TROY, Mich., Feb. 22, 2024 (GLOBE NEWSWIRE) -- Altair (NASDAQ:ALTR), a global leader in computational intelligence, today released its financial results for the fourth quarter and full year ended December 31, 2023.

"Altair finished 2023 with a strong fourth quarter, notching record-high revenue and profit for the quarter and full-year," said James R. Scapa, founder, chairman and chief executive officer of Altair. "We are seeing strong momentum across a number of verticals, where computational intelligence is becoming increasingly important. We are excited about our recent and upcoming product releases and believe that our investments in engineering AI are positioning us as a leader in this important and growing domain."

"Our global team worked hard to achieve outstanding results for 2023, and we finished the year exceeding our profitability goals. We are thrilled to have surpassed the 20% adjusted EBITDA margin target for 2023 that we established three years ago," said Matt Brown, chief financial officer of Altair. "Our strong results despite somewhat difficult macroeconomic conditions demonstrate the importance of our products in solving our customers' most important challenges. We are excited about the tremendous opportunity ahead of us as we continue to execute on our financial targets."

Fourth Quarter 2023 Financial Highlights

Software product revenue was $155.9 million compared to $145.0 million for the fourth quarter of 2022, an increase of 7.6% in reported currency and 6.7% in constant currency
Total revenue was $171.5 million compared to $160.4 million for the fourth quarter of 2022, an increase of 6.9% in reported currency and 6.0% in constant currency
Net income was $19.7 million compared to $12.1 million for the fourth quarter of 2022. Net income per share, diluted was $0.22 based on 89.0 million diluted weighted average common shares outstanding, compared to net income per share, diluted of $0.14 for the fourth quarter of 2022, based on 87.5 million diluted weighted average common shares outstanding. Net income margin was 11.5% compared to net income margin of 7.5% for the fourth quarter of 2022
Non-GAAP net income was $41.1 million, compared to non-GAAP net income of $27.5 million for the fourth quarter of 2022, an increase of 49.2%. Non-GAAP net income per share, diluted was $0.46 based on 89.0 million non-GAAP diluted common shares outstanding, compared to non-GAAP net income per share, diluted of $0.31 for the fourth quarter of 2022, based on 87.5 million non-GAAP diluted common shares outstanding
Adjusted EBITDA was $53.6 million compared to $38.7 million for the fourth quarter of 2022, an increase of 38.3%. Adjusted EBITDA margin was 31.2% compared to 24.1% for the fourth quarter of 2022
Cash provided by operating activities was $21.7 million, compared to $13.0 million for the fourth quarter of 2022
Free cash flow was $19.3 million, compared to $10.1 million for the fourth quarter of 2022.

Full Year 2023 Financial Highlights

Software product revenue was $550.0 million compared to $506.5 million for the full year of 2022, an increase of 8.6% in reported currency and 9.8% in constant currency
Total revenue was $612.7 million compared to $572.2 million for the full year of 2022, an increase of 7.1% in reported currency and 8.2% in constant currency
Net loss was $(8.9) million compared to net loss of $(43.4) million for the full year of 2022. Net loss per share, diluted was $(0.11) based on 80.6 million diluted weighted average common shares outstanding, compared to net loss per share, diluted of $(0.55) for the full year of 2022, based on 79.5 million diluted weighted average common shares outstanding. Net loss margin was -1.5% compared to net loss margin of -7.6% for the full year of 2022
Non-GAAP net income was $98.8 million, compared to non-GAAP net income of $75.6 million for the full year of 2022, an increase of 30.6%. Non-GAAP net income per share, diluted was $1.13 based on 87.6 million non-GAAP diluted common shares outstanding, compared to non-GAAP net income per share, diluted of $0.89 for the full year of 2022, based on 85.4 million non-GAAP diluted common shares outstanding
Adjusted EBITDA was $129.1 million compared to $108.6 million for the full year of 2022, an increase of 18.9%. Adjusted EBITDA margin was 21.1% compared to 19.0% for the full year of 2022
Cash provided by operating activities was $127.3 million, compared to $39.6 million for the full year of 2022
Free cash flow was $117.1 million, compared to $29.9 million for the full year of 2022.

