TROY, Mich., Aug. 09, 2018 (GLOBE NEWSWIRE) -- Altair (Nasdaq:ALTR) released its financial results for the second quarter ended June 30, 2018.

“Altair’s strong second quarter results exceeded our revenue and profitability expectations and reflect continued business momentum,” said James Scapa, Founder, Chairman and CEO. “Our performance is benefitting from growing market demand for CAE solutions that greatly enhance product design across a growing number of industries.”

Scapa continued, “We are seeing the positive impact our organic and inorganic investments are having across the business. As we move into the second half of 2018 and beyond, we are confident Altair is well positioned to generate a compelling combination of strong revenue growth and expanding profitability.”

Second Quarter 2018 Financial Highlights

-- Software product revenue was $72.8 million, an increase of 22% from $59.6 million for the second quarter of 2017. -- Total revenue was $95.6 million, an increase of 17% compared to $81.6 million for the second quarter of 2017. -- GAAP net income was $1.5 million, compared to net loss of $(7.2) million for the second quarter of 2017. Diluted net income per share was $0.02, based on 73.4 million diluted weighted average common shares outstanding, compared to diluted net loss per share of $(0.14) for the second quarter of 2017, based on 50.4 million diluted weighted average common shares outstanding. -- Adjusted EBITDA was $7.3 million, compared to $4.1 million for the second quarter of 2017. Adjusted EBITDA represents net income (loss) adjusted for income tax expense, interest expense, interest income and other, depreciation and amortization, stock-based compensation expense, restructuring charges, asset impairment charges and other special items as determined by management. -- Non-GAAP net income was $3.9 million, compared to $5.1 million for the second quarter of 2017. Non-GAAP net income per share was $0.05, based on 77.0 million non-GAAP diluted common shares outstanding, compared to $0.08 for the second quarter of 2017, based on 62.1 million non-GAAP diluted common shares outstanding. Non-GAAP net income excludes stock-based compensation, amortization of intangible assets related to acquisitions and certain tax adjustments. -- Cash flow from operations was $10.6 million, compared to $6.9 million for the second quarter of 2017. -- Free cash flow, which consists of cash flow from operations less capital expenditures, was $9.2 million compared to $5.5 million for the second quarter of 2017.

Business Outlook

Based on information available as of today, Altair is issuing forward-looking statements on guidance for the third quarter and full year 2018 as indicated below.

Third Quarter Full Year 2018 2018 ------------------------ -------------- ---------------- Software Product Revenue $72.5 to $73.5 $288.0 to $290.0 Total Revenue $95.0 $96.0 $380.0 $382.0 GAAP Net Income $2.0 $2.5 $11.5 $13.0 Adjusted EBITDA $8.0 $8.5 $34.0 $35.5 Non-GAAP Net Income $4.6 $5.1 $21.2 $22.7

(All figures in millions)

Conference Call Information What: Altair Second Quarter 2018 Financial Results Conference Call When: Thursday, August 9, 2018 Time: 4:30 p.m. EDT Live Call: (866) 754-5204, domestic (636) 812-6621, international Replay: (855) 859-2056, passcode 1776298, domestic (404) 537-3406, passcode 1776298, international Webcast: http://investor.altair.com (live & replay)

Non-GAAP Financial Measures This press release contains the following non-GAAP financial measures: Adjusted EBITDA, Non-GAAP Net Income, Non-GAAP Net Income Per Share and Free Cash Flow.

Altair believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to its financial condition and results of operations. The Company’s management uses these non-GAAP measures to compare the Company’s performance to that of prior periods for trend analysis, for purposes of determining executive and senior management incentive compensation and for budgeting and planning purposes. The Company also believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company’s financial measures with other software companies, many of which present similar non-GAAP financial measures to investors.

Company management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. Altair urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company’s business.Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables at the end of this release.

About Altair Altair transforms design and decision making by applying simulation, machine learning and optimization throughout product lifecycles. Our broad portfolio of simulation technology and patented units-based software licensing model enable Simulation-Driven Innovation for our customers. With more than 2,000 employees, Altair is headquartered in Troy, Michigan, USA and operates 71 offices throughout 24 countries. Altair serves more than 5,000 customers across broad industry segments. To learn more, please visit www.altair.com.

