Okay, awesome. Thank you everybody for joining today. My name is Dylan Becker. I'm the research analyst here at William Blair that covers Altair. For all the necessary disclosures, you can find those at williamblair.com. We have a CFO here, Matt Brown, joining us today. He's got a prepared presentation, probably around 10-15 minutes or so, and then we'll jump into Q&A. Matt, thank you for taking the time, and I'll let you take it from there. Yeah, my pleasure. Thank you. Let's see if I can figure out how to advance these slides. Yes, I can. Okay, safe harbor statement, please take a look at this. We'll be making forward-looking statements that are uncertain in nature, so take a second to read that. Thank you. Okay, so Altair, changing tomorrow together. So a little bit about Altair. Company was founded in 1985 by our founder and CEO, Jim Scapa, still leads the company today. Company IPO'd in 2017, and today we've got more than 16,000 customers. Revenue as of fiscal year 2023, $613 million, and fiscal year 2023, adjusted EBITDA of $129 million, or 21.1%. Pretty different company, though, from where we were at IPO versus where we are today. So, Altair at IPO, roughly evenly split across geographies, but had about 73% software in terms of our revenue composition. 27% of that was services and other. And in terms of our verticals concentration, pretty heavily concentrated in automotive, but also had some exposure there in aerospace and defense. If you fast-forward to where we are today, still very heavily focused, or sorry, evenly spread in geographies. Our customer count has grown significantly, where we were at 5,000 or so customers at the time of our IPO, we have now more than 16,000 customers, and we're much more heavily concentrated in software. So software now today represents roughly 90% of our business, with the remaining 10% in services and other. And during that time, we've diversified from a verticals concentration as well. Still, our largest verticals are automotive, but it makes up a lesser proportion of our total software revenue than it did at the time of IPO, and we've added some new verticals. So BFSI is a new vertical for us since the time of IPO. We've also expanded in technology and continued to grow aerospace and defense as well. Over that period of time, from IPO to today, we've had our software revenue growth at a CAGR of 14.4%. So it started at $245 million ending in 2017, and at the end of 2023, $550 million in software revenue. So okay, here's just a look at some of our financial performance over the last several years. So starting in 2020 to 2024, where we're guiding at the midpoint, you can see, a nice, nice, strong revenue growth performance. But importantly, what we've been concentrating on is our adjusted EBITDA margin growth. That's grown steadily from where we were in 2020, at 12.2%, up to where it is, where we're expecting it to be at the end of fiscal year 2024, at the midpoint, 21.7%. That margin expansion is, is key to our story and something that we continue, to drive forward. Here's a look at some of our customers organized by vertical, and you can see it's all the top names. We're in all of these accounts, meaningful to, to each of these, each of these companies, and meaningful to what they're trying to do. We're really supportive of what our customers are doing and driving forward and key to their innovation story. So what's our vision? Our vision, and I, I'll talk a little bit more about this in a moment, is around the convergence of what we see with simulation, high-performance computing, and data analytics, which we consider computational intelligence. We believe that computational intelligence is what's gonna be driving innovation in the future. It helps produce a more connected, safe, and sustainable future. Okay, so a little bit more about how we're sort of organized here. We have this data science plus rocket science, right? So what does that mean? It really means that convergence of simulation, core simulation tools, which is organized under our Altair HyperWorks product portfolio, along with data science, which is organized under Altair RapidMiner, and also high-performance computing, which is organized under Altair HPCWorks. All of that can be accessed under Altair One, which is our unified cloud platform. So one of the key drivers that we see as we look into the future is around simulation-driven design. We've got some really meaningful tech-product technologies that go all the way from geometry to manufacturing. This, we believe, is a growth driver for us and into the future to get simulation further up the design product stream. So sketch to simulation, you can start with a sketch, you can build that geometry, import existing CAD for analysis. Gives you design freedom, so offering advanced geometry, simulation driven optimization. So optimizing design around structures, fluids. Have a product called OptiStruct, which is one of the most important optimization technologies out in the market. Generative design is also important for this product capability, and it's generating design based on various performance and manufacturing constraints. So you can solve for certain constraints on a manufacturing basis, and then optimize your design based on what those constraints are. This, of course, gives you manufacturing confidence, can avoid a lot of the costly mistakes that are associated with some manufacturer defects and imperfections. Another tailwind, so talked a little bit about simulation-driven design. Another tailwind that we're seeing, and something that we've spoken about, is a convergence of electronic simulation and mechanical simulation. We are seeing those worlds come together. Customers in the past used to use different tool sets for mechanical and for electronic simulation. We're seeing those worlds come together, where customers are more interested now in seeing a tool set that can address both capabilities, and that's something that Altair is focused on. This can be at the chip level, so it's streamlining the design process with silicon debugging. It can also be at the board level, so catching early errors, and that helps with design and optimizing performance. This is something that we're continuing to focus on. We had an announcement back on our Investor Day, back