Ajei Gopal
President and Chief Executive Officer at ANSYS
Good morning, everyone and thank you for joining us. Q1 was an outstanding quarter for ANSYS with the company once again surpassing expectations across all key metrics. We grew ACV by 19% in constant currency over Q1 2022, which reflects the power of our world-class products, the ongoing demand from our customers and the strength of our business. As a result of our strong Q1, we have operationally raised our full year guidance for ACV revenue and EPS. Nicole will have the details in a few minutes. ANSYS realized broad-based growth across the business in Q1. We grew revenue by double-digits in every region in the quarter with the Americas leading the way. From a vertical perspective the high-tech and semiconductor, aerospace and defense, and automotive and ground transportation sectors were again our top contributors. Our largest agreement in the quarter was a nearly $74 million three-year contract with a multinational aerospace and defense technology company based in the US We grew the account by showcasing the value ANSYS is driven at this long-time customer including a new workflow with our digital mission engineering and electromagnetic solutions that reduce the time required to bring a critical product to market by 50%. That same workflow is being reused by multiple groups within the company helping to drive more users, more products and more computations. On these calls, I often highlight a specific aspect of our business.
Over the past several quarters, I have discussed the critical role that ANSYS solutions play in sustainability. I highlighted how customers are using our solutions in the development of next-generation semiconductor and I reviewed our leading suite of optical simulation products. For this call, I would like to give you additional insight into the innovation we are driving across our multiphysics portfolio through an easy-to-understand taxonomy of five technology pillars. Our investments in these pillars are applicable across our portfolio and demonstrate how we are building upon our product and technology leadership to further differentiate our solutions. Even more exciting is the interplay amongst these pillars, which is benefiting customers by helping them to solve more complex challenges, while driving our growth through more products, more users and more computations. As you know ANSYS is the leader in advanced numerical simulation methods that accurately predict the multiphysics behavior of engineered products. Our continued investment across our core multiphysics products is reflected in our first technology pillar, which is numerics. Accurately predicting physical phenomena in the real world, is intrinsically complicated.
The numerics pillar encompasses the latest advances in science, mathematics and analytics, which help us gain a deeper understanding of the physical world. It is the essence, of what we do at ANSYS with our core products. Over the last several releases, we have further differentiated our products with advanced numerics capabilities. Let me give you just, a few examples. In ANSYS Mechanical, new functionality enables customers to automatically predict structural crack initiation and growth without the need for expert knowledge. In ANSYS HFSS, our leading electromagnetic solution users can now solve increasingly complicated problems by creating simulations eight times larger than before. And in CFD, our fluids blade row analysis, enables customers to automatically mesh complex blade features while retaining the efficient Hex measures, that turbomachinery engineers demand. In Q1, we signed a new contract with a long-time customer INNIO, which uses advanced numerics capabilities from ANSYS to develop engines that run on a broad range of energy sources including hydrogen and biomethane. INNIO is expanding its usage of ANSYS multiphysics solutions, including structures and fluids, to accelerate time to market and to increase engine efficiency and performance.
Our second technology pillar is high-performance computing or HPC, which is enabling customers to solve problems they couldn't solve otherwise, and to do so faster than anyone thought possible. ANSYS has close partnerships with hyperscale computer partners, and has long taken advantage of distributed memory, multiprocessing and multiple cores to accelerate our customers' products to market, and in the process drive more computations. Again, I could cite numerous examples of new HPC technologies, in our solutions. But in the interest of time, here are just a few. In ANSYS Mechanical, technologies such as hybrid parallel, which blends distributor and shared memory parallel programming techniques, enables simulations to scale to tens of thousands of compute cores. A new multi-GPU solver, empowers users to run ANSYS Fluent natively on multiple GPUs. This CFD solution, which we believe is the first general-purpose CFD solver for GPUs is seven times less expensive in hardware purchase costs and consumes four times less power than an equivalent CPU solution. In Q1, we signed a contract with the International Technology Group, Andritz, which offers a broad portfolio of innovative, power plants, equipment, systems, services and digital solutions for a wide range of industries and end markets.
As part of this agreement, Andritz is leveraging HPC to more rapidly solve complex structural and fluid simulations, to increase the efficiency of its turbines. As a result, Andritz is reducing the amount of physical testing needed to deliver its products to market. The next area of technology emphasis, is artificial intelligence and machine learning. AI is not restricted to a specific ANSYS product line. Instead, it is architectured across our portfolio to improve ease of use, to accelerate time to solve and to further democratize simulation. Let me start with the use of AI to accelerate the time required to complete the simulation. You might recall, that a single large complex simulation, can run for days across hundreds of cores. We are incorporating AI techniques directly into multiple products, to increase the speed and scale of a single simulation. For example, our real-time radar functionality enhances HFSS, is being used to train machine learning algorithms, for radar systems in cluttered environments with moving targets. Combining synthetic radar responses with machine learning, has resulted in a 1,000x speed up, compared to previous methods and has opened the door to exciting new opportunities, for automotive radar and autonomy. Artificial intelligence can also address the multiple iterative simulations needed to get to an optimal design point.
