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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File Number: 0-20853
ANSYS, Inc.
(Exact name of registrant as specified in its charter)
Delaware
04-3219960
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
2600 ANSYS Drive,
Canonsburg,
PA
15317
(Address of Principal Executive Offices)
(Zip Code)
844-462-6797
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of exchange on which registered
Common Stock, $0.01 par value per shareANSSNasdaq Stock Market LLC
(Nasdaq Global Select Market)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes    No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes       No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes     No  
The number of shares of the Registrant's Common Stock, $0.01 par value per share, outstanding as of April 28, 2023 was 86,661,338 shares.



ANSYS, INC. AND SUBSIDIARIES
INDEX
  
Page No.

2

Table of Contents
PART I – FINANCIAL INFORMATION
Item 1.Financial Statements:

ANSYS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share and per share data)March 31,
2023
December 31,
2022
ASSETS
Current assets:
Cash and cash equivalents$507,689 $614,391 
Short-term investments165 183 
Accounts receivable, less allowance for doubtful accounts of $18,300
653,763 760,287 
Other receivables and current assets222,459 289,261 
Total current assets1,384,076 1,664,122 
Long-term assets:
Property and equipment, net80,825 80,838 
Operating lease right-of-use assets127,198 129,140 
Goodwill3,737,195 3,658,267 
Other intangible assets, net870,544 809,183 
Other long-term assets196,305 261,880 
Deferred income taxes84,791 84,515 
Total long-term assets5,096,858 5,023,823 
Total assets$6,480,934 $6,687,945 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$21,938 $14,021 
Accrued bonuses and commissions37,584 160,908 
Accrued income taxes10,908 7,698 
Other accrued expenses and liabilities184,154 198,220 
Deferred revenue396,331 413,989 
Total current liabilities650,915 794,836 
Long-term liabilities:
Deferred income taxes83,758 58,126 
Long-term operating lease liabilities110,227 112,802 
Long-term debt753,653 753,574 
Other long-term liabilities100,219 102,756 
Total long-term liabilities1,047,857 1,027,258 
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value; 2,000,000 shares authorized; zero shares issued or outstanding
  
Common stock, $0.01 par value; 300,000,000 shares authorized; 95,267,307 shares issued
953 953 
Additional paid-in capital1,505,788 1,540,317 
Retained earnings4,883,552 4,782,930 
Treasury stock, at cost: 8,611,394 and 8,317,389 shares, respectively
(1,498,693)(1,335,627)
Accumulated other comprehensive loss(109,438)(122,722)
Total stockholders' equity4,782,162 4,865,851 
Total liabilities and stockholders' equity$6,480,934 $6,687,945 

The accompanying notes are an integral part of the condensed consolidated financial statements.
3

Table of Contents

ANSYS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
(in thousands, except per share data)March 31,
2023
March 31,
2022
Revenue:
Software licenses$219,152 $157,445 
Maintenance and service290,295 267,632 
Total revenue509,447 425,077 
Cost of sales:
Software licenses11,744 8,436 
Amortization19,618 17,252 
Maintenance and service36,290 39,072 
Total cost of sales67,652 64,760 
Gross profit441,795 360,317 
Operating expenses:
Selling, general and administrative188,584 169,755 
Research and development120,335 105,274 
Amortization5,181 4,125 
Total operating expenses314,100 279,154 
Operating income127,695 81,163 
Interest income4,078 527 
Interest expense(10,758)(2,967)
Other expense, net(177)(694)
Income before income tax provision120,838 78,029 
Income tax provision20,216 7,041 
Net income$100,622 $70,988 
Earnings per share – basic:
Earnings per share$1.16 $0.81 
Weighted average shares86,930 87,122 
Earnings per share – diluted:
Earnings per share$1.15 $0.81 
Weighted average shares87,431 87,750 

The accompanying notes are an integral part of the condensed consolidated financial statements.
4

Table of Contents

ANSYS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 Three Months Ended
(in thousands)March 31,
2023
March 31,
2022
Net income$100,622 $70,988 
Other comprehensive income (loss):
Foreign currency translation adjustments13,284 (22,092)
Comprehensive income$113,906 $48,896 

The accompanying notes are an integral part of the condensed consolidated financial statements.
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Table of Contents

ANSYS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Three Months Ended
(in thousands)March 31,
2023
March 31,
2022
Cash flows from operating activities:
Net income$100,622 $70,988 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and intangible assets amortization32,124 29,080 
Operating lease right-of-use assets expense5,381 5,553 
Deferred income tax benefit(2,915)(861)
Provision for bad debts(118)2,326 
Stock-based compensation expense44,171 35,651 
Other307 919 
Changes in operating assets and liabilities:
Accounts receivable185,385 180,259 
Other receivables and current assets68,991 43,479 
Other long-term assets(5,798)(5,983)
Accounts payable, accrued expenses and current liabilities(135,365)(143,883)
Accrued income taxes1,481 (1,119)
Deferred revenue(25,879)455 
Other long-term liabilities(7,621)(5,928)
Net cash provided by operating activities260,766 210,936 
Cash flows from investing activities:
Acquisitions, net of cash acquired(120,584)(4,915)
Capital expenditures(6,892)(5,062)
Other investing activities(914)13 
Net cash used in investing activities(128,390)(9,964)
Cash flows from financing activities:
Purchase of treasury stock(196,494)(155,571)
Restricted stock withholding taxes paid in lieu of issued shares(52,916)(59,196)
Proceeds from shares issued for stock-based compensation8,582 10,122 
Net cash used in financing activities(240,828)(204,645)
Effect of exchange rate fluctuations on cash and cash equivalents1,750 (6,573)
Net decrease in cash and cash equivalents(106,702)(10,246)
Cash and cash equivalents, beginning of period614,391 667,667 
Cash and cash equivalents, end of period$507,689 $657,421 
Supplemental disclosure of cash flow information:
Income taxes paid$7,650 $3,566 
Interest paid$10,606 $2,626 
Fair value of non-cash consideration in connection with acquisitions$5,056 $ 

The accompanying notes are an integral part of the condensed consolidated financial statements.