Business Outlook

Based on information available as of today, Altair is issuing the following guidance for the first quarter and full year 2024:


(in millions, except %)	First Quarter 2024							Full Year 2024
Software Product Revenue	$	152		to	$	155		$	600		to	$	610
Growth Rate		1.6	%			3.6	%		9.1	%			10.9	%
Growth Rate - Constant Currency		0.8	%			2.8	%		8.3	%			10.1	%
Total Revenue	$	167			$	170		$	663			$	673
Growth Rate		0.6	%			2.4	%		8.2	%			9.8	%
Growth Rate - Constant Currency		-0.1	%			1.7	%		7.5	%			9.1	%
Net Income	$	8.0			$	11.0		$	30.0			$	37.7
Non-GAAP Net Income	$	29.5			$	31.7		$	114.4			$	120.4
Adjusted EBITDA	$	37			$	40		$	143			$	151
Net Cash Provided by Operating Activities								$	140			$	148
Free Cash Flow								$	129			$	137

Conference Call Information

What:	Altair's Fourth Quarter and Full Year 2023 Financial Results Conference Call
When:	Thursday, February 22, 2024
Time:	5 p.m. ET
Webcast:	http://investor.altair.com (live & replay)

Non-GAAP Financial Measures

This press release contains the following non-GAAP financial measures: Non-GAAP Net Income, Non-GAAP Net Income Per Share, Billings, Adjusted EBITDA, Free Cash Flow, Non-GAAP Gross Profit and Non-GAAP Operating Expense.

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.

Non-GAAP net income excludes stock-based compensation, amortization of intangible assets related to acquisitions, restructuring charges, asset impairment charges, non-cash interest expense, other special items as identified by management and described elsewhere in this press release, and the impact of non-GAAP tax rate to income tax expense, which approximates our tax rate excluding discrete items and other specific events that can fluctuate from period to period.

Non-GAAP diluted common shares includes the diluted weighted average shares outstanding per GAAP regardless of whether the Company is in a loss position.

Billings consists of total revenue plus the change in deferred revenue, excluding deferred revenue from acquisitions.

Adjusted EBITDA represents net income 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 identified by management and described elsewhere in this press release.

Free cash flow consists of cash flow from operations less capital expenditures.

Non-GAAP gross profit represents gross profit adjusted for stock-based compensation expense, restructuring expense and other special items as identified by management and described elsewhere in this press release.

Non-GAAP operating expense represents operating expense excluding stock-based compensation expense, amortization, restructuring charges, asset impairment charges and other special items as identified by management and described elsewhere in this press release.

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 is a global leader in computational intelligence that provides software and cloud solutions in simulation, high-performance computing (HPC), data analytics and AI. Altair enables organizations across all industries to compete more effectively and drive smarter decisions in an increasingly connected world – all while creating a greener, more sustainable future. For more information, visit https://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, our guidance for the first quarter and full year 2024, our statements regarding our expectations for 2024, 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 our forward-looking statements due to a number of factors, including but not limited to, the 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.

Media Relations

Altair

Dave Simon

248-614-2400 ext. 332

dls@altair.com

Investor Relations

The Blueshirt Group

Monica Gould

212-871-3927

ir@altair.com

ALTAIR ENGINEERING INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited)