Cautionary Language Concerning Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding our business outlook, potential growth, market positioning and future investments, and our reconciliations of projected non-GAAP financial measures. These forward-looking statements are made as of the date of this release and are based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,” variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond Altair’s control. Altair’s actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, risks detailed in Altair’s quarterly and annual reports filed with the Securities and Exchange Commission as well as other documents that may be filed by the Company from time to time with the Securities and Exchange Commission. Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent Altair’s views as of the date of this press release. The Company anticipates that subsequent events and developments will cause its views to change. Altair undertakes no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing Altair’s views as of any date subsequent to the date of this press release.

Investor RelationsBrian DenyeauICR248-614-2400 ext. 346 ir@altair.com

Media RelationsDave SimonAltair248-614-2400 ext. 332 pr@altair.com

Altair Engineering Inc. and subsidiaries Consolidated balance sheets June 30, December 31, 2018 2017 ------------ ------------ (In thousands, except per share data) (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 199,230 $ 39,213 Accounts receivable, net 73,793 86,635 Inventory, net 1,786 1,980 Income tax receivable 7,260 6,054 Prepaid expenses and other current assets 13,290 10,006 - -------- - - -------- - Total current assets 295,359 143,888 Property and equipment, net 30,112 31,446 Goodwill 63,263 62,706 Other intangible assets, net 24,846 24,461 Deferred tax assets 8,113 8,351 Other long-term assets 16,077 17,019 TOTAL ASSETS $ 437,770 $ 287,871 - -------- - - -------- - LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Current portion of long-term debt $ 390 $ 232 Accounts payable 5,957 4,880 Accrued compensation and benefits 26,393 26,560 Obligations for acquisition of businesses 9,842 13,925 Other accrued expenses and current liabilities 20,443 21,744 Deferred revenue 147,261 130,122 - -------- - - -------- - Total current liabilities 210,286 197,463 Long-term debt, net of current portion 690 178 Deferred revenue, non-current 9,256 9,640 Other long-term liabilities 13,474 17,647 TOTAL LIABILITIES 233,706 224,928 - -------- - - -------- - Commitments and contingencies MEZZANINE EQUITY 2,352 2,352 STOCKHOLDERS’ EQUITY: Preferred stock ($0.0001 par value), authorized 45,000 shares, none issued and — — outstanding Common stock ($0.0001 par value) Class A common stock, authorized 513,797 shares, issued and outstanding 36,518 4 2 and 26,725 shares as of June 30, 2018 and December 31, 2017, respectively Class B common stock, authorized 41,203 shares, issued and outstanding 33,171 and 3 4 36,508 shares as of June 30, 2018 and December 31, 2017, respectively Additional paid-in capital 369,579 232,156 Accumulated deficit (161,066 ) (166,499 ) Accumulated other comprehensive loss (6,808 ) (5,072 ) - -------- - - -------- - TOTAL STOCKHOLDERS’ EQUITY 201,712 60,591 TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY $ 437,770 $ 287,871 - -------- - - -------- -

Altair Engineering Inc. and subsidiaries Consolidated statements of operations (Unaudited) Three months ended Six months ended June June 30, 30, ---------------------- ------------------------ (in thousands, except per share data) 2018 2017 2018 2017 ---------- ---------- ----------- ----------- Revenue Software $ 72,813 $ 59,600 $ 140,956 $ 113,697 Software related services 8,707 8,204 18,180 17,175 - ------ - - ------ - - ------- - - ------- - Total software 81,520 67,804 159,136 130,872 Client engineering services 12,417 12,365 24,497 24,594 Other 1,629 1,477 3,664 3,062 - ------ - - ------- - Total revenue 95,566 81,646 187,297 158,528 - ------ - - ------ - - ------- - - ------- - Cost of revenue Software* 11,983 8,729 22,905 17,633 Software related services 6,512 7,114 13,221 13,773 - ------ - - ------ - - ------- - - ------- - Total software 18,495 15,843 36,126 31,406 Client engineering services 9,960 9,828 20,160 19,969 Other 1,001 1,247 2,212 2,297 - ------ - - ------- - Total cost of revenue 29,456 26,918 58,498 53,672 - ------ - - ------ - - ------- - - ------- - Gross profit 66,110 54,728 128,799 104,856 Operating expenses: Research and development* 24,744 22,838 47,447 41,608 Sales and marketing* 20,183 19,428 39,160 36,338 General and administrative* 17,412 21,201 34,402 37,290 Amortization of intangible assets 1,986 1,155 3,926 2,098 Other operating income (392 ) (2,736 ) (2,583 ) (3,330 ) Total operating expenses 63,933 61,886 122,352 114,004 - ------ - - ------ - - ------- - - ------- - Operating income (loss) 2,177 (7,158 ) 6,447 (9,148 ) Interest expense 45 548 61 1,159 Other (income) expense, net (176 ) 427 (1,076 ) 786 - ------ - - ------ - - ------- - - ------- - Income (loss) before income taxes 2,308 (8,133 ) 7,462 (11,093 ) Income tax expense (benefit) 795 (887 ) 2,029 (1,659 ) Net income (loss) $ 1,513 $ (7,246 ) $ 5,433 $ (9,434 ) - ------ - - ------ - - ------- - - ------- - Income (loss) per share: Net income (loss) per share attributable to common $ 0.02 $ (0.14 ) $ 0.08 $ (0.19 ) stockholders, basic Net income (loss) per share attributable to common $ 0.02 $ (0.14 ) $ 0.07 $ (0.19 ) stockholders, diluted Weighted average shares outstanding: Weighted average number of shares used in computing net 65,580 50,374 64,614 50,255 income (loss) per share, basic Weighted average number of shares used in computing net 73,391 50,374 72,881 50,255 income (loss) per share, diluted