6

Table of Contents
ANSYS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
 Common StockAdditional
Paid-In
Capital
Retained
Earnings
Treasury StockAccumulated Other Comprehensive (Loss) IncomeTotal
Stockholders'
Equity
(in thousands)SharesAmountSharesAmount
Balance, January 1, 2023
95,267$953 $1,540,317 $4,782,930 8,317 $(1,335,627)$(122,722)$4,865,851 
Treasury shares acquired650 (197,416)(197,416)
Stock-based compensation activity
(34,529)(356)34,350 (179)
Other comprehensive income13,284 13,284 
Net income100,622 100,622 
Balance, March 31, 2023
95,267$953 $1,505,788 $4,883,552 8,611$(1,498,693)$(109,438)$4,782,162 
    
 Common StockAdditional
Paid-In
Capital
Retained
Earnings
Treasury StockAccumulated
Other
Comprehensive Loss
Total
Stockholders'
Equity
(in thousands)SharesAmountSharesAmount
Balance, January 1, 2022
95,267$953 $1,465,694 $4,259,220 8,188 $(1,185,707)$(56,112)$4,484,048 
Treasury shares acquired500 (155,571)(155,571)
Stock-based compensation activity
(50,287)(403)36,865 (13,422)
Other comprehensive loss(22,092)(22,092)
Net income70,988 70,988 
Balance, March 31, 2022
95,267$953 $1,415,407 $4,330,208 8,285$(1,304,413)$(78,204)$4,363,951 

The accompanying notes are an integral part of the condensed consolidated financial statements.

7

Table of Contents
ANSYS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)

1.Organization
ANSYS, Inc. (Ansys, we, us, our) develops and globally markets engineering simulation software and services widely used by engineers, designers, researchers and students across a broad spectrum of industries and academia, including high-tech, aerospace and defense, automotive, energy, industrial equipment, materials and chemicals, consumer products, healthcare and construction.
As defined by the accounting guidance for segment reporting, we operate as one segment.
Given the integrated approach to the multi-discipline problem-solving needs of our customers, a single sale may contain components from multiple product areas and include combined technologies. We also have a multi-year product and integration strategy that will result in new, combined products or changes to the historical product offerings. As a result, it is impracticable for us to provide accurate historical or current reporting among our various product lines.
2.Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information for commercial and industrial companies, the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, the accompanying unaudited condensed consolidated financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements (and notes thereto) included in our Annual Report on Form 10-K for the year ended December 31, 2022 (2022 Form 10-K). The condensed consolidated December 31, 2022 balance sheet presented is derived from the audited December 31, 2022 balance sheet included in the 2022 Form 10-K. In our opinion, all adjustments considered necessary for a fair presentation of the financial statements have been included, and all adjustments are of a normal and recurring nature. Operating results for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for any future period. Certain items in the notes to the condensed consolidated financial statements of prior years have been reclassified to conform to the current year's presentation. These reclassifications had no effect on reported net income, comprehensive income, cash flows, total assets or total liabilities and stockholders' equity.
Accounting Guidance Issued and Not Yet Adopted
Recently issued accounting pronouncements are not expected to have a material impact on our financial position, results of operations or cash flows upon adoption.
Cash and Cash Equivalents
Cash and cash equivalents consist primarily of highly liquid investments such as deposits held at major banks and money market funds. Cash equivalents are carried at cost, which approximates fair value. Our cash and cash equivalents balances comprise the following:
 March 31, 2023December 31, 2022
(in thousands, except percentages)Amount% of TotalAmount% of Total
Cash accounts$405,195 79.8 $503,733 82.0 
Money market funds102,494 20.2 110,658 18.0 
Total$507,689 $614,391 

Our money market fund balances are held in various funds of two issuers.

8

Table of Contents
3.Revenue from Contracts with Customers
Disaggregation of Revenue
The following table summarizes revenue:
Three Months Ended
(in thousands, except percentages)March 31,
2023
March 31,
2022
Revenue:
Subscription lease licenses$147,922 $91,457 
Perpetual licenses71,230 65,988 
Software licenses219,152 157,445 
Maintenance268,593 247,241 
Service21,702 20,391 
Maintenance and service290,295 267,632 
Total revenue$509,447 $425,077 
Direct revenue, as a percentage of total revenue76.3 %72.4 %
Indirect revenue, as a percentage of total revenue23.7 %27.6 %

Our software license revenue is recognized up front, while maintenance and service revenue is generally recognized over the term of the contract. The shift reflected above from indirect to direct revenue was driven primarily by our previously announced acquisition of DYNAmore, a channel partner that was formerly captured in our indirect business.
Deferred Revenue
Deferred revenue consists of billings made or payments received in advance of revenue recognition from customer agreements. The timing of revenue recognition may differ from the timing of billings to customers. Payment terms vary by the type and location of customer and the products or services offered. The time between invoicing and when payment is due is not significant.
The changes in deferred revenue, inclusive of both current and long-term deferred revenue, during the three months ended March 31, 2023 and 2022 were as follows:
(in thousands)20232022
Beginning balance – January 1$435,758 $412,781 
Acquired deferred revenue6,555 84 
Deferral of revenue483,502 423,649 
Recognition of revenue(509,447)(425,077)
Currency translation701 (6,317)
Ending balance – March 31$417,069 $405,120 

Total revenue allocated to remaining performance obligations as of March 31, 2023 will be recognized as revenue as follows:
(in thousands) 
Next 12 months$825,244 
Months 13-24345,708 
Months 25-36147,965 
Thereafter38,567 
Total revenue allocated to remaining performance obligations$1,357,484 