	December 31,
(in thousands)	2023			2022
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	467,459		$	316,146
Accounts receivable, net		190,461			170,279
Income tax receivable		16,650			11,259
Prepaid expenses and other current assets		26,053			29,142
Total current assets		700,623			526,826
Property and equipment, net		39,803			37,517
Operating lease right of use assets		30,759			33,601
Goodwill		458,125			449,048
Other intangible assets, net		83,550			107,609
Deferred tax assets		9,955			9,727
Other long-term assets		40,678			40,410
TOTAL ASSETS	$	1,363,493		$	1,204,738
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	8,995		$	10,434
Accrued compensation and benefits		45,081			42,456
Current portion of operating lease liabilities		8,825			10,396
Other accrued expenses and current liabilities		48,398			56,371
Deferred revenue		131,356			113,081
Current portion of convertible senior notes, net		81,455			—
Total current liabilities		324,110			232,738
Convertible senior notes, net		225,929			305,604
Operating lease liabilities, net of current portion		22,625			24,065
Deferred revenue, non-current		32,347			31,379
Other long-term liabilities		47,151			41,216
TOTAL LIABILITIES		652,162			635,002
Commitments and contingencies
STOCKHOLDERS' EQUITY
Preferred stock ($0.0001 par value), authorized 45,000 shares, none issued or outstanding		—			—
Common stock ($0.0001 par value)
Class A common stock, authorized 513,797 shares, issued and outstanding 55,240 and 52,277 shares as of December 31, 2023 and 2022, respectively		5			5
Class B common stock, authorized 41,203 shares, issued and outstanding 26,814 and 27,745 shares as of December 31, 2023 and 2022, respectively		3			3
Additional paid-in capital		864,135			721,307
Accumulated deficit		(130,503	)		(121,577	)
Accumulated other comprehensive loss		(22,309	)		(30,002	)
TOTAL STOCKHOLDERS' EQUITY		711,331			569,736
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,363,493		$	1,204,738

ALTAIR ENGINEERING INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

	Three Months Ended December 31, 2023						Year Ended December 31, 2023
(in thousands, except per share data)	2023			2022			2023			2022
Revenue
License	$	113,172		$	107,418		$	393,144		$	363,520
Maintenance and other services		42,761			37,535			156,830			142,988
Total software		155,933			144,953			549,974			506,508
Software related services		7,751			7,518			28,032			30,661
Total software and related services		163,684			152,471			578,006			537,169
Client engineering services		6,561			6,469			29,497			28,883
Other		1,258			1,493			5,198			6,169
Total revenue		171,503			160,433			612,701			572,221
Cost of revenue
License		3,200			9,111			15,088			20,497
Maintenance and other services		14,340			13,318			56,094			51,946
Total software *		17,540			22,429			71,182			72,443
Software related services		5,655			5,119			21,830			21,858
Total software and related services		23,195			27,548			93,012			94,301
Client engineering services		5,129			5,187			24,450			23,577
Other		849			1,119			4,329			5,011
Total cost of revenue		29,173			33,854			121,791			122,889
Gross profit		142,330			126,579			490,910			449,332
Operating expenses:
Research and development *		52,519			51,934			212,645			202,542
Sales and marketing *		43,595			43,539			176,138			163,884
General and administrative *		17,096			18,234			70,887			72,288
Amortization of intangible assets		7,708			8,828			30,851			27,510
Other operating (income) expense, net		(1,178	)		(572	)		146			(9,955	)
Total operating expenses		119,740			121,963			490,667			456,269
Operating income (loss)		22,590			4,616			243			(6,937	)
Interest expense		1,533			1,526			6,116			4,377
Other (income) loss, net		(8,794	)		(9,183	)		(18,492	)		16,899
Income (loss) before income taxes		29,851			12,273			12,619			(28,213	)
Income tax expense		10,176			208			21,545			15,216
Net income (loss)	$	19,675		$	12,065		$	(8,926	)	$	(43,429	)
Income (loss) per share:
Net income (loss) per share attributable to common stockholders, basic	$	0.24		$	0.15		$	(0.11	)	$	(0.55	)
Net income (loss) per share attributable to common stockholders, diluted	$	0.22		$	0.14		$	(0.11	)	$	(0.55	)
Weighted average shares outstanding:
Weighted average number of shares used in computing net income (loss) per share, basic		81,760			80,266			80,596			79,472
Weighted average number of shares used in computing net income (loss) per share, diluted		88,977			87,498			80,596			79,472

* Amounts include stock-based compensation expense as follows (in thousands):

	(Unaudited)
	Three Months Ended December 31,				Year Ended December 31,
(in thousands)	2023		2022		2023		2022
Cost of revenue – software	$	2,303	$	2,086	$	10,095	$	8,351
Research and development		7,332		9,670		33,842		36,250
Sales and marketing		6,271		7,865		28,376		30,370
General and administrative		3,252		2,642		13,268		9,816
Total stock-based compensation expense	$	19,158	$	22,263	$	85,581	$	84,787

