Good day, thank you for standing by. Welcome to Altair's Q2 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star one one on your telephone. You will hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your speaker today, Dave Simon, Senior Vice President for Investor Relations. Please go ahead. Good afternoon, welcome, and thank you for attending Altair's earnings call for the Q2 of 2023, ended June 30, 2023. I'm Dave Simon, Altair's SVP for Investor Relations, and with me on the call are Jim Scapa, Founder, Chairman, and CEO, and Matt Brown, Chief Financial Officer. After market closed today, we issued a press release with details regarding our Q2 2023 performance and guidance for the Q3 and full year of 2023, 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 further 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, welcome to everyone on the call. Altair had a solid Q2 of 2023, with software product revenue, total revenue, and adjusted EBITDA all above the high end of our guidance. Our Q2 performance aligns well with our guidance for the full year and demonstrates our continued success and strength as a company. Adjusted EBITDA for Q2 2023 grew year-over-year to $17.1 million. Software product revenue as a percentage of total revenue for the Q2 continued a strong positive trend at 88.8%, compared to 88.1% in the Q2 of 2022. Software product revenue as a percentage of total revenue for the first half of 2023 increased to 89.5%, as compared to 88.2% in the first half of 2022. The recurring software license rate for the first half of 2023 was 94%, an increase from 93% in the first half of 2022. Total billings for Q2 2023 was $147.8 million, a year-over-year increase of 17.8% in reported currency and 19.6% in constant currency. Software product revenue on a constant currency basis grew by 9.4% in the Q2 versus a year ago, and 9.7% for the first six months of 2023 compared to 2022. We saw strength in the quarter in our renewal space, with customers choosing to renew and expand their usage of Altair Units. This growth was across many products, and especially in the aerospace, defense, technology, and automotive verticals. We believe our Q2 performance positions the company well for the rest of 2023 and for next year. Altair's portfolio for software for engineering simulation continues to demonstrate leadership and innovation. Many new and significant products are in the last stages of development and planned for release at the beginning of Q4 2023. We are excited about their potential impact in the market. We continue to integrate AI within our simulation products, especially within our solvers. Last week, Altair acquired an exciting MBSE requirements management solution called OmniV, developed by two former General Motors executives. The advantage of OmniV is that it's easy to learn and use, and naturally connects requirements to simulation and test validation solutions to achieve program goals. OmniV is more accessible for product engineers, designers, and developers to use, whereas other MBSE solutions are more abstract and geared for system engineers. OmniV covers both process development and requirements connectivity in one vendor-agnostic solution. It connects to PLM solutions, including Teamcenter, ENOVIA, and Windchill, and to other MBSE tools, including Cameo, IBM DOORS NG, and Jama Software, making OmniV easy to integrate into any engineering enterprise environment. This technology enhances our ability to support the fast-growing use of digital twin solutions, simulation and test data management, and AI, with an open architecture that provides a traceable ecosystem to track performance, cost, and mass of a product. We believe the addition of OmniV to our already powerful offering helps to position Altair as having the most comprehensive digital twin solution in the market. OmniV will be available via Altair Units, integrated into Altair's digital twin solution set, and accessible via Altair One, Altair's cloud innovation gateway. This year, we are focusing on more enterprise selling and engaging at higher levels with our most important customers to build long-term relationships and increase scope and scale in these accounts for the future. The aerospace vertical had some notable wins for Altair in the quarter. A space exploration company increased its software licensing commitment by more than 50%, resulting in a seven-figure annual licensing agreement. Applications range across several physics disciplines while deriving tremendous value from Altair Units, which gives broad access to our deepest simulation technologies, as well as our entire software portfolio, including data analytics and AI solutions. We are engaged with the same company in a variety of leading-edge consulting projects to push forward new product development opportunities with simulation-driven design. In another aerospace win, a major aircraft component supplier has committed to a 44% increase over a $7-figure, multiyear software licensing deal. This account is especially meaningful, as it is at the forefront of using simulation in lieu of physical testing for certification, which is both a major challenge and opportunity in commercial aircraft development. In the area of data analytics and AI for business applications, a new BFSI customer signed on to a $6-figure annual software license related to loan servicing within two months of its exposure to the