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Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes both deferred revenue and backlog. Our backlog represents deferred revenue associated with installment billings for periods beyond the current quarterly billing cycle and committed contracts with start dates beyond the end of the current period. Revenue recognized during the three months ended March 31, 2023 and 2022 included amounts in deferred revenue and backlog at the beginning of the period of $317.6 million and $244.6 million, respectively.
4.Acquisitions
During the quarter ended March 31, 2023, we completed the acquisition of DYNAmore for a purchase price of $139.2 million, or $126.4 million net of cash acquired. The acquisition expands our position as a simulation solution provider within the automotive industry. The effects of the acquisition were not material to our condensed consolidated results of operations.
During the three months ended March 31, 2023, we incurred acquisition-related expenses of $2.2 million. Acquisition-related expenses are recognized as selling, general and administrative and research and development expenses on the condensed consolidated statements of income.
The assets acquired and liabilities assumed in connection with the acquisition have been recorded based upon management's estimates of the fair market value as of the date of acquisition. The following tables summarize the fair value of consideration and the fair value of identified assets acquired and liabilities assumed for the acquisition at the date of acquisition:
Fair Value of Consideration:
(in thousands)
Cash$134,103 
Non-cash consideration5,056 
Total consideration$139,159 

Recognized Amounts of Identifiable Assets Acquired and Liabilities Assumed:
(in thousands)
Cash$12,779 
Accounts receivable and other tangible assets15,751 
Developed software and core technologies 3,594 
Customer lists75,690 
Trade names2,220 
Accounts payable and other liabilities(7,944)
Deferred revenue(6,555)
Net deferred tax liabilities(24,997)
Total identifiable net assets$70,538 
Goodwill$68,621 
The goodwill, which is not tax-deductible, is attributed to intangible assets that do not qualify for separate recognition, including the assembled workforce of the acquired business and the synergies expected to arise as a result of the acquisition.
The fair value of the assets acquired and liabilities assumed are based on preliminary calculations. The estimates and assumptions for these items are subject to change as additional information about what was known and knowable at the acquisition date is obtained during the measurement period (up to one year from the acquisition date).
We determined the fair value of our intangible assets using various valuation techniques, including the relief-from-royalty method and the multi-period excess earnings method. These models utilize certain unobservable inputs classified as Level 3 measurements as defined by ASC 820, Fair Value Measurements and Disclosures. The determination of fair value requires considerable judgment and is sensitive to changes in underlying assumptions, estimates and market factors. Estimating fair value requires us to make assumptions and estimates regarding our future plans, as well as industry and economic conditions. These assumptions and estimates include, but are not limited to: selection of a valuation methodology, royalty rate, discount rate and attrition rate.
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The weighted-average useful life, valuation method and assumptions used to determine the fair value of the intangible assets acquired are as follows:
Intangible AssetWeighted-Average Useful LifeValuation MethodAssumptions
Developed software and core technologies8 yearsRelief-from-royalty
Royalty rate: 20.0%
Discount rate: 15.5%
Trade names5 yearsRelief-from-royalty
Royalty rate: 1.0%
Discount rate: 15.5%
Customer lists14 yearsMulti-period excess earnings
Attrition rate: 5.0%
Discount rate: 15.5%
2022 Acquisitions
During the year ended December 31, 2022, we completed several acquisitions to enhance our customers' experience. These acquisitions were not individually significant. The combined purchase price of these acquisitions during the year ended December 31, 2022 was $401.7 million, or $390.9 million net of cash acquired.
The operating results of each acquisition have been included in our condensed consolidated financial statements since each respective date of acquisition. The effects of the acquisitions were not material to our condensed consolidated results of operations.
5.Other Receivables and Current Assets and Other Accrued Expenses and Liabilities
Our other receivables and current assets and other accrued expenses and liabilities comprise the following balances:
(in thousands)March 31,
2023
December 31,
2022
Receivables related to unrecognized revenue$144,602 $209,139 
Income taxes receivable, including overpayments and refunds14,458 28,963 
Prepaid expenses and other current assets63,399 51,159 
Total other receivables and current assets$222,459 $289,261 
Accrued vacation46,285 39,118 
Payroll-related accruals38,255 20,716 
Consumption, VAT and sales tax liabilities15,754 41,812 
Accrued expenses and other current liabilities83,860 96,574 
Total other accrued expenses and liabilities$184,154 $198,220 

Receivables related to unrecognized revenue represent the current portion of billings made for customer contracts that have not yet been recognized as revenue.
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6.Earnings Per Share
Basic earnings per share (EPS) amounts are computed by dividing earnings by the weighted average number of common shares outstanding during the period. Diluted EPS amounts assume the issuance of common stock for all potentially dilutive equivalents outstanding. To the extent stock awards are anti-dilutive, they are excluded from the calculation of diluted EPS.
The details of basic and diluted EPS are as follows:
 Three Months Ended
(in thousands, except per share data)March 31,
2023
March 31,
2022
Net income$100,622 $70,988 
Weighted average shares outstanding – basic86,930 87,122 
Dilutive effect of stock plans501 628 
Weighted average shares outstanding – diluted87,431 87,750 
Basic earnings per share$1.16 $0.81 
Diluted earnings per share$1.15 $0.81 
Anti-dilutive shares650 65 

7.Goodwill and Intangible Assets
Intangible assets are classified as follows:
 March 31, 2023December 31, 2022
(in thousands)Gross
Carrying
Amount
Accumulated
Amortization
Gross
Carrying
Amount
Accumulated
Amortization
Finite-lived intangible assets:
Developed software and core technologies
$1,112,781 $(501,164)$1,106,789 $(483,033)
Customer lists278,702 (71,717)205,484 (71,618)
Trade names 189,005 (137,420)186,424 (135,220)
Total$1,580,488 $(710,301)$1,498,697 $(689,871)
Indefinite-lived intangible asset:
Trade name$357 $357 
Finite-lived intangible assets are amortized over their estimated useful lives of two years to seventeen years.
As of March 31, 2023, estimated future amortization expense for the intangible assets reflected above was as follows:
(in thousands) 
Remainder of 2023$74,589 
2024105,244 
2025106,805 
2026108,672 
2027111,166 
2028107,841 
Thereafter255,870 
Total intangible assets subject to amortization870,187 
Indefinite-lived trade name357 
Other intangible assets, net$870,544 