at the end of March, where we are developing electronics capabilities within our SimSolid product, and we're expecting that to come to market and have an impact there as well. Finally, AI is another driver for us, and something that we view as a secular tailwind. We are continuing to embed artificial intelligence within our core product capabilities, something that we've been at for a long, long time, long before everybody was talking about AI. We've been incorporating those AI capabilities into our product sets. AI-enabled design, AI-embedded engineering, and AI-augmented manufacturing. So it's representing a real shift here for us. One such example is Physics AI, which is embedded within our design tools. PhysicsAI allows you to go from what was once doing a few simulation in a 24-hour period, to doing thousands of simulations. How does it do that? What PhysicsAI does is it's a module that leverages prior simulation runs and has the ability to then learn from those runs and allows that user to change parameters on the design. So for example, changing material composition, maybe thickness, maybe different physical constraints and loads and pressures, and based on machine learning, can inform then what a simulated result might be. Allows that designer to make better design decisions up front, they can then pass a more complete model on along, and then that validation simulation run can be done on the back end, which makes for a better more comprehensive product. Okay, so tried to go a little bit fast and leave plenty of time for Q&A. Just do have a quick video that I think gives a little bit more context around what Altair is doing, so that should play now. Imagine the possibilities, all of them. Now, test them. Improve them. Make them real. Impossible? Not at all, Altair. That's because we're in the possibility business. Since 1985, we've been quietly creating the tools that enable visionaries to transform the impossible into reality at market-defining speed. Best-in-class design and simulation, enterprise-grade data analytics and AI, turnkey high-performance computing. Now, as the only company bringing these technologies together, seamlessly merging data science with rocket science, we're setting the pace for a bold new standard of innovation. This is the science of possibility, where we can envision a better, smarter world and then breathe life faster than ever imagined possible. Perfect. No, that's great. That was a great backdrop, great overview. Thanks, Matt. Maybe as a way to kinda tie that into the overall opportunity, you touched on the convergence of simulation, data analytics, and high-performance computing. What are kind of the core drivers that you're seeing across end markets that are really kind of tied to that complexity? Is it initiatives like sustainability, connectivity, electrification? Like, what's driving complexity, that's fueling this convergence? Yeah, I mean, so I think fundamentally what we're seeing is our customers are in an increasingly more competitive environment. It's critical for them to develop better products faster in order to get those to market and to be competitive against their competitors. So yes, we help with sustainability, and that's an important thing about what we do, but really it's about providing our customers the tools that they need to be competitive. You know, as Convergent spent a lot of time talking about it, high-performance computing is a way that helps enable our customers to run more simulations to be faster and more efficient. And data analytics allows our customers to analyze the data that's being generated with the simulations that they run. There's a tremendous amount of synthetic data that's generated when our customers are running these simulations. So having a way to be able to organize that, you know, compile it, analyze it, look for anomalies, and ultimately make better design decisions is just hugely important. So this is something that we'd seen come together in convergence for some time, and something that I think is a real driver going forward. The one other thing I would add is we are increasingly seeing an opportunity in digital twin technologies. And for digital twin technology to really accelerate, you have to have an ability to capture to capture the data in a data analytics tool, and so that RapidMiner platform allows for that. It allows you then to capture sensor data from real-world product performance, predict maintenance, and other service operations, particularly with assets that are not especially serviceable, so think, you know, offshore oil rigs and things of that nature. Or to do preventive maintenance on, say, a manufacturing plant, where downtime is, and particularly unplanned downtime is very costly. So, these technologies are effectively allowing our customers to go win. As, as it is an enabling technology, what's the right way of thinking about the overall opportunity, right? You've talked about the proliferation across end markets, becoming a bit more diversified than where you were several years ago, extending to new use cases. How do you guys think about that equation, from a TAM perspective and where you sit today relative to that TAM? Yeah. So years ago, automakers realized that, you know, building a car and crashing it into a wall and then picking up the pieces and figuring out what worked was not the most efficient way to go design for crash, right? And they realized that doing computer-aided engineering and doing simulations on modeling, not just at the entire vehicle level, but at the component level, was the best and most efficient way to design. That is now being moved into many, many, many industries. It's just clear that the most efficient and effective way to go design products, whether you're designing an automobile or a fighter jet or a golf club, the best way to do that is computer-aided engineering. It's it it. You get the best result in the shortest amount of time. And so I'm confident that as we look out into the future, you know, we think, "Okay, well, is there gonna be more or is there gonna be less simulation?" I think clearly there's going to be more. I think if you think about, you know, are our customers going to be, is it important for customers to be using more, or less high-performance computing optimization