Ansys Inc (NASDAQ:ANSS)
Q1 2021 Earnings Call
May 6, 2021, 8:30 a.m. ET
- Prepared Remarks
- Questions and Answers
- Call Participants
Ladies and gentlemen, thank you for standing by, and welcome to ANSYS First Quarter 2020 Earnings Conference Call. With us today are Ajei Gopal, President and Chief Executive Officer; Nicole Anasenes, Chief Financial Officer and Senior Vice President of Finance; and Kelsey DeBriyn, Vice President, Investor and Government Relations. [Operator Instructions]
At this time, I would like to turn the conference over to Ms. DeBriyn for opening remarks. Please go ahead.
Kelsey DeBriyn — Head of Investor Relations & Government Affairs
Good morning, everyone. Our earnings release, the related prepared remarks document and the link to our first quarter Form 10-Q, have all been posted on the homepage of our Investor Relations website. They contain the key financial information and supporting data relative to our first quarter financial results and business update as well as our Q2 and updated fiscal year 2021 outlook and the key underlying quantitative and qualitative assumptions. Today’s presentation contains forward-looking information. Important factors that may affect our future results are discussed in our public filings with the SEC, all of which are available on our corporate website.
We note that uncertainty regarding the impact of the COVID-19 pandemic on our performance could cause actual results to differ materially from our projections. Forward-looking statements are based upon our view of the business as of today, and ANSYS undertakes no obligation to update any such information. During this call, we will be referring to non-GAAP financial measures unless otherwise stated. A discussion of the various items that are excluded and reconciliations of GAAP to the comparable non-GAAP financial measures are included in this morning’s earnings release materials. I would now like to turn the call over to our President and CEO, Ajei Gopal, for his opening remarks. Ajei?
Ajei Gopal — President and Chief Executive Officer
Thank you, Kelsey, and welcome to ANSYS, and thanks to everyone for joining us this morning. I am excited to report that Q1 was an excellent quarter for ANSYS, where we beat our financial guidance for revenue, operating margin and EPS. I’m also pleased that we are ahead of our internal plan for ACV. This is significant because, as I explained on our previous call, ACV is heavily loaded toward the back end of the year following the pattern of the past several years. And we are seeing the continued strengthening of the pipeline of ANSYS customer activities across all major geographies. The strong Q1 and our growing sales pipeline, coupled with our excellent Q4 last year, gives us increased confidence in the momentum of our business and in our ability to execute against our goals.
As a result, we are increasing our annual guidance for ACV, revenue, EPS and operating cash flow. We expect to see annual ACV growth, for example, to increase by over one percentage point in constant currency at the midpoint of our new guidance range. Nicole will provide more details in just a few minutes. In Q1, we were pleased to see that small and medium-sized customers who had slowed their purchasing decisions during the pandemic, showed stronger-than-expected sales growth across geographies and industries. Large customer behavior was as anticipated. From an industry perspective, our traditionally strong sector of hi-tech and semiconductor, aerospace and defense, and automotive and ground transportation continue to be our largest contributors.
Our largest deal in the quarter was a five-year multimillion-dollar agreement with a large North American automotive OEM. This longtime customer is realizing savings by using ANSYS Simulation for its strategic warranty cost control initiative. The manufacturer is also using ANSYS Simulation to identify the sources of electromagnetic noise to prevent interference and wireless communications. This new contract deepens and expands the customer’s use of ANSYS solutions for wireless communications, autonomy, explicit dynamics, materials intelligence and electrification. We saw numerous examples of simulation spurring product innovation and reducing development costs at our recently concluded Simulation World Virtual Conference.
Nearly 40,000 engineers, designers,…