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The changes in goodwill during the three months ended March 31, 2023 and 2022 were as follows:
(in thousands)20232022
Beginning balance – January 1$3,658,267 $3,409,271 
Acquisitions and adjustments(1)
69,227 1,961 
Currency translation9,701 (11,335)
Ending balance – March 31$3,737,195 $3,399,897 
(1) In accordance with the accounting for business combinations, we recorded adjustments to goodwill for the effect of changes in the provisional fair values of the assets acquired and liabilities assumed during the measurement period (up to one year from the acquisition date) as we obtained new information about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date.
During the first quarter of 2023, we completed the annual impairment test for goodwill and the indefinite-lived intangible asset and determined that these assets had not been impaired as of the test date, January 1, 2023. No events or circumstances changed during the three months ended March 31, 2023 that would indicate that the fair values of our reporting unit and indefinite-lived intangible asset are below their carrying amounts.
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8.Fair Value Measurement
The valuation hierarchy for disclosure of assets and liabilities reported at fair value prioritizes the inputs for such valuations into three broad levels:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; or
Level 3: unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value.
A financial asset's or liability's classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.
Our debt is classified within Level 2 of the fair value hierarchy because these borrowings are not actively traded and have a variable interest rate structure based upon market rates. The carrying amount of our debt approximates the estimated fair value. See Note 10, "Debt", for additional information on our borrowings.
The following tables provide the assets carried at fair value and measured on a recurring basis:
  Fair Value Measurements at Reporting Date Using:
(in thousands)March 31,
2023
Quoted Prices in
Active Markets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Assets
Cash equivalents$102,494 $102,494 $ $ 
Short-term investments$165 $ $165 $ 
Deferred compensation plan investments$1,634 $1,634 $ $ 
Equity securities$916 $916 $ $ 
  Fair Value Measurements at Reporting Date Using:
(in thousands)December 31, 2022Quoted Prices in
Active Markets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Assets
Cash equivalents$110,658 $110,658 $ $ 
Short-term investments$183 $ $183 $ 
Deferred compensation plan investments$1,618 $1,618 $ $ 
Equity securities$892 $892 $ $ 

The cash equivalents in the preceding tables represent money market funds, valued at net asset value, with carrying values which approximate their fair values because of their short-term nature.
The short-term investments in the preceding tables represent deposits held by certain foreign subsidiaries. The deposits have fixed interest rates with original maturities ranging from three months to one year.
The deferred compensation plan investments in the preceding tables represent trading securities held in a rabbi trust for the benefit of non-employee directors. These securities consist of mutual funds traded in an active market with quoted prices. As a result, the plan assets are classified as Level 1 in the fair value hierarchy. The plan assets are recorded within other long-term assets on our condensed consolidated balance sheets.
The equity securities represent our investment in a publicly traded company. These securities are traded in an active market with quoted prices. As a result, the securities are classified as Level 1 in the fair value hierarchy. The securities are recorded within other long-term assets on our condensed consolidated balance sheets.
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9.Leases
Our right-of-use assets and lease liabilities primarily include operating leases for office space. Our executive offices and those related to certain domestic product development, marketing, production and administration are located in a 186,000 square foot office facility in Canonsburg, Pennsylvania. The term of the lease is 183 months, which began on October 1, 2014 and expires on December 31, 2029. The lease agreement includes options to renew the contract through August 2044, an option to lease additional space in January 2025 and an option to terminate the lease in December 2025. No options are included in the lease liability as renewal is not reasonably certain. In addition, we are reasonably certain we will not terminate the lease agreement. Absent the exercise of options in the lease, our remaining base rent (inclusive of property taxes and certain operating costs) is $4.5 million per annum through 2024 and $4.7 million per annum for 2025 - 2029.
The components of our global lease cost reflected in the condensed consolidated statements of income are as follows:
 Three Months Ended
(in thousands)March 31,
2023
March 31,
2022
Lease liability cost$7,041 $6,971 
Variable lease cost not included in the lease liability(1)
1,183 1,084 
     Total lease cost$8,224 $8,055 
(1) Variable lease cost includes common area maintenance, property taxes, utilities and fluctuations in rent due to a change in an index or rate.
Other information related to operating leases is as follows:
 Three Months Ended
(in thousands)March 31,
2023
March 31,
2022
Cash paid for amounts included in the measurement of the lease liability:
     Operating cash flows from operating leases$(6,779)$(7,018)
Right-of-use assets obtained in exchange for new operating lease liabilities$4,414 $16,318 
As of March 31,
20232022
Weighted-average remaining lease term of operating leases
6.7 years7.3 years
Weighted-average discount rate of operating leases
3.2 %2.9 %