	(Unaudited)
	Three Months Ended December 31,				Year Ended December 31,
(in thousands)	2023		2022		2023		2022
Employee stock-based compensation plans	$	16,688	$	15,933	$	73,548	$	59,555
Post combination expense in connection with acquisitions		2,470		6,330		12,033		25,232
Total stock-based compensation expense	$	19,158	$	22,263	$	85,581	$	84,787

ALTAIR ENGINEERING INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited)

	Year Ended December 31,
(in thousands)	2023			2022			2021
OPERATING ACTIVITIES:
Net loss	$	(8,926	)	$	(43,429	)	$	(8,794	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		39,124			35,504			25,644
Amortization of debt discount and issuance costs		1,869			1,792			11,428
Stock-based compensation expense		85,581			84,787			44,549
Deferred income taxes		(2,319	)		(4,164	)		(1,502	)
Loss (gain) on mark-to-market adjustment of contingent consideration		5,706			(7,153	)		—
Expense on repurchase of convertible senior notes		—			16,621			—
Other, net		74			387			1,271
Changes in assets and liabilities:
Accounts receivable		(19,141	)		(34,175	)		(15,645	)
Prepaid expenses and other current assets		(1,915	)		1,014			(9,026	)
Other long-term assets		(52	)		2,852			(6,682	)
Accounts payable		(1,878	)		3,771			(3,857	)
Accrued compensation and benefits		1,783			280			7,761
Other accrued expenses and current liabilities		9,068			(59,463	)		6,365
Deferred revenue		18,333			40,946			10,111
Net cash provided by operating activities		127,307			39,570			61,623
INVESTING ACTIVITIES:
Capital expenditures		(10,193	)		(9,648	)		(7,849	)
Payments for acquisition of businesses, net of cash acquired		(3,236	)		(134,541	)		(53,983	)
Other investing activities, net		(2,423	)		(10,322	)		(650	)
Net cash used in investing activities		(15,852	)		(154,511	)		(62,482	)
FINANCING ACTIVITIES:
Proceeds from the exercise of common stock options		36,140			3,577			2,262
Proceeds from employee stock purchase plan contributions		7,978			8,976			4,222
Payments for repurchase and retirement of common stock		(6,255	)		(19,659	)		—
Proceeds from issuance of convertible senior notes, net of underwriters' discounts and commissions		—			224,265			—
Repurchase of convertible senior notes		—			(192,422	)		—
Payments for issuance costs of convertible senior notes		—			(1,523	)		—
Proceeds from private placement of common stock		—			—			200,000
Payments on revolving commitment		—			—			(30,000	)
Other financing activities		(97	)		(233	)		(537	)
Net cash provided by financing activities		37,766			22,981			175,947
Effect of exchange rate changes on cash, cash equivalents and restricted cash		1,397			(5,094	)		(2,623	)
Net increase (decrease) in cash, cash equivalents and restricted cash		150,618			(97,054	)		172,465
Cash, cash equivalents and restricted cash at beginning of year		316,958			414,012			241,547
Cash, cash equivalents and restricted cash at end of period	$	467,576		$	316,958		$	414,012

Financial Results

The following table provides a reconciliation of Non-GAAP net income and Non-GAAP net income per share – diluted, to net income (loss) and net income (loss) per share – diluted, the most comparable GAAP financial measures:

	(Unaudited)
	Three Months Ended December 31,						Year Ended December 31,
(in thousands, except per share amounts)	2023			2022			2023			2022
Net income (loss)	$	19,675		$	12,065		$	(8,926	)	$	(43,429	)
Stock-based compensation expense		19,158			22,263			85,581			84,787
Amortization of intangible assets		7,708			8,828			30,851			27,510
Non-cash interest expense		470			467			1,869			1,806
Impact of non-GAAP tax rate⁽¹⁾		(4,261	)		(9,468	)		(13,158	)		(11,346	)
Special adjustments and other⁽²⁾		(1,659	)		(6,614	)		2,553			16,272
Non-GAAP net income	$	41,091		$	27,541		$	98,770		$	75,600

Net income (loss) per share, diluted	$	0.22		$	0.14		$	(0.11	)	$	(0.55	)
Non-GAAP net income per share, diluted	$	0.46		$	0.31		$	1.13		$	0.89

GAAP diluted shares outstanding:		88,977			87,498			80,596			79,472
Non-GAAP diluted shares outstanding:		88,977			87,498			87,642			85,392

(1) The Company uses a non-GAAP effective tax rate of 26%.