Altair suite of tools. A major European city has committed to Altair SLC as its solution for analyzing demographic data with a goal of improving social services. A large U.S. manufacturer of building products signed a multiyear, six-figure annual software license for its accounting and finance teams to expand usage from data preparation to wide applications available in the Altair RapidMiner platform under Altair Units. We see great momentum in the convergence of simulation with AI. A major automotive manufacturer in APAC has licensed additional Altair Units, specifically for using data science to design antennas. Altair has, for many years, been a leader in simulation software for antenna development, and we have significant domain expertise in correlating test data with simulation results for more robust design guidance. Using Altair RapidMiner, we helped this manufacturer reduce a test data analysis process from two weeks down to just a few minutes and use data science to derive rapid design, exploration, and optimization. We continue to encourage diversity and inclusion to support the next generation of engineers and scientists. Last quarter, we announced a STEM education scholarship program with Columbia University. We are pleased to have recently added the University of Michigan-Dearborn to our Altair Only Forward scholarship program. These scholarships focus on supporting underrepresented minorities and women, which is especially meaningful as we seek to play a role in developing outstanding and diverse talent. These scholarships will support students with a demonstrated interest in increasing diversity in STEM fields. Each recipient must be a full-time student pursuing a four-year degree in engineering or computer science, and a member of one of the following organizations: National Society of Black Engineers, Society of Hispanic Professional Engineers, or Society of Women Engineers. Scholarship recipients will be chosen by a committee of faculty and leadership in the College of Engineering and Computer Science this fall, with nine recipients, each receiving $25,000. Altair was named for the third consecutive year to Newsweek's Most Loved Workplaces list as one of the top 100 companies measured by employee happiness and satisfaction at work. Credit for the string of awards goes to our global management teams, who are outstanding stewards of Altair's foundational values. We have worked hard since our founding in 1985 to create and maintain a workplace where employees can thrive in a supportive, inclusive environment. Our ability to maintain these values over 38 years of major shifts in technologies, geopolitics, and how we work, is key to Altair's success. Altair was also named as one of the 2023 Fortune Best Workplaces for Millennials. This award acknowledges companies that excel at providing younger employees with a sense of purpose in the workplace. These workplace awards, combined with our STEM education commitments and strong global internship program, are great indicators of our focus on talent development and sustainable work-life balance. Altair was named the overall leader in the manufacturing data analytics sector in the latest report by global technology intelligence firm ABI Research, for advanced data collection, normalization, and analytics capabilities. The report evaluated 10 data analytics vendors that enable industrial and manufacturing firms to proactively monitor their equipment and optimize their operations with the use of data analytics. ABI Research determined rankings by evaluating capabilities for data collection, streaming analytics, data normalization, core analytics, user experience, commercial success, and time to value. The report emphasizes Altair's platform versatility and depth, and made note of our huge array of modeling techniques and wide variety of options to display and share IoT sensor data. With our deep expertise and understanding of manufacturing complexities and machine learning, we have developed solutions to easily build analytical applications with our low-code platform to support faster, more effective decision-making. Earlier this week, the winners of the 2023 Altair Enlighten Award were announced. Presented in association with the Center for Automotive Research, the Enlighten Award program showcases how the automotive industry's leading minds are applying advanced technologies and responsible AI to create a better, greener industry. Congratulations to the winners of the 11th annual Enlighten Awards: Polestar, Nikola, ArcelorMittal, Volteras, Toyota, BASF, U.S. Farathane, Adient, Multimatic, and Marelli. 