The maturity schedule of the operating lease liabilities as of March 31, 2023 is as follows:
(in thousands) 
Remainder of 2023$20,886 
202425,316 
202521,759 
202619,415 
202718,078 
Thereafter43,495 
     Total future lease payments148,949 
Less: Present value adjustment(15,100)
     Present value of future lease payments(1)
$133,849 
(1) Includes the current portion of operating lease liabilities of $23.6 million, which is reflected in other accrued expenses and liabilities in the condensed consolidated balance sheets.
There were no material leases that have been signed but not yet commenced as of March 31, 2023.
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10.Debt
On June 30, 2022, we entered into a credit agreement (2022 Credit Agreement) with PNC Bank, National Association, as administrative agent, swing line lender, and an L/C issuer, the lenders party thereto, and the other L/C issuers party thereto. The 2022 Credit Agreement refinanced our previous credit agreements in their entirety. Terms used in this description of the 2022 Credit Agreement with initial capital letters that are not otherwise defined herein are as defined in the 2022 Credit Agreement.
The 2022 Credit Agreement provides for a $755.0 million unsecured term loan facility and a $500.0 million unsecured revolving loan facility, which includes a $50.0 million sublimit for the issuance of letters of credit. The revolving loan facility is available for working capital and general corporate purposes. Each of the term loan facility and the revolving loan facility matures on June 30, 2027.
Borrowings under the term loan and revolving loan facilities accrue interest at a rate that is based on the Term SOFR plus an applicable margin or at the base rate plus an applicable margin, at our election. The base rate is the highest of (i) the Overnight Bank Funding Rate, plus 0.500%, (ii) the PNC Bank, National Association prime rate, and (iii) Daily Simple SOFR plus an adjustment for SOFR plus 1.00%. The applicable margin for the borrowings is a percentage per annum based on the lower of (1) a pricing level determined by our then-current consolidated net leverage ratio and (2) a pricing level determined by our public debt rating (if available).

The 2022 Credit Agreement also provides for the option to add certain foreign subsidiaries as borrowers and to borrow in Euros, Sterling, Yen and Swiss Francs under the revolving loan facility, up to a sublimit of $150.0 million. Borrowings under the revolving loan facility denominated in these currencies will accrue interest at a rate that is based on (a) for Euros, €STR, (b) for Sterling, SONIA, (c) for Yen, TONAR and (d) for Swiss Francs, SARON, plus an applicable margin calculated as described above.
Under the 2022 Credit Agreement, the weighted average interest rate in effect for the three months ended March 31, 2023 was 5.56%. Under the prior credit agreements, the weighted average interest rate in effect for the three months ended March 31, 2022 was 1.35%. The rate in effect as of March 31, 2023 and for the second quarter of 2023 under the 2022 Credit Agreement is 5.87%.
The 2022 Credit Agreement contains customary representations and warranties, affirmative and negative covenants and events of default. The 2022 Credit Agreement also contains a financial covenant requiring us and our subsidiaries to maintain a consolidated net leverage ratio not in excess of 3.50 to 1.00 as of the end of any fiscal quarter (for the four-quarter period ending on such date) with an opportunity for a temporary increase in such consolidated net leverage ratio to 4.00 to 1.00 upon the consummation of certain qualified acquisitions for which the aggregate consideration is at least $250.0 million.
As of March 31, 2023, we had $755.0 million of borrowings outstanding under the term loan, with a carrying value of $753.7 million, which is net of $1.3 million of unamortized debt discounts and issuance costs. The total amount was included in long-term debt. As of March 31, 2023, no borrowings were outstanding under the revolving loan facility.
As of December 31, 2022, we had $755.0 million of borrowings outstanding under the term loan, with a carrying value of $753.6 million, which is net of $1.4 million of unamortized debt discounts and issuance costs. The total amount was included in long-term debt. As of December 31, 2022, no borrowings were outstanding under the revolving loan facility.
We were in compliance with all covenants under the 2022 Credit Agreement as of March 31, 2023 and December 31, 2022.

11.Income Taxes
Our income before income tax provision, income tax provision and effective tax rates were as follows:
 Three Months Ended
(in thousands, except percentages)March 31,
2023
March 31,
2022
Income before income tax provision$120,838 $78,029 
Income tax provision$20,216 $7,041 
Effective tax rate16.7 %9.0 %

The increase in the effective tax rate from the prior year was primarily due to decreased benefits related to stock-based compensation, many of which were recognized discretely. These benefits were offset by non-deductible compensation.
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12.Stock Repurchase Program
Under our stock repurchase program, we repurchased shares as follows:
Three Months Ended
(in thousands, except per share data)March 31,
2023
March 31,
2022
Number of shares repurchased650500 
Average price paid per share$302.34 $311.14 
Total cost$196,494 $155,571 

As of March 31, 2023, 1.1 million shares remained available for repurchase under the program.
13.Stock-Based Compensation
Total stock-based compensation expense and its net impact on basic and diluted earnings per share are as follows:
 Three Months Ended
(in thousands, except per share data)March 31,
2023
March 31,
2022
Cost of sales:
Maintenance and service$2,878 $2,563 
Operating expenses:
Selling, general and administrative23,905 20,444 
Research and development17,388 12,644 
Stock-based compensation expense before taxes44,171 35,651 
Related income tax benefits(18,186)(24,888)
Stock-based compensation expense, net of taxes$25,985 $10,763 
Net impact on earnings per share:
Basic earnings per share$(0.30)$(0.12)
Diluted earnings per share$(0.30)$(0.12)


14.Geographic Information
Revenue to external customers is attributed to individual countries based upon the location of the customer. Revenue by geographic area is as follows:
 Three Months Ended
(in thousands)March 31,
2023
March 31,
2022
United States$246,707 $197,561 
China39,436 25,796 
Germany38,674 30,586 
Japan38,086 37,871 
South Korea21,864 21,940 
Other Europe, Middle East and Africa (EMEA)82,404 74,437 
Other international42,276 36,886 
Total revenue$509,447 $425,077 
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Property and equipment by geographic area is as follows:
(in thousands)March 31,
2023
December 31,
2022
United States$58,916 $58,258 
India5,769 5,978 
EMEA10,886 11,043 
Other international5,254 5,559 
Total property and equipment, net$80,825 $80,838 