(2) The three months ended December 31, 2023, includes a $1.2 million loss from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition and $2.9 million currency gains on acquisition-related intercompany loans. The three months ended December 31, 2022, includes $6.9 million currency gains on acquisition-related intercompany loans and a $0.3 million loss from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. The twelve months ended December 31, 2023, includes a $5.7 million loss from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition and $3.2 million currency gains on acquisition-related intercompany loans. The twelve months ended December 31, 2022, includes $16.6 million expense on repurchase of convertible senior notes, $6.8 million currency losses on acquisition-related intercompany loans, and a $7.2 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition.

The following table provides a reconciliation of Adjusted EBITDA to net income (loss), the most comparable GAAP financial measure:

	(Unaudited)
	Three Months Ended December 31,						Year Ended December 31,
(in thousands)	2023			2022			2023			2022
Net income (loss)	$	19,675		$	12,065		$	(8,926	)	$	(43,429	)
Income tax expense		10,176			208			21,545			15,216
Stock-based compensation expense		19,158			22,263			85,581			84,787
Interest expense		1,533			1,526			6,116			4,377
Depreciation and amortization		9,853			11,412			39,124			35,504
Special adjustments, interest income and other⁽¹⁾		(6,822	)		(8,733	)		(14,302	)		12,145
Adjusted EBITDA	$	53,573		$	38,741		$	129,138		$	108,600

(1) The three months ended December 31, 2023, includes a $1.2 million loss from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, $2.9 million currency gains on acquisition-related intercompany loans, and $5.2 million of interest income. The three months ended December 31, 2022, includes $6.9 million currency gains on acquisition-related intercompany loans, a $0.3 million loss from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, and $2.1 million of interest income. The twelve months ended December 31, 2023, includes a $5.7 million loss from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, $3.2 million currency gains on acquisition-related intercompany loans, and $16.9 million of interest income. The twelve months ended December 31, 2022, includes $16.6 million expense on repurchase of convertible senior notes, $6.8 million currency losses on acquisition-related intercompany loans, a $7.2 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, and $4.1 million of interest income.

The following table provides a reconciliation of Free Cash Flow to net cash provided by operating activities, the most comparable GAAP financial measure:

	(Unaudited)
	Three Months Ended December 31,						Year Ended December 31,
(in thousands)	2023			2022			2023			2022
Net cash provided by operating activities⁽¹⁾	$	21,651		$	13,036		$	127,307		$	39,570
Capital expenditures		(2,311	)		(2,927	)		(10,193	)		(9,648	)
Free Cash Flow⁽¹⁾	$	19,340		$	10,109		$	117,114		$	29,922

(1) The twelve months ended December 31, 2022, includes a $65.9 million payment in January 2022 for a damages judgment assumed as part of an acquisition in 2021.

The following table provides a reconciliation of Non-GAAP gross profit to gross profit, the most comparable GAAP financial measure, and a comparison of Non-GAAP gross margin (Non-GAAP gross profit as a percentage of total revenue) to gross margin (gross profit as a percentage of total revenue), the most comparable GAAP financial measure:

	(Unaudited)
	Three Months Ended December 31, 2023						Year Ended December 31,
(in thousands)	2023			2022			2023			2022
Gross profit	$	142,330		$	126,579		$	490,910		$	449,332
Stock-based compensation expense		2,303			2,086			10,095			8,351
Non-GAAP gross profit	$	144,633		$	128,665		$	501,005		$	457,683

Gross profit margin		83.0	%		78.9	%		80.1	%		78.5	%
Non-GAAP gross margin		84.3	%		80.2	%		81.8	%		80.0	%

