. That sounds fine. I mean, we are seeing that parts of the business are certainly affected by the chip shortage. I think there's no hiding from that. That's a fairly obvious thing. It generally affects a small part of our business on the HPC side a little bit. We just remain a little bit conservative on that. Mostly, that just moves business around, to be honest with you. You know, we guide for the whole year, and we don't do any heroics, if you will, to bring deals into a certain quarter to make it sort of line up with the quarter stuff. We try and be relatively conservative. We wanna hit our numbers, you know, quarter on quarter. In general, we're very bullish and optimistic about, you know, how the business is going, you know, through this year and going forward. I think we're very confident about products, services, you know, where we stand in the market. Yo u know, I think the numbers just speak for themselves. Matt, what do you wanna add to that? Yeah, I mean, only thing I'd add is we've been pretty consistent on our second half guide just heading into this Q3. When we looked at the second half of the year, I'm feeling pretty good about it. In fact, we've taken that outlook up marginally on the top line. Still feeling good about it. I definitely agree with Jim. There's always a little bit of conservatism built in, but overall our outlook is pretty consistent with what we gave last quarter. When it comes to profitability, we're actually taking that up pretty meaningfully, actually. Yeah, we're feeling good about Q3 and the second half in general. Okay. Yeah, that makes sense. I guess maybe one other one too. So now that I guess maybe a quick update too around kind of the conversion to the new units model as we think about, I think maybe we're expecting most of the base to have converted at this point, and we've talked in the past about 2021 focusing on that conversion and maybe not seeing as material kind of uplift from the usage component as customers adapt to the new suites. I guess, how are you thinking about, I know it's early for 2022, but that conversion within the existing base and then the opportunity for further kinda upsell to layer on to kinda some of that software growth as we think about 2022 and beyond? Thanks. Sure. I think most of the traditional customer base has converted. You are correct. From there, we see a lot of opportunity. For example, on the electronics side, some of the manufacturing pieces, a lot of the Inspire technologies, Simulation-Driven Design pieces. We are expecting an uplift, you know, coming off of that going forward on the traditional simulation business. When you get to the data analytics business, we're still working on converting, you know, that user community to the Units model. You know, there's more going on there. It's not just converting to the new Units model, but it's converting to the Units model. We're having a lot of success. The sales organization really gets it now and is very highly motivated. We've had to make some adjustments to, you know, to help customers make that move. As we get more successes underneath us, it's gonna continue to go through next year. Yeah. Okay. Awesome. Thank you, guys. The only thing I'll- Yeah. I'm sorry. Go ahead. Yeah. The only thing I'll add there is the number I think we gave last quarter was that roughly three-quarters of our install base had converted from HyperWorks Units, Altair Units. That number is now in excess of 90% through Q3, and we'll get the rest in Q4. At this point, we're ready to call that substantially complete. Okay. Awesome. Thank you, guys. Thank you. Our next question comes from Ken Wong with Guggenheim Securities. Thanks for taking my question. Just a quick circle up on in terms of how we should be thinking about 4Q. It was a fantastic 3Q quarter. I guess just one wanted to see if there was any kind of pull forward there or if that all largely tracked to plan. On 4Q, just kinda how you guys might be embedding any kind of conservatism. I know someone touched on on just macro in general, but wanted to make sure that we kind of understood the thinking behind the outlook there. Yeah, I mean, our approach really to the second half is I think the best way to look at it. You're never gonna get timing perfect, when we're looking at Q3 and Q4. You know, the main point that we wanna try to get across is our view of the second half is intact and actually marginally more positive as we've made our way through on top line. Yeah, you know, there's gonna be a bit of conservatism in there. Really, I think the message is, look, we're feeling unchanged, somewhat more positive because we're now, you know, halfway through the second half. Nothing more to read into it than that. We've been pretty consistent on our view on the second half for a while now. Got it. One more if I could. You know, another really strong performance in terms of margins. You know, as we kind of look ahead, you know, how are you thinking about this kinda growth versus profitability dynamic? Is there a bias to stay lean or potentially lean into this recent momentum that you guys have seen? Thanks a lot. Yeah. Why don't I take that one, Matt? Yeah, go ahead, Jim. You know, I think we're gonna continue to try and trend in the right direction as far as margins go. You know, we're pretty committed to the goals that we have there. At the same time, it's important for us to invest in the business and we're continuing to look for opportunities to do that. It is an important balance. If