2023 is an important year of complex transitions for Altair in the midst of a lackluster macroeconomic environment, hampered by inflation and uncertainty, to set ourselves up for very strong growth in 2024 and 2025. We are managing expenses aggressively to achieve a 20% adjusted EBITDA margin this year, and to position the company for continued adjusted EBITDA increases for the next three to five years. Shifting our organization to focus more on selling our entire portfolio in key vertical markets and customers, completing the software development of several strategic and significant initiatives, and establishing partnerships with key system integrators and hyperscalers to elevate our position and grow our share of wallet across key accounts. As we take stock of where we are at the halfway point in the year, we are very satisfied that we have been extremely successful in every one of these endeavors, all while we continue to meet the quantitative financial objectives we established for 2023. As a result, we feel the company is going to be well-positioned to take significant advantage of the strong demand we anticipate beginning in 2024. Now, I will turn the call over to Matt to provide more details on our financial performance and our guidance for the Q3 and full year 2023. Matt? Thank you, Jim. Hello to everyone on the call, and thank you for joining us. Q2 was another solid quarter for Altair, once again exceeding the high end of the guidance range on software product revenue, total revenue, and adjusted EBITDA. Our strong first half performance 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. As I dive into the details of our financial results, remember, some of our revenues and expenses are transacted in currencies other than the US dollar, and therefore, our reported results may be significantly impacted by changes in foreign exchange rates. To aid in the review of our results, throughout my remarks, I will make reference to growth rates in both reported and constant currency.... Total billings for the quarter were $147.8 million, an impressive year-over-year increase of 17.8% in reported currency, and 19.6% in constant currency. In Q2 2023, we saw particular strength in our renewals base. We had meaningful expansions in some of our top-tier accounts as customers are broadening their usage of applications across several physics disciplines. In addition, we had notable new customer wins for our data analytics products as customers are realizing the power of Altair SLC and the Altair RapidMiner platform. This strength in billings led to software product revenue in Q2 2023 of $125.3 million, a year-over-year increase of 7.2% in reported currency and 9.4% in constant currency compared to Q2 2022. Total revenue in Q2 2023, which includes services and other revenue, was $141.2 million, a year-over-year increase of 6.4% in reported currency and 8.4% in constant currency compared to Q2 2022. Our recurring software license rate, which is the percentage of software product billings that are recurring, continues to be strong at approximately 94% for the first half of 2023. non-GAAP gross margin, which excludes stock-based compensation, was 80.0% in the Q2, compared to 79.3% in the prior year, an increase of 70 basis points. Software product mix and an increase on our software product gross margin drove this increase. Our software product revenue, which carries higher gross margins, was 88.8% of total revenue in Q2 2023, compared to 88.1% in the prior year. Over the long term, we continue to expect a general mix shift towards software product revenue, as growth there will outpace services and other revenue. As a result, we expect our non-GAAP gross margin to continue to increase modestly in the near term. Non-GAAP operating expenses, which excludes stock-based compensation and amortization of intangible assets, were $96.9 million, compared to $90.3 million in the year-ago period. The year-over-year increase was in line with our expectations and was driven by increases in research and development and sales capacity, partially offset by decreases in general and administrative costs. Adjusted EBITDA in Q2 2023 was $17.1 million, or 12.1% of total revenue, compared to $16.4 million, or 12.4% in Q2 2022. Turning to our balance sheet, we ended the quarter with $418.3 million in cash and cash equivalents, an increase of approximately $40.0 million from the prior quarter. The increase was driven primarily by cash from operating activities, and we continue to be pleased with our cash flow generation. Free cash flow through the first half of 2023 was $83.0 million. Let's turn to guidance for Q3 and full year 2023. We've provided detailed guidance tables in our earnings press release, including reconciliations to comparable GAAP amounts. We are continuing to see an FX impact relative to 2022, as foreign exchange rates have changed throughout last year. To continue to provide more clarity on the FX impact to our expectations, we've provided growth rates in both reported currency and constant currency in our guidance tables. For Q3, we expect software product revenue in the range of $111 million to $113 million, a year-over-year increase of 7.0% to 8.9% in reported currency and 5.8%-7.7% in constant currency. For full year 2023, we are maintaining our previous outlook for software product revenue in constant currency and slightly decreasing our outlook in reported currency due to changes in foreign exchange rates to a range of $548 million-$558 million, a year-over-year increase of 8.2%-10.2% in reported currency and 9.1%-11.0% in constant currency. As expected, services and other revenue has begun to stabilize in 2023 compared to the sharp declines we saw in 2022. While services and other revenue was down year-over-year in the first half of this year, we expect it to be roughly flat in the second half of the year. As a result, we expect total revenue for Q3 2023 in the range of $126 million-$128 million, a year-over-year increase of 5.6%-7.2% in reported currency and 4.4%-6.1% in constant currency. For full year 2023, we are maintaining our previous outlook for total revenue and constant currency, and slightly decreasing our outlook in reported currency