*Amounts include stock-based compensation expense as follows (in thousands): (Unaudited) Three months Six months ended June 30, ended June 30, --------------- --------------- 2018 2017 2018 2017 ----- -------- ----- -------- Cost of revenue – software $ 8 $ 11 $ 16 $ 16 Research and development 108 3,009 155 3,784 Sales and marketing 134 1,684 175 2,115 General and administrative 184 6,464 304 8,122 - ------ - ------ Total stock-based compensation expense $ 434 $ 11,168 $ 650 $ 14,037 - --- - ------ - --- - ------

Altair Engineering Inc. and subsidiaries Consolidated statements of cash flows (Unaudited) Six months ended June 30, ------------------------ (In thousands) 2018 2017 ----------- ----------- OPERATING ACTIVITIES: Net income (loss) $ 5,433 $ (9,434 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 7,525 5,084 Provision for bad debt 269 116 Stock-based compensation expense 650 14,037 Deferred income taxes (283 ) (3,679 ) Other, net (154 ) 34 Changes in assets and liabilities: Accounts receivable 11,743 11,412 Prepaid expenses and other current assets (2,927 ) (3,850 ) Other long-term assets (278 ) (2,567 ) Accounts payable 335 955 Accrued compensation and benefits 73 (1,531 ) Other accrued expenses and current liabilities (4,496 ) (2,331 ) Deferred revenue 19,423 17,871 Net cash provided by operating activities 37,313 26,117 - ------- - - ------- - INVESTING ACTIVITIES: Payments for acquisition of businesses, net of cash acquired (7,028 ) (6,437 ) Capital expenditures (3,130 ) (2,335 ) Payments for acquisition of developed technology (2,738 ) (2,120 ) Other investing activities, net 38 (28 ) Net cash used in investing activities (12,858 ) (10,920 ) - ------- - - ------- - FINANCING ACTIVITIES: Proceeds from issuance of Class A common stock in follow-on public offering, 135,572 — net of underwriters' discounts and commissions Proceeds from the exercise of stock options 1,668 476 Payments for follow-on public offering and initial public offering costs (468 ) (869 ) Payments for redemption of common stock (119 ) (611 ) Principal payments on long-term debt (76 ) (5,248 ) Payments on revolving commitment — (53,564 ) Borrowings under revolving commitment — 44,227 Other financing activities (147 ) (20 ) Net cash provided by (used in) financing activities 136,430 (15,609 ) - ------- - - ------- - Effect of exchange rate changes on cash, cash equivalents and restricted cash (877 ) 962 - ------- - - ------- - Net increase in cash, cash equivalents and restricted cash 160,008 550 Cash, cash equivalents and restricted cash at beginning of year 39,578 17,139 Cash, cash equivalents and restricted cash at end of period $ 199,586 $ 17,689 - ------- - - ------- - Supplemental disclosure of cash flow: Interest paid $ 41 $ 1,163 Income taxes paid $ 3,660 $ 2,352 Supplemental disclosure of non-cash investing and financing activities: Capital leases $ 1,010 $ — Property and equipment in accounts payable and other accrued expenses $ 935 $ 155 and current liabilities Follow-on public offering costs in accounts payable $ 88 $ — Promissory notes issued and deferred payment obligations for acquisitions $ 278 $ 2,728 Issuance of common stock with put rights $ — $ 2,345 Initial public offering costs in other long-term assets $ — $ 1,522 Issuance of common stock in connection with acquisitions $ — $ 415