you ask the CFO, that's why I wanted to interrupt Matt. You know, I think he tends to lean one way. I think we're gonna continue to have a balance and, I mean, you can see the numbers are really trending, you know, in a very positive way for us. Go ahead, Matt. Give them your answer. Thanks, Jim. Oh, the only thing I was gonna mention, and I can just add there, is. Yes, you know, absolutely investing for growth, both in product development and in sales. But what we're trying to do, and we've been consistent in this message as well, is we're gonna try to grow profit faster even than revenue, and we'll be able to do that by just continuing to grow revenue faster than expenses. It's not a complicated formula, but it's a formula that's been working here, and we're gonna continue to try to do that. Great. Thanks for the insight, guys. Our next question comes from Jackson Ader with JP Morgan. Great. Good evening, guys. Thanks. My question, Jim, on the HPC impacts for the chip shortage, could we just go into a little bit more detail on, you know, what are those constraints actually causing the lower activity? Is it because inventory is sitting around? Is it because the end customers just, you know, don't have the same kind of cash 'cause they're not, you know, generating the revenue that they thought they would be? What is the main driver there, just so we're clear? I think the main drag there has to do with computing shipments. You know, a lot of the new business is tied into shipping of new computers and particularly, you know, really big iron types of machines where our software, you know, gets installed to do, you know, all the workload and workflow management. You know, if equipment is delayed by, you know, 45 days or whatever, you know, the install of the software goes in later. The good news is that we're seeing really robust demand for all that. But the bad news is that, you know, that there is some, you know, some impact there. You know, I think we're managing it pretty well. You know, we're sort of blocking and tackling is how we're growing the business. We don't... You know, I think it's really important because I look at other companies that are pulling on big deals, you know, in a quarter and this sort of stuff, whatever it takes to hit numbers. We just don't do that. I think we've guided, you know, appropriately through the year. We're very on track here. We're, you know, ahead in you know, every metric you might have. Yeah, I hope that's enough color for you to understand that. Yeah. No, that's great. That's helpful. Okay, the PollEx, I mean, do you call it a promotion with the Altium Designers? A couple of questions. I mean, is it, you know, how long does the kind of free access to PollEx last for the Altium base? And then why, you know, what made Altium the right audience, I guess, or design community here for this type of program? Generally speaking, Altium is a very, very large user community, something like 200,000 users, I think, across the world. It's relatively lower end solution, you know, relative to some of the other players, or at least lower, smaller customers, smaller companies versus large enterprise. That's not entirely true. You know, they have a mix, but probably a larger mix to the lower end. You know, we see this as a really great opportunity to get a lot of visibility around our technology, and we think it's really great for Altium as well because they, you know, they currently. This will give them the opportunity to be more competitive, I guess, at a higher end in the marketplace. We probably will do something similar and, you know, for the other ECAD vendors, but we wanna just see how this goes to start with. Okay, great. Again, just quickly, like, is it over? Like, is it or is it an ongoing thing that you're gonna offer for free or is it, you know, is there a finite length to it? We haven't defined a finite length, so this is something that, you know, the Altium user community can download and use. If they're a more sophisticated user, they're gonna find that they love the technology, we think. That's how much confidence we have in the technology. They may need to, you know, purchase an upgraded version to do more sophisticated things. We actually give them a great deal of power with the base version. For, you know, higher end customers, they're gonna require more. When they go to upgrade, that is not a free solution. Yeah, I mean, there's some experimentation going on here. I like to experiment with business models, and I think this is something that makes a lot of sense for both companies. Got it. All right. Thank you. As a reminder, if you'd like to ask a question at this time, that is star then one. Our next question comes from Gal Munda with Berenberg. Yeah, hi, good afternoon, and thank you for my questions. The first one is just around the margin. I'd like to go back, and obviously it's very impressive that you're guiding at a higher end at around 17% EBITDA margin already. Earlier in the year, at the end of May, I believe we talked about this, your Investor Day, getting to 20% by 2023. Is there a way where you can see, Matt, kind of getting there even a little bit earlier? Or will Jim's way kind of seeing this tilt that to balance into getting there by 2023 as you promised us in May? Yeah. No, I'm not gonna commit to getting there any earlier. Nice try. We are happy with what we've been able to do so far. I really do think it's important, as Jim mentioned, to make sure that we're continuing to invest. We're