Software company Ansys says simulation ‘essential’ in 2020
Engineering simulation software company Ansys has picked up on Gov. Tom Wolf’s language during the COVID-19 pandemic.
Although not following quite the same definition, incoming Chief Financial Officer Nicole Anasenes said the pandemic has shown that the company’s “customers view simulation as essential.”
In her case, “essential” didn’t mean a designation that determined which businesses could continue operations while others were required to shut their doors. Rather, Ansys found simulation became an essential tool to keeping things running while the virus upended normal business operations.
“The pandemic proves that research and design engineers are effective when working from home,” President and CEO Ajei Gopal said on a call with investors Thursday. “They can use simulation to develop products even with no access to their labs.”
The simulation technology Ansys makes has already been used in cars, computers, rockets, cellphones, wearable technology and 5G-enabled laptops. It also is being used to build resilient and temperature-controlled shipping containers to transport pharmaceuticals, including vaccines.
For Ansys, based in Canonsburg, the essential moniker translated to record revenue and income for the last quarter of 2020, eightfigure deals with customers, and the acceleration of a “digital transformation” that makes its product even more relevant — particularly when it comes to transportation, telecommunications, consumer electronics and eco-friendly products such as electric cars and aircraft engines.
“The pandemic has pushed customers to accelerate road maps and innovate faster,” Mr. Gopal said.
After a slow start in 2020, a combination of deferred spending from earlier in the year, optimism around the COVID-19 vaccine and expected stimulus help from the federal government pushed “stronger than expected” sales activity in the last quarter of the year, he said.
For the fourth quarter, Ansys reported net income of $215.6 million, a 30% increase from $165.9 million in the last quarter of 2019.
Revenue for the quarter jumped up 28% to $623.7 million, from $486.2 million the prior year. Diluted earnings per share fell at $2.46, a 29% increase from $1.91 in
the last quarter of 2019.
Ansys reported net income of $433.9 million for fiscal year 2020, down 4% from $451.3 million in fiscal 2019.
Revenue for the year increased 11% to $1.68 billion in 2020 from $1.51 billion the year before. Diluted earnings per share for 2020 hit $4.97, a 5% drop from $5.25 in fiscal year 2019.
In 2021, Ansys anticipates the “business environment” — or its own operations and its customers’ operations — will recover in the second half of the year.
Still, the impact won’t be equal: The company expects its small- and medium-sized clients will still feel the negative economic impacts of the pandemic more than its larger clients, and it also expects to see a shift from “perpetual” licenses to “lease” licenses, or ones that offer more flexibility in a time of economic uncertainty.
In addition to the pandemic’s disruption to the global supply chain, Ansys is feeling the effects of trade restrictions between the U.S. and China. The company estimates the sanctions have impacted annual sales by about $25 million.
Though Ansys classifies China as a “perpetual market” for the company, it is still a small part of the business overall, Mr. Gopal said.
Another small part of the business overall, Ansys Cloud, saw growth of more than 100% in 2020, Mr. Gopal said. The Ansys Cloud offers on-demand, cloud-based computing resources that work with Ansys’ other services.