15.Contingencies and Commitments
We are subject to various claims, investigations, and legal and regulatory proceedings that arise in the ordinary course of business, including, but not limited to, commercial disputes, labor and employment matters, tax audits, alleged infringement of third parties' intellectual property rights and other matters. In our opinion, the resolution of pending matters is not expected to have a material adverse effect on our consolidated results of operations, cash flows or financial position. However, each of these matters is subject to various uncertainties and it is possible that an unfavorable resolution of one or more of these proceedings could materially affect our consolidated results of operations, cash flows or financial position.
Our Indian subsidiary has several service tax audits pending that have resulted in formal inquiries being received on transactions through mid-2012. We could incur tax charges and related liabilities of $7.1 million. As such charges are not probable at this time, a reserve has not been recorded on the condensed consolidated balance sheet as of March 31, 2023. The service tax issues raised in our notices and inquiries are very similar to the case, M/s Microsoft Corporation (I) (P) Ltd. Vs. Commissioner of Service Tax, New Delhi, wherein the Delhi Customs, Excise and Service Tax Appellate Tribunal (CESTAT) issued a favorable ruling to Microsoft. The Microsoft ruling was subsequently challenged in the Supreme Court by the Indian tax authority and a decision is still pending. We can provide no assurances on the impact that the present Microsoft case's decision will have on our cases, however, an unfavorable ruling in the Microsoft case may impact our assessment of probability and result in the recording of a $7.1 million reserve. We are uncertain as to when these service tax matters will be concluded.
We sell software licenses and services to our customers under contractual agreements. Such agreements generally include certain provisions indemnifying the customer against claims, by third parties, of infringement or misappropriation of their intellectual property rights arising from such customer's usage of our products or services. To date, payments related to these indemnification provisions have been immaterial. For several reasons, including the lack of prior material indemnification claims, we cannot determine the maximum amount of potential future payments, if any, related to such indemnification provisions.
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Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and notes thereto for the three months ended March 31, 2023, and with our audited consolidated financial statements and notes thereto for the year ended December 31, 2022 included in the 2022 Form 10-K filed with the Securities and Exchange Commission (SEC). The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles (GAAP).
Business
Ansys, a corporation formed in 1994, develops and globally markets engineering simulation software and services widely used by engineers, designers, researchers and students across a broad spectrum of industries and academia, including high-tech, aerospace and defense, automotive, energy, industrial equipment, materials and chemicals, consumer products, healthcare and construction. Headquartered south of Pittsburgh, Pennsylvania, we employed 5,900 and 5,600 people as of March 31, 2023 and December 31, 2022, respectively. We focus on the development of open and flexible solutions that enable users to analyze designs on-premises and/or via the cloud, providing a common platform for fast, efficient and cost-conscious product development, from design concept to final-stage testing, validation and deployment. We distribute our suite of simulation technologies through direct sales offices in strategic, global locations and a global network of independent resellers and distributors (collectively, channel partners). It is our intention to continue to maintain this hybrid sales and distribution model. We operate and report as one segment.
When visionary companies need to know how their world-changing ideas will perform, they close the gap between design and reality using Ansys simulation. For more than 50 years, Ansys software has enabled innovators across industries to push the boundaries of product design by using the predictive power of simulation. From sustainable transportation and advanced satellite systems to life-saving medical devices, Ansys powers innovation that drives human advancement.
Our strategy of Pervasive Insights seeks to deepen the use of simulation in our core market, to inject simulation throughout the product lifecycle and extend the accessibility to a broader set of users and use cases. Our business has three vectors of growth:
More products. Our broad and deep multiphysics portfolio enables us to grow with customers as they use simulation to solve more complex problems across a broad set of industries.
More users. Investments in simulation education and user experience simplification has made simulation more accessible to a broader user base.
More computations. Larger and more complex simulations drive more computation, requiring customers to use more Ansys licenses to complete their simulations.
Through decades of investments in the academic community and enhanced user experiences, our solutions have become accessible and relevant beyond our core "engineering" end user, to reach more users upstream and downstream from our core, which is the product validation process. Our multiphysics solutions enable our customers to address increasingly complex R&D challenges from the component through the system and mission level of analysis. Our products seamlessly enable access to high performance compute capacity to run simulations, on-premises or in the cloud, which means our customers' R&D teams are unencumbered by compute capacity limitations that can hinder R&D cycle times.
The engineering software simulation market is strong and growing. The market growth is driven by customers' need for rapid, quality innovation in a cost efficient manner, enabling faster time to market for new products and lower warranty costs. Increasing product complexity is driving sustained demand for simulations. Key industry trends fueling customers' increasing needs for simulation include:
Electrification;
Autonomy;
Connectivity;
The industrial internet of things; and
Sustainability, including minimizing waste and physical prototyping, and improving circularity and development time.

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We have been investing and intend to continue to invest in our portfolio to broaden the range of physics and enable customers to analyze the interactions among physics at the component, system and mission level. Our strategy of Pervasive Insights is aligned with the near-term market growth opportunities and is laying the foundation for a future where simulation can be further democratized to broader classes of end-users and end-use cases.
To augment our organic development roadmaps, we intend to continue our strategic and disciplined acquisition strategy to grow our business. Our strategy is to partner with industry leaders to extend simulation into other ecosystems and customer R&D workflows. Our business is built on a culture of high ethical standards and commitment to diversity, equity, inclusion and belonging.

We license our technology to businesses in a diverse set of industries, educational institutions and governmental agencies. We believe that the features, functionality and integrated multiphysics capabilities of our software products are as strong as they have ever been. The software business is generally characterized by long sales cycles which increase the difficulty of predicting sales for any particular quarter. We make many operational and strategic decisions based upon short- and long-term sales forecasts that are impacted not only by these long sales cycles, but also by current global economic conditions. As a result, we believe that our overall performance is best measured by fiscal year results rather than by quarterly results.

