UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission File Number: 0-20853
ANSYS, Inc.
(Exact name of registrant as specified in its charter)
Delaware
04-3219960
State or other jurisdiction of incorporation or organization
(I.R.S. Employer Identification No.)
2600 ANSYS Drive,
Canonsburg,
PA
15317
(Address of principal executive offices)
(Zip Code)
844-462-6797
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.01 par value per share
ANSS
Nasdaq Stock Market LLC
(Nasdaq Global Select Market)
Securities registered pursuant to section 12(g) of the Act:
None
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§
232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth
company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange
Act.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the
correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No x
The aggregate market value of the voting stock held by non-affiliates of the registrant, based upon the closing sale price per share of the registrant's common stock on
June 30, 2024, as reported on the Nasdaq Global Select Market, was $23,147,000,000.
The number of shares of the registrant's common stock, par value $0.01 per share, outstanding as of February 14, 2025 was 87,651,781 shares.
Documents Incorporated By Reference:
Portions of the Proxy Statement for the registrant's 2025 Annual Meeting of Stockholders are incorporated by reference into Part III.
ANSYS, Inc.
ANNUAL REPORT ON FORM 10-K FOR FISCAL YEAR 2024
Table of Contents
PART I
Item 1.
Business
6
Item 1A.
Risk Factors
19
Item 1B.
Unresolved Staff Comments
31
Item 1C.
Cybersecurity
32
Item 2.
Properties
33
Item 3.
Legal Proceedings
33
Item 4.
Mine Safety Disclosures
34
PART II
Item 5.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
35
Item 6.
[Reserved]
37
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations
38
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
56
Item 8.
Financial Statements and Supplementary Data
57
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
57
Item 9A.
Controls and Procedures
57
Item 9B.
Other Information
58
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
58
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
59
Item 11.
Executive Compensation
59
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
59
Item 13.
Certain Relationships and Related Transactions, and Director Independence
59
Item 14.
Principal Accountant Fees and Services
59
PART IV
Item 15.
Exhibit and Financial Statement Schedules
60
Item 16.
Form 10-K Summary
96
SIGNATURES
97
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Important Factors Regarding Future Results
Information provided by us in this Annual Report on Form 10-K may contain forward-looking statements concerning, among other things, such matters as
projected financial performance, market and industry segment growth, product development and commercialization, the proposed transaction with
Synopsys, Inc. (Synopsys), including the expected date of closing and the potential benefits thereof, or other aspects of future operations. Such statements,
made pursuant to the safe harbor established by the securities laws, are based on the assumptions and expectations of management at the time such
statements are made. We caution investors that our performance (and, therefore, any forward-looking statement) is subject to risks and uncertainties.
Various important factors including, but not limited to, those discussed in Item 1A. Risk Factors, may cause our future results to differ materially from
those projected in any forward-looking statement. All information presented is as of December 31, 2024, unless otherwise indicated.
Note About Forward-Looking Statements
The following discussion should be read in conjunction with the audited consolidated financial statements and notes thereto included elsewhere in this
Annual Report on Form 10-K. Our discussion and analysis of our financial condition and results of operations in Part II, Item 7 of this Annual Report on
Form 10-K are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in
the United States of America (GAAP). The preparation of these financial statements requires us to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our
estimates, including those related to contract revenue, standalone selling prices of our products and services, allowance for doubtful accounts receivable,
valuation of goodwill and other intangible assets, useful lives for depreciation and amortization, operating lease assets and liabilities, fair value of stock
awards, deferred compensation, income taxes, uncertain tax positions, tax valuation reserves, and contingencies and litigation. We base our estimates on
historical experience, market experience, estimated future cash flows and various other assumptions that management believes are reasonable under the
circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates.
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934 (the Exchange Act). Forward-looking statements are statements that provide current expectations or forecasts of
future events based on certain assumptions. Forward-looking statements are subject to risks, uncertainties, and factors relating to our business which could
cause our actual results to differ materially from the expectations expressed in or implied by such forward-looking statements.
Forward-looking statements use words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “likely,” “may,” “outlook,”
“plan,” “predict,” “project,” “should,” “target,” or other words of similar meaning. Forward-looking statements include those about market opportunity,
including our total addressable market, the proposed transaction with Synopsys, including the expected date of closing and the potential benefits thereof,
and other aspects of future operations. We caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of
the date they are made. We undertake no obligation to update forward-looking statements, whether as a result of new information, future events or
otherwise, except as may be required by law.