capabilities? I think more. Data analytics, same thing, right? More and more data is being generated. We think there's more opportunity to leverage data analytics to make better design decisions and better business decisions. So that, to me, gives me a ton of confidence that, wow, we're in just an incredible space. If you see the types of problems that our customers are working on, it's inspiring to see. And you know, the capability that you know, an aerospace engineer is working on a fighter jet is super, super important to them. But you know, that golf club manufacturer and that engineer that's working on a golf club that's trying to get 10 extra yards out of their driver, that's really super important to them, and we play everywhere in between, so it's fun. I mean, I get a lot out of just talking with customers and understanding the problems that they're trying to solve. It's an incredible amount of innovation happening. I think we could all use, yeah, 10 extra yards on our drive. So, maybe, maybe with that, how do you guys go to market? Obviously it's a, it's incentivized usage, this pooled units model. Maybe kind of dig into, how you actually kind of realize value for the solutions you provide. Yeah, sure. So we have what's called Altair Units model, which is, you know, essentially where we are selling capacity for various product suites to our customer. And that customer can use any of our products within the suite that they buy across their entire organization. It can be one engineer, or it can be an entire team of engineers. They're buying capacity, right? And they can draw down against that capacity. The benefit there for us is that it becomes very frictionless then to sell to additional individuals within a team, or even to additional teams within a company, because that, that encourages usage. And all that means then is that that customer needs to buy more capacity. Same is true for cross-selling products within a portfolio. We want our customers to be using HyperMesh, and we also want our customers to be using our solvers. And, being able to go to a customer and say, "Hey, listen, you already have access to these tools. You can begin using them today. You're gonna draw down on more capacity, but that's okay. We can up your capacity level." And certainly in a renewal situation, that's what we're looking to do, is to increase that capacity. So, it makes the sort of frictionless cross-sell opportunity, I think, really nice, something that we concentrate on. It's also probably contributed in some capacity to the resiliency you're seeing throughout your own business, partly being tied to R&D budgets as well, which maybe are a bit more strategic as enterprises think about what their next 10 years can look like. Can you talk about how being tied to kind of that segment actually helps support the overall resiliency and what you're seeing and hearing from customers today as they think about it? Sure. Yeah, I think, I think companies today realize, that even in somewhat difficult macroeconomic environments, they have to continue to invest in product innovation. You know, the companies that, you know, have been in prior downturns that did not invest in, in product development and innovation paid a pretty hefty price, and I, and, were not competitive when that, when that macro situation inevitably turned around. So you're right. What we are seeing is, is a lot of resiliency in, in R&D budgets. You know, companies are, are looking out for the long term and, and understanding that they need to continue to innovate and, and be competitive, and, and Altair is core to that effort. A big part of that as well, too, has been the emphasis on the gross margin expansion tied to recurring kind of software components of the business, too. Can you talk about how that's driving a lever, or driving a lot of the operational execution relative to the margin targets and the margin performance, that you touched on in the presentation? Sure, yeah. So as I kind of flashed from the time of IPO when software revenue was, you know, in the low 70%, you know, fast-forward to today, where software revenue is about 90% of our total, that makes a pretty big difference on our gross margins. Our gross margin profile for software only is up around 90% or so. Whereas it's something like 20% for services and other. So as that mix has shifted to be much more software-focused, our overall blended gross margin has increased meaningfully over the years, and will continue to do so. That's an important lever for us. We're now, you know, well above 80%, on a non-GAAP gross margin basis. I expect that that's gonna continue to increase, because software growth will continue to outpace services and other revenue growth. So that's one important lever, when we think about adjusted EBITDA margin and just, you know, free cash flow margin even. But the other important lever is down in OpEx, and we expect to get some efficiency out of our OpEx lines as well, in order to continue to grow our adjusted EBITDA margin on what we say about a 200-300 basis point growth over a period of years. How do you think about the partner role in this ecosystem as well? I know you guys have announced a partnership with GCP, being embedded within that ecosystem. There's obviously a host of other solutions that are embedded in your platform as well, but how do you think about the value that partners can deliver here? Yeah, I think there's a lot of value. You know, there's a couple different ways to talk about partners. One of the things that we're proud about is our Altair Partner Alliance, where we've got over 150 partner companies that participate in our Altair Partner Alliance and allow our customers at the enterprise level to access those partner technologies when they're part of our enterprise suite. That's an important partnership. It's also important that we're partnering with, you know, channel partners and system integrators, something that we've been focusing on as a way to, yes, drive forward on go-to-market, but also do that in a way that's efficient, where we're being cost-effective and can get a bit more efficient on the sales and marketing side. It allows our, you know, account representatives to focus on the highest and most highest strategic accounts. And then the channel, the