We address the competition and price pressure that we face in the short- and long-term by focusing on expanding the breadth, depth, ease of use and quality of the technologies, features, functionality and integrated multiphysics capabilities of our software products as compared to our competitors; investing in research and development to develop new and innovative products and increasing the capabilities of our existing products; maintaining a diverse industry footprint and focusing on customer needs, training, consulting and support; and enhancing our distribution channels. We also evaluate and execute strategic acquisitions to supplement our global engineering talent, product offerings and distribution channels.

Overview
Overall GAAP and Non-GAAP Results
This section includes a discussion of GAAP and non-GAAP results. For reconciliations of non-GAAP results to GAAP results, see the section titled "Non-GAAP Results" herein.
The 2023 period non-GAAP results exclude the income statement effects of stock-based compensation, excess payroll taxes related to stock-based compensation, amortization of acquired intangible assets, expenses related to business combinations and adjustments for the income tax effect of the excluded items. The 2022 period non-GAAP results also exclude the income statement effects of acquisition accounting adjustments to deferred revenue from business combinations closed prior to 2022. There is no adjustment in 2023 as the impact is not material.
Our GAAP and non-GAAP results for the three months ended March 31, 2023 as compared to the three months ended March 31, 2022 reflected the following growth rates:
Three Months Ended March 31, 2023
GAAPNon-GAAP
Revenue19.8 %18.9 %
Operating income57.3 %36.6 %
Diluted earnings per share42.0 %36.0 %
Our strong results reflect an increase in revenue during the three months ended March 31, 2023 due to broad-based growth across all license types. We also experienced increased operating expenses during the three months ended March 31, 2023, primarily due to increased personnel costs. Additionally, the actual U.S. Dollar reported results were negatively impacted by a stronger U.S. Dollar.
This section also includes a discussion of constant currency results, which we use for financial and operational decision-making and as a means to evaluate period-to-period comparisons by excluding the effects of foreign currency fluctuations on the reported results. All constant currency results presented in this Item 2 exclude the effects of foreign currency fluctuations on the reported results. To present this information, the 2023 period results for entities whose functional currency is a currency other than the U.S. Dollar were converted to U.S. Dollars at rates that were in effect for the 2022 comparable period, rather than the actual exchange rates in effect for the 2023 period. Constant currency growth rates are calculated by adjusting the 2023 period reported amounts by the 2023 period currency fluctuation impacts and comparing to the 2022 comparable period reported amounts.
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Impact of Foreign Currency
Our comparative financial results were impacted by fluctuations in the U.S. Dollar during the three months ended March 31, 2023 as compared to the three months ended March 31, 2022. The impacts on our revenue and operating income as a result of the fluctuations of the U.S. Dollar when measured against our foreign currencies based on 2022 period exchange rates are reflected in the table below. Amounts in brackets indicate an adverse impact from currency fluctuations.
Three Months Ended March 31, 2023
(in thousands)GAAPNon-GAAP
Revenue$(13,891)$(13,891)
Operating income$(3,903)$(4,392)

In constant currency, our growth was as follows:
Three Months Ended March 31, 2023
GAAPNon-GAAP
Revenue23.1 %22.1 %
Operating income62.1 %39.6 %

Other Key Business Metric

Annual Contract Value (ACV) is a key performance metric and is useful to investors in assessing the strength and trajectory of our business. ACV is a supplemental metric to help evaluate the annual performance of the business. Over the life of the contract, ACV equals the total value realized from a customer. ACV is not impacted by the timing of license revenue recognition. ACV is used by management in financial and operational decision-making and in setting sales targets used for compensation. ACV is not a replacement for, and should be viewed independently of, GAAP revenue and deferred revenue as ACV is a performance metric and is not intended to be combined with any of these items. There is no GAAP measure comparable to ACV. ACV is composed of the following:

the annualized value of maintenance and subscription lease contracts with start dates or anniversary dates during the period, plus

the value of perpetual license contracts with start dates during the period, plus

the annualized value of fixed-term services contracts with start dates or anniversary dates during the period, plus

the value of work performed during the period on fixed-deliverable services contracts.

When we refer to the anniversary dates in the definition of ACV above, we are referencing the date of the beginning of the next twelve-month period in a contractually committed multi-year contract. If a contract is three years in duration, with a start date of July 1, 2023, the anniversary dates would be July 1, 2024 and July 1, 2025. We label these anniversary dates as they are contractually committed. While this contract would be up for renewal on July 1, 2026, our ACV performance metric does not assume any contract renewals.

Example 1: For purposes of calculating ACV, a $100,000 subscription lease contract or a $100,000 maintenance contract with a term of July 1, 2023 – June 30, 2024, would each contribute $100,000 to ACV for fiscal year 2023 with no contribution to ACV for fiscal year 2024.

Example 2: For purposes of calculating ACV, a $300,000 subscription lease contract or a $300,000 maintenance contract with a term of July 1, 2023 – June 30, 2026, would each contribute $100,000 to ACV in each of fiscal years 2023, 2024 and 2025. There would be no contribution to ACV for fiscal year 2026 as each period captures the full annual value upon the anniversary date.

Example 3: A perpetual license valued at $200,000 with a contract start date of March 1, 2023 would contribute $200,000 to ACV in fiscal year 2023.
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Our ACV was as follows:
 Three Months Ended March 31,
(in thousands, except percentages)20232022Change
ActualConstant CurrencyActualActualConstant
Currency
AmountAmount%Amount%
ACV$399,407 $411,001 $344,145 $55,262 16.1 %$66,856 19.4 

Our trailing twelve-month recurring ACV, converted from the functional currency to U.S. Dollars at the 2022 period monthly average exchange rates, was as follows:
 
