ANSS
#Thank you.
More macro, basically.
I mean, there are elements of both because, as we mentioned, the maturation curve, we need it to be a little bit faster than it was.
But it is the macro thing.
I mean, you just, again, if you even read the news that's come out over the last three months.
I mean it's not that we're reading that news and adjusting, we are hearing from our customers things that echo what you are also reading in the broader news.
So there are pockets in Asia that were typically much more robust 12 months ago.
Now, a couple of those are tending to soften up.
There's a lot of mixed bag in Europe, so we factored those in.
But, again, it's all driven out of the pipeline build, the forecast, and the guidance going in.
But as you say, it's a very modest ---+ it's not much of a change, but we still want to reflect it in the things that we actually see.
Okay, well, the first thing you'd see is that at the upper-end accounts, where we had the focus, we've got a very good coverage there.
Now keep in mind, we did a couple of specific things.
We took our more experienced sales reps and we put them into a named account realm.
I'm sorry, for recent listeners who may not know some of those terms, but essentially it was on focusing them on limited number of accounts, such that they would actually spend their time doing more developmental activities as opposed to ad hoc responses.
Now, those have started to ramp up in the next [tier].
However, it took those people time to evolve and cover those accounts.
Now, in the territory basis then we had more of the new sales capacity put in there.
And essentially, that is one that therefore needs to take a little bit more ramp-up and that is the area where we have seen the slowest uptake.
And you would expect a little bit more resistance in that, given the fact that the macro headwinds are a little bit higher.
So we think that it takes a little bit more time to ramp those up and basically those will key right at a handful of initiatives, that I mentioned that we already have in place, because that is a strong target area for us.
Hi, <UNK>.
No problem.
Good morning, <UNK>.
Well, you're absolutely right, cloud computing does fit this model in the long term very well.
And for the very reason that it implies virtually infinite computing, however, therein also lies the issues that customers are looking at.
Because infinite computing can cost ---+ even if it's more economic, it can cost infinite dollars.
And as a result, what they don't want to do is, for instance, open up the tap and leave the water running and then all of a sudden find out that they've gotten caught in a very difficult economic model.
That is the reason, as I mentioned, for the economic evaluations and proof-of-concepts that are going on right now.
This really is not fundamentally different than what they always did when they were building their internal clouds.
And, in general, that's why a lot of people didn't have 100,000 node clusters because, well, they don't need it most of the time, so they are not going to invest to have one sitting around.
So, we also think that being able to look at that model, of how people do that internal, and buy what they normally would, but now have the access to scale up on those periodic bases when they need a full scale simulation.
But, given the fact that there isn't a body of history on this, and that people are very cognizant of budgets right now, that is what's driving the overall issue.
Now, on top of it, it used to be that R&D would decide, okay, I'm going to buy this computer and as long as IT says, yes, this is an okay computer, then the purchase was relatively an R&D expenditure.
We find, as the cloud and the larger scale computing comes in, R&D has to do it, but in addition, IT has to also really sanction and bring it into play.
Actually make it usable, take care of cybersecurity concerns that weren't there before, all the budgetary concerns, and things like that.
And the expansionary opportunities of that model are what also drives the complexity and uncertainty that's causing these extended evaluation cycles right now.
Well, <UNK>, if you look back, our ability to return value to our stockholders, the greatest value has been created through the M&A that we've done over the past two decades.
And so, there are opportunities for us to continue to accelerate our longer term strategy and our customer adoption model with our customers, through M&A.
So we want to make sure that we balance and prioritize where we think the greatest opportunity to return value to our shareholders is.
Good morning, <UNK>.
Well, I think the first part is, you have to have requisite capabilities, and normally for people to shift, you have to have additional capabilities over and above.
But as I mentioned, the portfolio, there are a couple of elements, one of which ---+ moving to a broader usage pattern.
Second of all, was also being able to use a broader usage pattern in terms of users, I'm sorry.
And then, broader usage in terms of the span of products, there in some of the portfolio aspect.