happy. We're sort of one foot in front of the other. We don't wanna get ahead of ourselves. That makes a lot of sense. Good answer, Matt. Maybe, Jim, for you. AEC vertical is something that has been lagging just in terms of technology and software adoption for decades, effectively. We're just starting to see the adoption of proper 3D tools. Do you believe that over time, AEC vertical could be a material part of the CAE market as well? Your investments now position you well as the leader. You've already had some exposure to AEC before, and you're kind of doubling down on that opportunity. Why now, I guess? It's a vast market. Like everything else, there's sort of a low end and then a high end to that market. We've already been playing at the relatively high end, but we do think that, you know, being able to bring a broader offering to that customer base, particularly at the mid-size and higher end of the market, is gonna be really interesting as time goes on. You know, obviously this market is very driven by these certification codes. You know, that can limit some of what you might do. I think, you know, the market is really going to continue to evolve using more interesting materials, composites, timber, all of that. You know, the ability to use a lot of the interesting technology that we've, you know, really evolved over the last 25 years in that market, I think is gonna have an impact, and it's gonna be kind of fun. I'm not gonna predict the revenue levels, but I think it's an appropriate investment at this time. Some of our other technology was sort of ready to make this move now. The S-FRAME technology really brought us this domain expertise and the certification code technology that we needed. We could have developed it, you know, ourselves. We've done a lot of that in the aerospace market. It really made sense to go out and acquire it right now. Yeah. Hope that's a clear answer. Very clear. Thank you. Thanks for the answer. Our next question comes from Blair Abernethy with Rosenblatt Securities. Thanks very much, and nice quarter, guys. Just wondering on the strong performance on the software side of things this quarter. Jim, I wonder if you would highlight sort of what areas, what product areas, you saw or are seeing particular strength in. And I don't know whether you'd mention anything about how SimSolid did in the quarter. Anything to sort of give us a little more color on what's resonating well with new customers these days. I do think it's across the board. Since you asked about SimSolid is just on a tear, to be honest with you. It's being embraced and adopted, you know, really in a very large number of customers. As we get more and more capabilities put into the code, more and more capabilities in the Inspire code as well, where we have it as well. We're developing, you know, so that it can run on the cloud with, you know, students. There is really no competition to that technology. We think it's gonna continue to make a really big play in the future. Even in, you know, outside of structures, we think there's opportunities for that technology in some of the other domains like electromagnetics. Yeah, that's a fun one. Really it's across the board. You know, the products for manufacturing are really starting to hit their stride. The Inspire product is really gaining a lot of traction, of course, coupled with SimSolid. All the electronic stuff has been really going well. PollEx is getting a very good reception in a lot of the supplier community, in automotive, and many other customers as well. Yeah, it's quite across the board. The HPC products and the data analytics products are growing faster than the simulation products in general. So that's going well as you know also. Okay. Great. Thank you. Just on the data and analytics. You know, given the customer base when you originally acquired Datawatch was more financial services kind of oriented. You know, how does it look there in terms of you know, their customer base today versus when you acquired them? You know, where are you gaining traction with net new customers to the business in that particular area? The pipeline for you know our traditional manufacturing customers to leverage these tools is really growing. We have a lot of really interesting projects that are running that are helping us to understand use cases and what's gonna make sense. There's a lot of interest from customers, but it's important to sort of get those use cases that make sense for them. That's going extremely well. We are you know working very very hard on sort of that next generation platform, which is important in the traditional space, but also gonna be important in you know in our traditional manufacturing space. You know we added you know MLOps, and there's a huge amount of technology going into the cloud-native version. It's still early. We do have a lot of customers starting to use it. We're getting good responses. There's more work to do there. You know, I expect it. It's just a very large market with just a very large opportunity. Lots of competition, of course, but I think we're very well placed to do well there, and especially with the units model, I think it can be disruptive. Okay, great. Thank you. I'm showing no further questions in queue at this time. I'd like to turn the call back to Jim Scapa for closing remarks. Well, thank you. Appreciate everybody's interest in Altair. Appreciate my team for just delivering another great quarter. Thank you all. This concludes today's conference call.