Twelve Months Ended March 31,
Change
(in thousands, except percentages)20232022Amount%
Recurring ACV at 2022 monthly average exchange rates$1,713,249 $1,457,904 $255,345 17.5 
Recurring ACV includes both subscription lease license and maintenance ACV and excludes perpetual license and service ACV.
Industry Commentary:
High-tech, aerospace & defense (A&D) and automotive continue to be our leading industries in 2023 as our value proposition remains highly attractive as companies seek to produce more competitive products while increasing the productivity and efficiency of engineering resources. Customers are heightening their focus on artificial intelligence and machine learning, driving growth in the high-tech industry. Mobile communications, automotive applications and three-dimensional integrated circuits were key segments of high-tech growth in the first quarter. Within the A&D industry, digital transformation technologies remain a necessity for government-led programs, supporting increased investment in our technology and aiding elevated direct engagements across the branched armed services and intelligence community. As automotive manufacturers increase their investments in the development of electric vehicles and advanced driver-assistance systems, we continue to see growth in the automotive industry. The construction industry also had strong growth as the capabilities of multiphysics solutions are a vital component of addressing the diverse needs of the marketplace, with projects ranging from smart city infrastructure to advanced manufacturing.
Geographic Trends:
The following table presents our geographic revenue growth using actual and constant currency rates during the three months ended March 31, 2023 as compared to the three months ended March 31, 2022:

Three Months Ended March 31, 2023
GAAPNon-GAAP
ActualConstant CurrencyActualConstant Currency
Americas25.5 %25.7 %24.5 %24.7 %
EMEA15.3 %20.6 %14.2 %19.5 %
Asia-Pacific14.0 %20.9 %13.0 %19.8 %
Total19.8 %23.1 %18.9 %22.1 %
The value and duration of multi-year subscription lease contracts executed during the period significantly impact the recognition of revenue. As a result, revenue may fluctuate, particularly on a quarterly basis, due to the timing of such contracts, relative differences in duration of long-term contracts from quarter to quarter and changes in the mix of license types sold compared to the prior year. Large swings in revenue growth rates are not necessarily indicative of customers' software usage changes or cash flows during the periods presented.To drive growth, we continue to focus on a number of sales improvement activities across our geographic regions, including sales hiring, pipeline building, productivity initiatives and customer engagement activities.
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Use of Estimates:
The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to contract revenue, standalone selling prices of our products and services, allowance for doubtful accounts receivable, valuation of goodwill and other intangible assets, useful lives for depreciation and amortization, acquired deferred revenue, operating lease assets and liabilities, fair values of stock awards, deferred compensation, income taxes, uncertain tax positions, tax valuation reserves, and contingencies and litigation. We base our estimates on historical experience, market experience, estimated future cash flows and various other assumptions that management believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
Forward-Looking Information
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the Exchange Act). Forward-looking statements are statements that provide current expectations or forecasts of future events based on certain assumptions. Forward-looking statements are subject to risks, uncertainties, and factors relating to our business which could cause our actual results to differ materially from the expectations expressed in or implied by such forward-looking statements.
Forward-looking statements use words such as "anticipate," "believe," "could," "estimate," "expect," "forecast," "intend," "likely," "may," "outlook," "plan," "predict," "project," "should," "target," or other words of similar meaning. Forward-looking statements include those about market opportunity, including our total addressable market. We caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date they are made. We undertake no obligation to update forward-looking statements, whether as a result of new information, future events or otherwise.
The risks associated with the following, among others, could cause actual results to differ materially from those described in any forward-looking statements:

adverse conditions in the macroeconomic environment, including high inflation, recessionary conditions and volatility in equity and foreign exchange markets; political, economic and regulatory uncertainties in the countries and regions in which we operate;

impacts from tariffs, trade sanctions, export controls or other trade barriers including export control restrictions and licensing requirements for exports to China, and impacts from changes to diplomatic relations and trade policy between the United States and Russia or the United States and other countries that may support Russia or take similar actions due to the conflict between Russia and Ukraine;

constrained credit and liquidity due to disruptions in the global economy and financial markets, which may limit or delay availability of credit under our existing or new credit facilities, or which may limit our ability to obtain credit or financing on acceptable terms or at all;

our ability to timely recruit and retain key personnel in a highly competitive labor market for skilled personnel, including potential financial impacts of wage inflation;

declines in our customers’ businesses resulting in adverse changes in procurement patterns; disruptions in accounts receivable and cash flow due to customers’ liquidity challenges and commercial deterioration; uncertainties regarding demand for our products and services in the future and our customers’ acceptance of new products; delays or declines in anticipated sales due to reduced or altered sales and marketing interactions with customers; and potential variations in our sales forecast compared to actual sales;

increased volatility in our revenue due to the timing, duration and value of multi-year subscription lease contracts; and our reliance on high renewal rates for annual subscription lease and maintenance contracts;

our ability to protect our proprietary technology; cybersecurity threats or other security breaches, including in relation to breaches occurring through our products and an increased level of our activity that is occurring from remote global off-site locations; and disclosure and misuse of employee or customer data whether as a result of a cybersecurity incident or otherwise;

our ability and our channel partners’ ability to comply with laws and regulations in relevant jurisdictions; and the outcome of contingencies, including legal proceedings, government or regulatory investigations and tax audit cases;

uncertainty regarding income tax estimates in the jurisdictions in which we operate; and the effect of changes in tax laws and regulations in the jurisdictions in which we operate;
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the quality of our products, including the strength of features, functionality and integrated multiphysics capabilities; our ability to develop and market new products to address the industry’s rapidly changing technology; failures or errors in our products and services; and increased pricing pressure as a result of the competitive environment in which we operate;
investments in complementary companies, products, services and technologies; our ability to complete and successfully integrate our acquisitions and realize the financial and business benefits of the transactions; and the impact indebtedness incurred in connection with any acquisition could have on our operations;

investments in global sales and marketing organizations and global business infrastructure; and dependence on our channel partners for the distribution of our products;

current and potential future impacts of a global health crisis, natural disaster or catastrophe, and the actions taken to address these events by our customers, suppliers, regulatory authorities and our business, on the glob