Often customers use ANSYS products to run complex multi-variant optimizations, where they vary design parameters and boundary conditions over multiple simulation runs to reach the best design. Such multiple intrusive runs can be time-consuming due to the number of simulations that need to be performed. To address this issue, our optimization engine ANSYS optiSLang uses AI techniques to reduce the time it takes to intuitively run thousands of simulations for products across the ANSYS portfolio. For example, one customer designing electric motors initially needed seven hours to run an ANSYS-Motor CAD multivariate optimization with 4800 simulations. But with the AI techniques in optiSLang, they solve the same problem in an astonishing 17 minutes. Our fourth technology pillar is cloud and experience. We have made some recent announcements about our cloud marketplace offerings and we are continuing to invest in cloud native capabilities as well as user experience. ANSYS offers two distinct kinds of cloud offerings. The first is Cloud Marketplace and the second is cloud native. And this combination of marketplace and native takes full advantage of past innovations as well as some of our newly announced cloud capabilities. The marketplace offerings deliver flexibility to our customers by taking advantage of familiar ANSYS products, while leveraging the benefit of cloud computing and their own pre-existing relationships with cloud service providers.
ANSYS has announced partnerships with key cloud providers AWS and Microsoft Azure. In quick, Q1, a developer of sustainability technologies for buildings and electric vehicles began using ANSYS Max well on the cloud thanks to ANSYS Gateway powered by AWS. Using this cloud-powered solution the customer is optimizing the electromagnetics of its smart motor design via cloud bursting on several independent workstations. Users can spin up a cluster in minutes and add remote users from satellite locations to improve overall agility and speed proof-of-concept. The company's engineers are simultaneously running 125,000 simulations and analyzing design seven times faster, thanks to the solution. On the cloud native space, we are targeting new users and new use cases with a cloud-based platform for the development and deployment of new workflows and applications. While cloud native simulation is still early in the maturity cycle, we are continuing to advance this exciting technology. The final technology pillar empowers customers to optimize product designs to meet physical and behavioral requirements throughout the engineering design life cycle, thanks to digital engineering. Digital engineering relates to a set of connected federated and interoperable technologies that enable the collaborative execution of engineering tasks.
Today, the vast majority of time and money spent on R&D goes towards failure mode avoidance. Digital engineering enables a more rigorous R&D process based on model-based engineering, system-level simulation and an agile iterative methodology that results in improved product quality and faster throughput with reduce costs. The latest release of ANSYS Minerva improves engineering productivity with efficient stimulation process and data management, while connecting powerful simulation and optimization solutions to an existing ecosystem of tools and processes. And ANSYs SCADE users can employ model-based systems engineering methods to design and generate reliable embedded software. As you might expect, this pillar is driving more users and more products. In Q1, we signed an agreement with a global automotive OEM that is expanding its use of ANSYS products to include additional electronics and model-based system engineering technologies. By taking advantage of these solutions, the automaker can enforce architecture from existing models, allowing for reuse and traceability of parts. The automaker has reported that the use of ANSYS simulation has decreased product development time by month, which is helping the company to keep pace with increasing customer demands.
Our investments across these five technology pillars: Numerics, HBC, AI/ML, Cloud and Experience and digital engineering are critical for our ongoing successes. Even more important is the interplay amongst them, which is fueling ANSYS' growth and widening our product leadership across the board. Our customers across industries are benefiting from many of these advances today, which is helping them to deliver their own innovations to market. Moving to our partner ecosystem. We recently announced a collaboration with Synopsys and Keysight Technologies, in which we developed a radio frequency design reference flow for TSMC's 16-nanometer FinFET compact technology. TSMC's technology is critical for advanced autonomous systems including automotive radar, 5G connectivity, security applications and environmental monitors. We also recently announced that ANSYS is expanding our university partnerships to train the next generation of engineers through a funded curriculum program. We are financially supporting educators to help them develop undergraduate engineering curricula at universities around the world. ANSYS is already being taught at more than 3,000 universities across nearly 90 countries and there have been more than 2.75 million downloads of our free student product.
In Q1, we published the updated version of our corporate responsibility report. In it, we discussed the progress we have made against our ESG goals. Additionally, ANSYS has developed a focused strategy to support our customers' sustainability objectives with a particular emphasis on clean environment, materials and circularity, energy solutions and manufacturing and operational efficiency. Finally, I'm excited to announce that ANSYS has again been certified as a most loved workplace. This certification recognizes great workplaces based on employee surveys that gauge levels of respect, collaboration, support and a sense of belonging. In summary, Q1 was an outstanding quarter that has set the stage for the rest of 2023. As we have demonstrated by again beating guidance across all key metrics, our end markets remain robust and our business has proven its resilience, despite some economic uncertainties. Customers understand our compelling value proposition, which is driving their top line growth and delivering bottom line savings. Our continued momentum, the strong customer relationships, we have consistently demonstrated and our ongoing investments in technology will propel us through 2023 and beyond. As a result, we are more confident than ever in our ability to achieve future milestones.
And with that, I'll now turn the call over to Nicole. Nicole?