due to changes in foreign exchange rates to a range of $611 million-$621 million, a year-over-year increase of 6.8%-8.5% in reported currency and 7.5%-9.3% in constant currency. Moving to adjusted EBITDA. For Q3 2023, we expect adjusted EBITDA in the range of $3 million-$5 million or 2.4%-3.9% of total revenue, compared to $6.8 million or 5.7% of total revenue in Q3 2022. For full year 2023, we are maintaining our previous outlook for adjusted EBITDA and constant currency and slightly decreasing our outlook in reported currency due to changes in foreign exchange rates to a range of $119 million-$129 million, or 19.5%-20.8% of total revenue, compared to $108.6 million, or 19.0% of total revenue in 2022. Finally, for the full year 2023, we are maintaining our outlook from the last quarter for free cash flow, which we expect to be in the range of $108 million-$116 million and represents a substantial increase year-over-year. As a reminder, our cash flow expectations are sensitive to billings and collections patterns, which fluctuate seasonally. In particular, our historical pattern has shown a larger free cash inflow in the first half of the year, primarily from collections on billings from Q4 and Q1, and a smaller free cash inflow in the second half of the year. We're expecting that pattern to continue this year. We're pleased with the outperformance we've seen in the first half of the year and look forward to a strong second half. With that, we'd be happy to take your questions. Operator? If you'd like to ask a question at this time, please press star one one on your touchtone telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Matt Hedberg with RBC Capital Markets. Matt, your line is now open. Yeah, thanks. This is actually Matt Swanson for Matt. This is kind of a question for Jim and Matt, but Jim, you mentioned, I think the word you used was lackluster to describe the macro environment right now, and I think that's kind of been reflected in PMI. I mean, could you talk a little bit about how resilient the budgets, those R&D budgets that you're selling into are in this type of macro? Maybe, Matt, if you could extrapolate a little bit more on how you're thinking about the macro for guidance. Sure. Sure. Hi, Matt Swanson. Yeah, lack- lackluster, from my point of view, just means fireworks aren't really going off. It's not, it, it's not a down market, you know, in the sense of a 2009, but it's, it's kind of a sideways market from my point of view. When I think about, you know, R&D budgets, I, I think everybody is watching costs more than, more than they are in, in a more dynamic market, frankly. I, I think the economy, you know, tends to ebb and flow, and, and it's cyclical a little bit. I think 2023, in general, is, is on the lower part of, of that cycle. This is why I'm anticipating, you know, 2024 and 2025 to be, you know, basically, that cycle. Again, it's not... It, it's not, I mean, you can see our numbers. We had, you know, very solid billings growth. We're seeing a lot of potential, actually, in the market and actually increasing potential towards the second half of this year, as I think we start to, you know, emerge, if you will, from a little bit of a lackluster feeling. But every customer is certainly, you know, just as we are managing our costs very closely, I think our customers are doing that as well. For us, that creates opportunities. We're seeing many very significant customers coming to us very much more interested than they were before in, in, in maybe making a switch to our platform. Of course, that, that's very, very promising, but, you know, those take a little bit longer, and I think we're gonna start seeing the results of that in 24, more so than, than in 23. Yeah, I hope that was clear. Matt, I would just add on, you know, to answer the second part of your question there. You know, what Jim just described is, is embedded in, in the guide for the year. Where you're seeing us coming out and guiding the midpoint, in constant currency for software product revenue growth at about 10%, that's not quite what we saw last year, right? It's, it's reflected a little bit. Having said that, you know, we're, we're looking all the time at pipeline and, and we feel very, very good about our positioning and the way that our pipeline is shaping up for the year. In particular, I think we're doing all the right things to make sure that we're investing for a really fantastic future as well. We feel very, very good about the position that we're in, and, and looking forward to continuing to capitalize on that, far into the future. Yeah, no, both, both parts of the answer were really helpful. Then, Jim, thank you for the additional color, on some of your AI initiatives that you're going through right now. If I could just ask about it in, maybe a slightly different way for some indirect benefits. One being, are you seeing any, you know, increased conversations around the HPC business or people, you know, trying to figure out the compute side? Then the second would be, you know, if this is finally the moment we start to see more generative design, which might, you know, increase the pace of design cycle, more designs, what does that mean to the simulation business? Like, is that possibly a catalyst sometime? I know we're extrapolating a lot on AI right now in general, but. Yeah. No, it's, it's a great question. I actually asked that question this