The following table provides a reconciliation of Non-GAAP operating expense to Total operating expense, the most comparable GAAP financial measure:

	(Unaudited)
	Three Months Ended December 31, 2023						Year Ended December 31,
(in thousands)	2023			2022			2023			2022
Total operating expense	$	119,740		$	121,963		$	490,667		$	456,269
Stock-based compensation expense		(16,855	)		(20,177	)		(75,486	)		(76,436	)
Amortization		(7,708	)		(8,828	)		(30,851	)		(27,510	)
(Gain) loss on mark-to-market adjustment of contingent consideration		(1,212	)		(329	)		(5,706	)		7,153
Non-GAAP operating expense	$	93,965		$	92,629		$	378,624		$	359,476

The following table provides a reconciliation of Billings to revenue, the most comparable GAAP financial measure:

	(Unaudited)
	Three Months Ended December 31,						Year Ended December 31,
(in thousands)	2023			2022			2023			2022
Revenue	$	171,503		$	160,433		$	612,701		$	572,221
Ending deferred revenue		163,703			144,460			163,703			144,460
Beginning deferred revenue		(138,933	)		(116,540	)		(144,460	)		(106,032	)
Deferred revenue acquired		(149	)		(449	)		(149	)		(3,047	)
Billings	$	196,124		$	187,904		$	631,795		$	607,602

The following table provides revenue, Billings and Adjusted EBITDA on a constant currency basis:

	(Unaudited)
	Three Months Ended December 31, 2023							Three Months Ended December 31, 2022		Increase/ (Decrease) %
(in thousands)	As reported		Currency changes			As adjusted for constant currency		As reported		As reported			As adjusted for constant currency
Software revenue	$	155.9	$	(1.3	)	$	154.6	$	145.0		7.6	%		6.7	%
Total revenue	$	171.5	$	(1.5	)	$	170.0	$	160.4		6.9	%		6.0	%
Billings	$	196.1	$	(1.4	)	$	194.7	$	187.9		4.4	%		3.6	%
Adjusted EBITDA	$	53.6	$	0.3		$	53.9	$	38.7		38.3	%		39.1	%


	(Unaudited)
	Year Ended December 31, 2023							Year Ended December 31, 2022		Increase/ (Decrease) %
(in thousands)	As reported		Currency changes			As adjusted for constant currency		As reported		As reported			As adjusted for constant currency
Software revenue	$	550.0	$	6.4		$	556.4	$	506.5		8.6	%		9.8	%
Total revenue	$	612.7	$	6.6		$	619.3	$	572.2		7.1	%		8.2	%
Billings	$	631.8	$	5.1		$	636.9	$	607.6		4.0	%		4.8	%
Adjusted EBITDA	$	129.1	$	5.2		$	134.3	$	108.6		18.9	%		23.7	%

Change in Classification of Indirect Costs

Beginning in the first quarter of 2023, the Company refined its classification of certain indirect costs to reflect the way management is now reviewing the information in decision making and to improve comparability with peers. These indirect costs include certain IT, facilities, and depreciation expenses that were previously reported primarily in General and administrative expense. These indirect costs have now been reclassified to Research and development, Sales and marketing, and General and administrative expenses based on global headcount. Management believes this refined methodology better reflects the nature of the costs and financial performance of the Company.

As a result, the Company's consolidated statements of operations have been recast for prior periods presented to reflect the effects of the changes to Research and development, Sales and marketing, and General and administrative expense. There was no net impact to total operating expenses, income from operations, net income or net income per share for any periods presented. The consolidated balance sheets, consolidated statements of comprehensive income, consolidated statements of changes in stockholders' equity, and the consolidated statements of cash flows were not affected by changes in the presentation of these costs.

Each prior period that will be presented in the forthcoming Form 10-Q and Form 10-K filings will be recast to conform to current period presentation. The following tables provide the relevant financial results as previously reported, as recast for the current period and forthcoming filings, and the associated impacts of the changes. Within these tables, the references to periods such as "FY 2021" and "Q1 2022" refer to the corresponding periods as reported in the applicable Form 10-K, Form 10-Q, or Form 8-K filings.