The following table provides a reconciliation of Non-GAAP net income and Non-GAAP diluted earnings per share to net income (loss) and earnings (loss) per share - diluted, the most comparable GAAP financial measures (in thousands): (Unaudited) Three months ended Six months ended June 30, June 30, 2018 2017 2018 2017 -------- ---------- -------- ---------- Net income (loss) $ 1,513 $ (7,246 ) $ 5,433 $ (9,434 ) Stock-based 434 11,168 650 14,037 compensation expense Amortization of 1,986 1,155 3,926 2,098 intangible assets Non-GAAP net income $ 3,933 $ 5,077 $ 10,009 $ 6,701 - ------ - ------ - - ------ - ------ - Earnings (loss) per $ 0.02 $ (0.14 ) $ 0.07 $ (0.19 ) share - diluted Non-GAAP earnings per $ 0.05 $ 0.08 $ 0.13 $ 0.11 share - diluted GAAP diluted shares outstanding: Weighted average number of shares used in computing 73,391 50,374 72,881 50,255 net income (loss) per share, diluted Non-GAAP diluted shares outstanding: Number of shares used in computing 77,000 62,100 77,000 62,100 net income per share, diluted

The following table provides a reconciliation of Adjusted EBITDA to net income (loss), the most comparable GAAP financial measure (in thousands): (Unaudited) Three months ended Six months ended June June 30, 30, 2018 2017 2018 2017 - ----- - ------ - - ------ - - ------ - Net income (loss) $ 1,513 $ (7,246 ) $ 5,433 $ (9,434 ) Income tax expense (benefit) 795 (887 ) 2,029 (1,659 ) Stock-based compensation expense 434 11,168 650 14,037 Interest expense 45 548 61 1,159 Interest income and other(1) 536 (2,046 ) (719 ) (2,131 ) Depreciation and amortization 3,982 2,610 7,525 5,084 - ----- - ------ - - ------ - - ------ - Adjusted EBITDA $ 7,305 $ 4,147 $ 14,979 $ 7,056 - ----- - ------ - - ------ - - ------ - Includes an impairment charge for royalty contracts resulting in $0.9 million and $1.8 million of expense for the three and six months ended (1) June 30, 2018, respectively. Includes a non-recurring adjustment for a change in estimated legal expenses resulting in $2.0 million of income for the six months ended June 30, 2018, and three and six months ended June 30, 2017.

The following table provides a reconciliation of Free Cash Flow to net cash provided by operating activities, the most comparable GAAP financial measure (in thousands): (Unaudited) Three months ended Six months ended June June 30, 30, ---------------------- ---------------------- 2018 2017 2018 2017 - ------ - - ------ - - ------ - - ------ - Net cash provided by operating activities $ 10,624 $ 6,915 $ 37,313 $ 26,117 Capital expenditures (1,446 ) (1,366 ) (3,130 ) (2,335 ) - ------ - - ------ - - ------ - - ------ - Free cash flow $ 9,178 $ 5,549 $ 34,183 $ 23,782 - ------ - - ------ - - ------ - - ------ -

The following table provides a reconciliation of projected net income to projected Non-GAAP net income, the most comparable GAAP financial measure (in thousands): (Unaudited) ------------------------------------ Three months Year ending ending September 30, December 31, 2018 2018 ---------------- ------------------ low high low high ------- ------- -------- -------- Net income $ 2,000 $ 2,500 $ 11,500 $ 13,000 Stock-based compensation expense 600 600 1,700 1,700 Amortization of intangible assets 2,000 2,000 8,000 8,000 Non-GAAP net income $ 4,600 $ 5,100 $ 21,200 $ 22,700 - ----- - ----- - ------ - ------

The following table provides a reconciliation of projected Adjusted EBITDA to projected net income, the most comparable GAAP financial measure (in thousands): (Unaudited) ----------------------------------------------------------- Three months Year ending ending September 30, December 31, 2018 2018 ---------------- ------------------- low high low high ------- ------- -------- -------- Net income $ 2,000 $ 2,500 $ 11,500 ) $ 13,000 Income tax expense 1,200 1,200 6,000 6,000 Stock-based compensation expense 600 600 1,700 1,700 Interest expense - - - - Interest income and other - - - - Depreciation and amortization 4,000 4,000 14,600 14,600 Other non-recurring charges(1) 200 200 200 200 Adjusted EBITDA $ 8,000 $ 8,500 $ 34,000 $ 35,500 - ----- - ----- - ------ - ------ (1) Represents projected non-recurring costs related to impairment charges.