morning because we have a customer that went through a whole benchmark. You know, there's a number of little players in, in the space coming out with AI solutions, physics-based AI solutions, and Altair launched our PhysicsAI solution, like, a quarter ago or two quarters ago. They selected us, and, the first question I asked is, did they select us 'cause of our units model or, you know, 'cause we're bigger or because of the technology? He said, because of the technology, we, we are clearly in the lead, which was a great answer. I loved hearing that answer. But then I asked, "Is that gonna reduce the amount of simulation that they do? Because we dramatically are, are reducing, you know, the, the time it takes to, to validate designs. He said, "No, absolutely not." They're just doing more of it, which is obviously the answer I wanna hear, but I, I think it's, it, it's a true answer. I mean, I, I just think the technology, as it always has, is continuing to get better, and, and people are gonna do more and more simulation, whether they're using AI embedded or integrated or as part of it. You know, I think the use of this kind of algorithmic technology is only gonna continue to grow, in my, in my view. I think we're in a great spot. We have a lot of really amazing stuff coming. This has been an absolute year of, of investing, which is what I tend to do in these, if you will, lackluster cycles, and then come out swinging. Yeah, we're very excited about product as well. Thank you. Sure. Our next question comes from the line of Ken Wong with Oppenheimer. Great. Thanks for taking my question. Jim, just touching on just the, the macro a little bit. I think when you were closing out your prepared remarks, you mentioned, you know, take advantage of strong demand that you anticipate in, in 2024. Was that just kind of general, again, expectations that you'll, you'll start to see, you know, more fireworks, or, or is there something in your pipeline, something that you guys are, are, are, are seeing, like, internally, that gives you that, the comfort in saying that, strong demand in 2024? I think it's both. You know, I've, I've, I've been doing this for a long time, and, I have a, a, a pretty good feel for, for what happens, you know, macro to, to, to Altair, if you will. We do see a lot of really big opportunities that are building in the pipeline that are a little bit longer, you know, take a little bit longer to, to gel. You know, we feel excited about where, where things are going. It's a combination. Okay, perfect. Matt, if I could just, you know, as we look at the, the outlook, I realize that your, your, you know, your revenue is probably a little lumpier than, let's say, a traditional SaaS company, but I guess 3Q does look a little lighter, a little more back-end loaded into 4Q. Any slippage, some timing stuff, or just help us walk through the thinking behind that 3Q, 4Q dynamic? Yeah. Hey, Ken, no problem. First off, what we're seeing this year has been playing out generally, you know, how we've been guiding since the beginning of the year. You know, we've been guiding software product revenue growth of about 10% at the midpoint in constant currency. So far, we've been... You know, we've seen constant currency growth of about 9.7% in the first half, and we're expecting about 10.3% at the midpoint in the second half. Actually, a pretty reasonable first half, second half dynamic there. You know, in other words, not specifically back and loaded, certainly not, not with respect to first half, second half. Then when you look specifically at the Q3, Q4 dynamic, it really just comes down to a somewhat difficult nature of guiding Q3. You know, in Q3, you've got the summer holiday. It's historically been our smallest quarter of the year, so where only $several million can make a seemingly large impact on percentages, and so you sometimes get a strange set of comparisons there. Again, when you look at the pipeline for the second half and what we're seeing for the second half in total, we feel really good about how the year is shaping up. Nothing more to read into it than that. Okay, fantastic. Thank you, guys. Our next question comes from the line of Dylan Becker with William Blair. Yep. Hey, guys. thanks for taking the question. Jim, maybe on kind of the vendor consolidation theme, too, obviously, customers love the units model. but I guess the dynamic that you guys are seeing, healthy renewals, wondering if you could kind of help us parse through, is the, the momentum coming from, again, expansion across new teams for different design workflows? Is it customers switching and seeing that consolidation play out? Is it, is it elevated compute intensity? I, I guess, kind of help us think through what, what maybe some of the core drivers are there? I mean, there's an overarching, you know, activity happening, you know, in our most important markets. Aerospace is very, very active right now, and aerospace and defense in general is probably the strongest sector right now that we see. Technology may be number two. But even in automotive, there's, you know, there's still a lot of competitive drive to get to new products, to get to electric and all of that. So there's still a lot of, a lot of sort of overarching, you know, demand, just because people are, our customers are trying to get to new products. What was the second part of your question? Sorry. No, I think that kind