So, again, superior capabilities and superior breadth in terms of that, plus a platform for running on those; it just turns out, from a long-term perspective, if you're building a long-term strategy for simulation adoption, this probably has a much better survivability curve.
Well, sorry if you see the ---+ the semiconductor market for us grew at a low single-digit amount.
So, given the fact that it's a fair amount of our business, mathematically it had probably a 1% or 2% drag associated with that.
Again, being short-term one, as we said, we don't think it's a fundamental one.
<UNK>, just one point to add on to that.
One of the things that we are seeing is, China was a very bright spot for us in the quarter.
And, one of the bright spots around China is the government's push in the semiconductor industry.
As a result of that, we are seeing benefits from our portfolio of solutions that we've got for semis, as the Chinese government makes a push into that.
So while there were some dampening effects from continued consolidation, we are seeing some positive aspects of portfolio in China from semis.
No.
At this point in time, no, but keep in mind that I don't think that's closed.
<UNK>, add anything.
I don't think that's closed.
I think they announced the acquisition.
We really haven't seen an impact one way or the other on that currently.
But no, it's not been a factor.
Yes, hold on, <UNK>.
Negative $5.1 million.
Well, yes, it is now.
We see the ---+ first of all, in the first iteration of somebody moving to an enterprise license agreement, that type of assumption, it's the first one that takes the time.
Thereafter, it then tends to ramp up.
Sometimes it can get into several months when you talking about the dollars and you're talking about the legal agreements and understanding all the terms going in there.
So, we'll see that.
That's usually a cost of switching the kind of arrangement that's felt in the first iteration and then isn't felt in the outlying years.
The second part is, we also mentioned the addition of the new logos.
Now, the new logos, that's a real good thing for us because we have a pretty good track record of continuing to build off of those and retaining those customers.
However, whenever a customer takes that first step into simulation, they normally take a little bit longer to absorb it also.
So you'll see at both ends of the curve, that just from the procurement differences, that the sales cycles are lengthening out.
I am saying that's in addition to the overall effect you might see from the macros that can go up or down at any given period of time.
Well, yes.
When you stretch out the time, yes.
The thing is that even if these behaviors persist, we would expect that the low-end customers will have that normal digestion process for their first iteration of software.
However, as we get more and more customers on the enterprise license agreement, we've already covered that first cost of getting them on.
But as we mentioned, it's getting those added on is a several-year process.
It just tends to taper off and build over time.
But once you hit steady state, you're really past that large-end digestion problem.
I'm not sure.
We did not cut with a chainsaw, <UNK>.
What we did was took a look, as I said in my comments.
One, we are at this point factoring in no economic improvement through the remainder of the year.
So we expect the same kind of headwinds that we've been facing.
We don't see upticks in oil and gas happening anytime soon.
So our business in parts of Europe, in Brazil, in Southwest, in Canada will continue to be, unfortunately negatively impacted by that sector.
We have factored in the pipeline that we see, of those larger accounts, in the second half that are currently being worked now, largely in North America with a handful in Europe.
And we've also factored in some of the softness in some of the parts of Asia.
So we have tried to take a conservative view on our business for the remainder of the year so that we don't have to repeat this going forward.
Okay, thanks, Robert, and thanks everybody on the call.
So I'd actually like to thank all of you for your participation on our call today and for the continuing following and support of ANSYS.
And I'd also like to thank the entire ANSYS team, by the way, for their dedication in Q1 and the continued commitment to driving the results that we've been talking about.
So, bottom line is that we believe that we're well-positioned to drive growth and achieve our goals.
So basically we have an unparalleled product offering.
We've got extraordinary longevity with our customers.
We've got extremely high recurring revenues and the opportunity to augment our growth through new product features and exciting technologies from acquisition.
So, we're committed to driving revenue and earnings growth, but also keeping that operating cash flow and significant returns for our stockholders.
So, I thank all of you very much and we will catch you no later than at the next quarterly call.