The risks associated with the following, among others, could cause actual results to differ materially from those described in any forward-looking
statements:
•
our ability to complete the proposed transaction with Synopsys on anticipated terms and timing, including completing the associated divestiture of
our PowerArtist RTL business and obtaining regulatory approvals, and other conditions related to the completion of the transaction with Synopsys;
•
the realization of the anticipated benefits of the proposed transaction with Synopsys, including potential disruptions to our and Synopsys’
businesses and commercial relationships with others resulting from the announcement, pendency, or completion of the proposed transaction and
uncertainty as to the long-term value of Synopsys’ common stock;
•
restrictions on our operations during the pendency of the proposed transaction with Synopsys that could impact our ability to pursue certain
business opportunities or strategic transactions, including tuck-in M&A;
•
adverse conditions in the macroeconomic environment, including inflation, recessionary conditions and volatility in equity and foreign exchange
markets;
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•
political, economic and regulatory uncertainties in the countries and regions in which we operate;
•
impacts from tariffs, trade sanctions, export controls or other trade barriers, including export control restrictions and licensing requirements for
exports to China;
•
impacts resulting from the conflict between Israel and Hamas and other countries and groups in the Middle East, including impacts from changes
to diplomatic relations and trade policy between the United States and other countries resulting from the conflict;
•
impacts from changes to diplomatic relations and trade policy between the United States and Russia or between the United States and other
countries that may support Russia or take similar actions due to the conflict between Russia and Ukraine;
•
constrained credit and liquidity due to disruptions in the global economy and financial markets, which may limit or delay availability of credit
under our existing or new credit facilities, or which may limit our ability to obtain credit or financing on acceptable terms or at all;
•
our ability to timely recruit and retain key personnel in a highly competitive labor market, including potential financial impacts of wage inflation
and potential impacts due to the proposed transaction with Synopsys;
•
our ability to protect our proprietary technology; cybersecurity threats or other security breaches, including in relation to breaches occurring
through our products and an increased level of our activity that is occurring from remote global off-site locations; and disclosure or misuse of
employee or customer data whether as a result of a cybersecurity incident or otherwise;
•
volatility in our revenue due to the timing, duration and value of multi-year subscription lease contracts; and our reliance on high renewal rates for
annual subscription lease and maintenance contracts;
•
declines in our customers’ businesses resulting in adverse changes in procurement patterns; disruptions in accounts receivable and cash flow due
to customers’ liquidity challenges and commercial deterioration; uncertainties regarding demand for our products and services in the future and
our customers’ acceptance of new products; delays or declines in anticipated sales due to reduced or altered sales and marketing interactions with
customers; and potential variations in our sales forecast compared to actual sales;
•
our ability and our channel partners’ ability to comply with laws and regulations in relevant jurisdictions; and the outcome of contingencies,
including legal proceedings, government or regulatory investigations and tax audit cases;
•
uncertainty regarding income tax estimates in the jurisdictions in which we operate; and the effect of changes in tax laws and regulations in the
jurisdictions in which we operate;
•
the quality of our products, including the strength of features, functionality and integrated multiphysics capabilities; our ability to develop and
market new products to address the industry’s rapidly changing technology, including the use of artificial intelligence and machine learning in our
products as well as the products of our competitors; failures or errors in our products and services; and increased pricing pressure as a result of the
competitive environment in which we operate;
•
investments in complementary companies, products, services and technologies; our ability to complete and successfully integrate our acquisitions
and realize the financial and business benefits of such transactions; and the impact indebtedness incurred in connection with any acquisition could
have on our operations;
•
investments in global sales and marketing organizations and global business infrastructure, and dependence on our channel partners for the
distribution of our products;
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•
current and potential future impacts of any global health crisis, natural disaster or catastrophe; the actions taken to address these events by our
customers, our suppliers, and regulatory authorities; the resulting effects on our business, the global economy and our consolidated financial
statements; and other public health and safety risks and related government actions or mandates;
•
operational disruptions generally or specifically in connection with transitions to and from remote work environments; and the failure of our
technological infrastructure or those of the service providers upon whom we rely including for infrastructure and cloud services;
•
our intention to repatriate previously taxed earnings and to reinvest all other earnings of our non-U.S. subsidiaries;
•
plans for future capital spending; the extent of corporate benefits from such spending including with respect to customer relationship management;
and higher than anticipated costs for research and development or a slowdown in our research and development activities;
•
our ability to execute on our strategies related to environmental, social, and governance matters, and meet evolving and varied expectations,
including as a result of evolving regulatory and other standards, processes, and assumptions, the pace of scientific and technological
developments, increased costs and the availability of requisite financing, and changes in carbon markets; and
•
other risks and uncertainties described in our reports filed from time to time with the Securities and Exchange Commission (the SEC).
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PART I
ITEM 1.