of. It's, I guess, spending consolidation and how that plays into the Units model, too, right? Oh, the consolidation piece. Yeah. I mean, when you're in this, down part of the cycle, as I'm describing it, you know, it takes a little bit of a while. There's a lot of religion in, in our world of, of technical computing and, and, and simulation and all that. As customers are, are looking deeper, you know, at, at how do we do all the work we need to do, but how do we do it more efficiently, more effectively, more cost-effectively? As the cycle sort of gets towards the end, they start really looking more closely at, you know, what can we do competitively? Is there, you know, is there a different partner that we should be working more with? We're in every one of these accounts already, you know, all these accounts are very competitive. Customers are deciding who's the better partner, right? I think there's more opportunity right now for us. Okay. All right. Super helpful. Thanks for that. Then maybe Matt, again, kind of touching back on, on the guidance framework. It looks like the seasonality is kind of aligning with the prior year period, and I think Jim made a comment around kind of more of an enterprise emphasis from the sales force. Is that naturally maybe a function, too, of kind of this little bit of shift in the model of just aligning with kind of the purchasing decision, decisioning for those larger-scale customers? I mean, with respect to the Q3, Q4 dynamic, no, not really, actually. It, it really is just a function of, of some timing of deals when... You know, when you're trying to project when deals are going to close in, in, in late September versus early October on a, on again, a, a fairly smaller base, at least from us, it's our, it's our smallest seasonal quarter, that just can drive some, some of those dynamics. So no, it, it, it actually doesn't have much to do with the, with the dynamic that, that Jim touched on. Okay. All right. Super helpful. Thank you, guys. Thanks, Jim. Okay. Thank you. Our next question comes from the line of Josh Tilton with Wolfe Research. Hi, this is Luke Mott on for Josh. Thanks for taking my question. You said earlier you expect adjusted EBITDA to increase for the next three to five years. Any details you could provide on that, or what will drive it, and any more color you could give around the magnitude of those increases would be very helpful. Then I have a follow-up. Thank you. You get that one, Matt. Sorry. Sure, no problem. Yeah. You know, a lot of what we've been, what we've been saying over the last couple of years here around our ability to just continue to incrementally add to our adjusted EBITDA margin is something that we, we believe we can continue into the future, certainly in the next three to five years, but frankly, and beyond. The way that we're doing that is we're continuing to increase our proportion of software revenue as a percentage of total, and that is having a benefit to our gross margins, which is reflected, for example, in this quarter, where we're able to increase our non-GAAP gross margins year-over-year. We expect that that's gonna continue. That's one helpful driver. Of course, the other is, is we're continuing to manage our OpEx expenses. Without putting any, any kind of quantifiable metrics on it, which, which we'll, we'll do after we, after we get through the end of this year, really, the, the game plan is, is what you've seen over the last couple of years here, where we're gonna continue to drive revenue growth, fueled primarily by software revenue growth, and, and keep our costs in check. Great. Thank you so much. Just kind of circling back to some of the earlier questions and commentary around your existing automotive accounts, I was wondering for some of those legacy customers how much more room you see for cross-sell or upsell there, and how much more room there is to run, not just within the simulation side, but also with the data products? Yeah, I, I think there's a lot of, you know, we've been looking at, at, at customers like, like the large OEMs in Detroit for years, and, and our business just continues to grow year-on-year for 25, 30 years. I think that's gonna continue. There's a huge amount of opportunity on the data side, a lot of opportunity on the designer side as well, with products like SimSolid and Inspire. You know, if you look at the number of designers compared to the number of, of simulation engineers, it's, it's 5, 6, 7 to 1. Lots of opportunity there. A lot of opportunity on the data side as well, and, and even on the manufacturing plant floor. You saw our ABI survey. If you look at the, at the companies we were compared against, and if you look at they, they do a kind of, I don't know if I should say Magic Quadrant, but like a Magic Quadrant, and we're way at the upper right-hand corner, and there's a lot of well-known names that you might have thought of in, in that space that we beat out. You know, I, I think there's a huge amount of opportunity there. Thank you. Sure. Our next question comes from the line of Charles Shi with Needham & Company. Hi, good afternoon. I, first, I wanna clarify a little bit, maybe this is an accounting question, maybe to Matt. Looks like the Q3 guidance, you're still seeing foreign exchange as a tailwind, but you did lower your annual guidance, and there seems to be some, some foreign exchange-related headwind. How do