percentage of the revenue that goes through the channel will increase a little bit over time and make us more efficient. And you did just touch on the go-to-market efficiency as well, too. There's been an initiative over the last, I don't know, 18+ months or so, give or take, of verticalizing more of the sales force. Yeah. How do you think about that as an angle to better understand the customer use cases, the customer applicability, to really fuel, that expansion motion or that cross-sell motion within that customer base? Yeah, I'm glad you brought that up. About a year and a quarter ago or so, we moved into verticals. So we started with our top four verticals, being automotive, aerospace and defense, technology, and BFSI. And more recently, starting this year, we added two more verticals, so healthcare, life sciences, heavy machinery, ship and rail. So now we are in six verticals, and we really did that because we recognized that the problems that our customers are facing can be unique to the vertical that they're in. So, automakers are experiencing specific challenges and problems that are specific to them and that may be different from aerospace or technology and so on. It allows our sales teams to more effectively target those customers with the product capabilities that we have, in particular, cross-selling. So understanding how data analytics, for example, is impacting an automaker is different than how data analytics may be impacting a technology company. But it allows our sales team to really focus, get that industry expertise, and then sell effectively into that vertical. You touched on the electronics opportunity, right? The announcement with SimSolid for electronics. SimSolid has been delivering a lot of value to the core customer base as well, but how do we think about the right way of framing kind of where the electronics opportunity can go and how SimSolid is an enabler of that? Yeah, I mean, I think I touched on it a little bit a minute ago. These worlds of electronic simulation and mechanical simulation are coming together, and many companies are realizing that to effectively design a product, particularly an electronics product, there are mechanical considerations that must be made, and these customers are designing systems and electronic systems that have mechanical components. And, you know, SimSolid originally for structures, absolutely breakthrough technology. The underlying foundation of SimSolid works with electronics as well, and there are other capabilities that we plan on bringing in also. This is a really nice step in the right direction for us in order to address that converged tool set. So yeah, we're excited about it and excited to see what happens. And it seems like there might be... you guys are doing a lot, obviously, so there might be a disparate ecosystem of companies that you're competing against. I guess, what's the right way of framing the competitive landscape as well, and kind of obviously the differentiation in the units model and what you can offer? Yeah, I mean, this tends to be a fairly fragmented market. We feel that our product capabilities and technologies can hold our own with the best, right? And we believe that we are the best and can be competitive. I think one of the things that gives us an advantage is that we do have such a broad portfolio set. We do play in many of the same places as our peers and competitors. We've always prided ourselves, actually, on ensuring that our products are compatible with our peers and competitors. But where I believe that we have the edge is we can begin to start having conversations around, "Hey, look, you're in our enterprise suite. You're effectively already paying for a broad portfolio of products. Did you know that we can do this also?" I think given the frictionless model of Altair Units, I think that makes for a really compelling business case. Sure. Sure. And we've touched on a lot as well. Maybe from a financial perspective, we call that a little bit of the margin expansion opportunity, but what's the right way of thinking about kind of the evolution of obviously where Altair was at IPO to where we are today, versus where we can be over the next five or so years? Yeah, I think, there, there's no structural limit in terms of our margin expansion. I think we're gonna continue to get more and more profitable there, consistent with what we laid out in our midterm targets. Along with that comes a really meaningful increase in free cash flow. At the end of the day, that's what I'm interested in, is cash. And EBITDA is an interesting proxy for it, but for us, free cash flow is what we're looking at, too. We've had a really nice free cash flow conversion, and that's something that we're gonna continue to move forward with. Yeah, I think the right way to look at the business is looking at, you know, starting with software revenue growth and, and moving to profitability, and ultimately, that makes its way to cash. With a healthy cash generation profile, what are your kind of objectives from a capital allocation perspective? Obviously, tuck-ins are a part of this, but how do you think about using that cash? Yeah. So we just settled the remainder of our 2024 notes earlier this week. It's about $82 million in cash. Still leaves us with plenty of cash on the balance sheet. We're being smart in terms of the types of assets that we're investing in. You know, I don't expect any dividends. You know, we'll be opportunistic with share buybacks and in the meantime, we're earning 5.5% on the cash in the bank. So we'll be opportunistic and look for the right opportunities. Good, good problems to have. Yeah. Maybe as a way to wrap, Matt, what excites you most about the future for Altair? Obviously, there's a lot of digitization happening, but what gets you up? For me, it's really goes back to our technology and just how amazing it is. I mean, you saw a little bit of a clip on it, you know, in the video here. It really is incredible to see what we've got going on in our company, and you know, looking to see how we can help our customers. Fantastic. Well, thank you, Matt. Appreciate the time. Thank you, everybody, for listening in. We will continue the conversation upstairs in the Maher Room, and look forward to you joining us there. Thank you. Thanks.