The following table summarizes the changes made to the consolidated statements of operations (in thousands):

	Previously Reported
	FY 2021			Q1 2022			Q2 2022			Q3 2022			Q4 2022			FY 2022
Operating expenses:
Research and development	$	151,049		$	43,094		$	46,477		$	48,781		$	47,511		$	185,863
Sales and marketing		132,750			35,682			39,116			39,244			41,203			155,245
General and administrative		91,500			23,569			24,367			24,677			24,993			97,606
Amortization of intangible assets		18,357			5,903			6,208			6,571			8,828			27,510
Other operating income, net		(3,482	)		(781	)		(5,767	)		(2,835	)		(572	)		(9,955	)
Total operating expenses	$	390,174		$	107,467		$	110,401		$	116,438		$	121,963		$	456,269

	Recast
	FY 2021			Q1 2022			Q2 2022			Q3 2022			Q4 2022			FY 2022
Operating expenses:
Research and development	$	167,341		$	47,079		$	50,437		$	53,092		$	51,934		$	202,542
Sales and marketing		141,484			37,840			41,153			41,352			43,539			163,884
General and administrative		66,474			17,426			18,370			18,258			18,234			72,288
Amortization of intangible assets		18,357			5,903			6,208			6,571			8,828			27,510
Other operating income, net		(3,482	)		(781	)		(5,767	)		(2,835	)		(572	)		(9,955	)
Total operating expenses	$	390,174		$	107,467		$	110,401		$	116,438		$	121,963		$	456,269

	Change
	FY 2021			Q1 2022			Q2 2022			Q3 2022			Q4 2022			FY 2022
Operating expenses:
Research and development	$	16,292		$	3,985		$	3,960		$	4,311		$	4,423		$	16,679
Sales and marketing		8,734			2,158			2,037			2,108			2,336			8,639
General and administrative		(25,026	)		(6,143	)		(5,997	)		(6,419	)		(6,759	)		(25,318	)
Amortization of intangible assets		—			—			—			—			—			—
Other operating income, net		—			—			—			—			—			—
Total operating expenses	$	—		$	—		$	—		$	—		$	—		$	—

Business Outlook

The following table provides a reconciliation of projected Non-GAAP net income to projected net income, the most comparable GAAP financial measure:

	(Unaudited)
	Three Months Ending March 31, 2024						Year Ending December 31, 2024
(in thousands)	Low			High			Low			High
Net income	$	8,000		$	11,000		$	30,000		$	37,700
Stock-based compensation expense		18,900			18,900			74,500			74,500
Amortization of intangible assets		7,400			7,400			28,800			28,800
Non-cash interest expense		500			500			1,500			1,500
Impact of non-GAAP tax rate⁽¹⁾		(5,300	)		(6,100	)		(20,400	)		(22,100	)
Non-GAAP net income	$	29,500		$	31,700		$	114,400		$	120,400

(1) The Company uses a non-GAAP effective tax rate of 25%.

The following table provides a reconciliation of projected Adjusted EBITDA to projected net income, the most comparable GAAP financial measure:

	(Unaudited)
	Three Months Ending March 31, 2024						Year Ending December 31, 2024
(in thousands)	Low			High			Low			High
Net income	$	8,000		$	11,000		$	30,000		$	37,700
Income tax expense		4,500			4,500			17,700			18,000
Stock-based compensation expense		18,900			18,900			74,500			74,500
Interest (income) expense, net		(3,900	)		(3,900	)		(16,600	)		(16,600	)
Depreciation and amortization		9,500			9,500			37,400			37,400
Adjusted EBITDA	$	37,000		$	40,000		$	143,000		$	151,000

The following table provides a reconciliation of projected Free Cash Flow to projected net cash provided by operating activities, the most comparable GAAP financial measure:

	(Unaudited)
	Year Ending December 31, 2024
(in thousands)	Low			High
Net cash provided by operating activities	$	140,000		$	148,000
Capital expenditures		(11,000	)		(11,000	)
Free cash flow	$	129,000		$	137,000

Altair Announces Fourth Quarter and Full Year 2023 Financial Results