I reconcile the two? Is, what was the assumption that went a little bit off, I guess, back, let's say, like three months ago in terms of the foreign exchange rate and the, the currencies you're exposed to? Thank you. Hey, Charles. I'm not sure I caught all of that. Are you referring to the, to the, the changing guidance at the midpoint from, full year guidance that we gave last quarter to this quarter? Yes. Okay, got it. What we're pointing out there is that, as a result of changes in FX rates that we've witnessed over the last quarter, the change in guidance and reported currency from a software product revenue and total revenue perspective, is now down by $3 million on a reported currency basis, but it's exactly what it was on a constant currency basis that we gave last quarter. No change in constant currency. That impact flows down to EBITDA, but it's partially offset actually, by some FX benefit that you get in expenses. While the impact to revenue is $3 million, the impact to adjusted EBITDA is only $1 million, because there, you get... It's sort of a natural hedge there, in expenses. Again, that's all in reported currency. In constant currency, the guide is the same guide that we gave last quarter for full year. Got it. Maybe the next question to Jim. Jim, I heard your discussion with the, I mean, your response to another question in terms of lackluster versus fireworks going off. I want to be a little bit more specific, and I want to ask you about automotive. Well, this may be my favorite question every quarter, what do you see about 2024 in terms of that vertical? It's still your largest one, although contributions coming lower, is 2024 a lackluster or you think the fireworks are gonna go off? This is a high-level question. Direction of color is very... We'll really wanna hear that. Thank you. Well, I never should have used that word, huh? I mean, I think generally, we're gonna start seeing an uptick in the spending for a lot of these companies. I think they've been holding a little bit tighter, you know, through this year, I think they're gonna loosen up next year. It's, it's not just about, you know, the sales that they make, because the amount that they spend on engineering is actually a very tiny percentage of their total revenue, and total expenses even. I do think budgets have been, you know, are a little bit more restricted. They're also figuring out, you know, how to play the data game right now. A lot of companies are, are selecting, you know, their solution corporate-wide for data analytics and data science. We're in a lot of these conversations in a lot of, in a lot of companies. I think that as they start to figure out what are the applications and how can they really have an impact, you know, there's a lot of hype. There's a big hype cycle around generative AI, but there is real meaningful opportunities to apply this technology and have an impact on their businesses. I think we're really well-placed understanding their domain. I, I think we're gonna start seeing more and more growth, you know, coming out of this year, personally. I don't have a crystal ball any more than you do, so I could be wrong here. I do have a lot of experience, and, and I think that our products, that we're developing, you know, right, are really gonna position us, and not just the products, but our go-to-market approach. We've, you know, much more meaningfully, organized towards, specific verticals. All that's really coming together in a very nice way for us as well. A lot of work going on this year to, to sort of reorient the company, and, and we're just seeing, you know, the, the results of that, I think is gonna, is gonna continue to grow the pipeline coming into next year, and it's, it's just a big opportunity. Thanks, Jim. really looking forward to 2024. Thank you. That's all my questions. Thank you. Our next question comes from the line of Blair Abernethy with Rosenblatt Securities. Thanks very much. Just to, Jim, I wonder if you can give us a sense of how SimSolid Cloud is doing. I know it just launched in April, but just wanna get some color about how that's doing in the market? Okay. It, it's still very, very early days for Simsolid Cloud. Simsolid is really going well, actually. We just have a lot of companies that are, you know, beginning to, to really recognize the power of Simsolid. A lot of companies have done, done significant evaluation. We understand the concerns that they have, for example, around how we do adaptivity, and, and we've been really tuning that for designers so that there's a lot more automation and, and setting parameters and all that. You know, we're, we're seeing this is one of the products that we're excited about, you know, really continuing to take off, continuing to, to take us into a lot of places we haven't been before. Simsolid Cloud, it's, it's a opportunity in the small medium accounts. We're trying to partner with, with some of the hyperscalers around that. It's also a great opportunity to, to sort of evaluate the software, even for a, a large corporation. They wanna run a couple of models quickly in, in the cloud. For now, I think the, the bigger business opportunity for us is still, you know, if you will, on-prem, quite frankly. Okay, great. Thank you. Then just a question on the, on the recent acquisition, OmniV, announced last week. Just maybe just some rationale as to why why you purchased this. Did they have, you know, much in the way of customers or revenue prior to the acquisition? Sure. I mean, all customers are starting to think more about, you know, systems-level design, and building out digital twins to, to, to model, you know, an entire system, and we're in the thick of that in many, many accounts. That is... You know, that's just a really important piece of the business. We had a gap there. You know, you guys often ask me: Well, what are you trying to fill? I never wanna answer those questions for you. This was a gap. We, we didn't have a requirements management solution. You know, we, we have been working with for several years now, and we do believe that, that this is a tool that's quite differentiated now. Customers love it, that, that have started to see it. It's very, very easy to learn how to use and, and to implement it. It does the two main things that, that customers need. It, it, it helps you set up the process, and auto, you know, creation of your SysML models. Then it, it very, very nicely connects to simulation and test data for validation, which is exactly what you need to do with these tools. You know, you're setting up upfront, here are the requirements, and then here's how you're gonna validate these requirements. It's just a key element. I think, you know, the products that are out there in the market today are, are somewhat difficult for product engineers to really grasp, I'm gonna say. I, I think this product is, is gonna take off, actually. That's great. Thanks very much for the color. Sure. Thank you. Our next question comes from the line of Mark Schappel with Loop Capital Markets. Hi, thank you for taking my question. Jim, it's, it's nice to see the, the growing success that you're having with cross-selling your data analytics products into your simulation install base. I was wondering if you could give us a sense of how much of this success you would attribute to, say, the changes you made to the sales teams at the beginning of the year and or versus just customers becoming more comfortable with combining simulation with data analytics? Yeah, that's a great question. It's, it's a combination of, of things. I mean, any of these things require, you know, you have to sell it within your own organization, then, you know, the teams have to actually learn, you know, what these tools do. Our technical teams have mostly been trained now with, with RapidMiner, with Monarch, with Panopticon. So even the simulation guys are all very well-versed in, in using and applying these tools. The sales guys similarly need to understand the use cases and how to sell these products, and I think we've, we've come a long way in, in the last two and a half years, where they, you know, they can do that. We did do some crossing, you know, creating these vertical teams and crossing some of the, the leadership from the data teams into the different verticals, and I think that leadership is, is making a pretty big difference. It's also, you know, the customers are... You know, as we get into customers and as we solve a problem over here, and they go: Oh, wow, you know, you just saved us. You know, we, we went from two weeks to two hours, you know, doing this thing or that thing. Could we apply it here? Could we apply it there? We're, we're starting to see the customers sort of at the grassroots level, beginning to, to grasp it and get it. The real power for us is, is that the RapidMiner platform is a true, you know, no-code platform. There's a lot of, well, you know, other products will remain nameless, but a lot of other products that sort of claim to be no-code, you never can get to the end unless you get a Python programmer in there writing some code. RapidMiner really is a no-code platform. It, it's just extremely easy to implement, and it's very broad and, and deep. I just think we're, we're in a great spot. We understand the domain, and we've got just enough of that crossing, you know, cross, cross-training and all of that happening in our, in our organization that, you know, it's starting to get traction. Great. Thank you. That, that's helpful. Thank you. Our next question comes from the line of Andrew DeGasperi with Berenberg. Hi, this is Stephanie on for Andrew. Thank you for taking the question. In terms of your acquisition strategy, do you expect any shift in the way you think about acquisitions? Further, what areas specifically are you looking at? Thank you. Sure. Thank you for the question. I, I generally try not to tell you what I'm looking at. That, that doesn't usually work for me. I don't see a big change. I, I mean, I think we are very clear internally in the areas that are interesting to us, and, and we're paying attention, and we look at a lot of different companies. You know, but at the same time, we're value players as well. We're very focused on, on the quality of the technology and also the, the, you know, the culture of the. A lot of stuff, you know, that we're looking at, quite frankly, right now, we have a lot of different opportunities. You know, we're going to continue to probably mostly just tuck things in, and continue to grow, you know, grow the solution set. Sorry for not answering the question, but that's, that's probably the best I can do. Got it. Thank you. Thank you. That concludes today's question and answer session. This concludes today's conference call. Thank you for participating. You may now disconnect.