BUSINESS
ANSYS, Inc. (Ansys, we, us, our), a corporation formed in 1994, develops and globally markets engineering simulation software and services widely used
by engineers, designers, researchers and students across a broad spectrum of industries and academia, including high-tech, aerospace and defense (A&D),
automotive, energy, industrial equipment, materials and chemicals, consumer products, healthcare and construction. Headquartered south of Pittsburgh,
Pennsylvania, we employed 6,500 and 6,200 people as of December 31, 2024 and 2023, respectively. We focus on the development of open and flexible
solutions that enable users to analyze designs on-premises and/or via the cloud, providing a common platform for fast, efficient and cost-conscious product
development, from design concept to final-stage testing, validation and deployment. We distribute our suite of simulation technologies through direct sales
offices in strategic, global locations and a global network of independent resellers and distributors (collectively, channel partners). It is our intention to
continue to maintain this hybrid sales and distribution model. We operate and report as one segment.
When visionary companies need to know how their world-changing ideas will perform, they close the gap between design and reality using Ansys
simulation. For more than 50 years, Ansys software has enabled innovators across industries to push the boundaries of product design by using the
predictive power of simulation. From sustainable transportation and advanced satellite systems to life-saving medical devices, Ansys powers innovation
that drives human advancement.
Our strategy of Pervasive Insights seeks to deepen the use of simulation in our core market, to inject simulation throughout the product lifecycle and extend
the accessibility to a broader set of users and use cases. Our business has three vectors of growth:
•
More products. Our broad and deep multiphysics portfolio enables us to grow with customers as they use simulation to solve more complex
problems across a broad set of industries.
•
More users. Investments in simulation education and user experience simplification has made simulation more accessible to a broader user base.
•
More computations. Larger and more complex simulations drive more computation, requiring customers to use more Ansys licenses to complete
their simulations.
Through decades of investments in the academic community and enhanced user experiences, our solutions have become accessible and relevant beyond our
core "engineering" end user, to reach more users upstream and downstream from our core, which is the product validation process. Our multiphysics
solutions enable our customers to address increasingly complex research and development (R&D) challenges from the component through the system and
mission level of analysis. Our products seamlessly enable access to high performance compute capacity to run simulations, on-premises or in the cloud,
which means our customers' R&D teams are unencumbered by compute capacity limitations that can hinder R&D cycle times. Through our updated
product strategy, we have embraced five key technology pillars: numerics, high-performance computing (HPC), cloud, artificial intelligence (AI) and
machine learning (ML), and digital engineering. Innovation across these pillars has helped us transform and modernize processes and techniques across our
business and deliver products that our customers rely on to win in the marketplace. For example, our investments in AI capabilities across our simulation
portfolio and technical support services enhance the customer experience, democratize and accelerate simulation, unlock greater design exploration and
further next-generation innovation.
The engineering software simulation market is strong and growing. The market growth is driven by customers' need for rapid, quality innovation in a cost-
efficient manner, enabling faster time to market for new products, streamlined certification and lower warranty costs. Increasing product complexity is
driving sustained demand for simulations. Key industry trends fueling customers' increasing needs for simulation include:
•
Electrification;
•
Autonomy;
•
Connectivity;
•
The industrial internet of things (IIoT);
•
Digital transformation/shift to fully digital engineering ecosystem; and
•
Sustainability, including minimizing waste and physical prototyping, and improving circularity and development time.
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We have been investing and intend to continue to invest in our portfolio to broaden the range of physics and enable customers to analyze the interactions
among physics at the component, system and mission level. Our strategy of Pervasive Insights is aligned with the near-term market growth opportunities
and is laying the foundation for a future where simulation can be further democratized to broader classes of end-users and end-use cases. In addition, we
have and expect to continue to partner with industry leaders to extend simulation into other ecosystems and customer R&D workflows.
Synopsys Merger Agreement
On January 15, 2024, we entered into an Agreement and Plan of Merger (the Merger Agreement) with Synopsys and ALTA Acquisition Corp., a Delaware
corporation and wholly owned subsidiary of Synopsys (Merger Sub). The Merger Agreement provides for the merger of Merger Sub with and into Ansys,
with Ansys surviving the merger as a wholly owned subsidiary of Synopsys. Our Board of Directors and stockholders have approved the Merger
Agreement. If the merger is consummated, our common stock will be delisted from the Nasdaq Global Select Market and deregistered under the Exchange
Act.
Under the Merger Agreement, at the effective time of the merger, each issued and outstanding share of our common stock (subject to certain exceptions set
forth in the Merger Agreement) will be cancelled and converted into the right to receive (i) 0.3450 (the Exchange Ratio) of a share of common stock, par
value $0.01 per share, of Synopsys (the Stock Consideration) and (ii) $197.00 in cash, without interest (the Per Share Cash Amount), subject to applicable
withholding taxes. With regard to the Stock Consideration, if the aggregate number of shares of Synopsys common stock to be issued in connection with
the merger would exceed the Maximum Share Number (19.9999% of the shares of Synopsys common stock issued and outstanding immediately prior to
the effective time of the merger), (a) the Exchange Ratio will be reduced to the minimum extent necessary such that the aggregate number of shares of
Synopsys common stock to be issued in connection with the merger does not exceed the Maximum Share Number and (b) the Per Share Cash Amount will
be correspondingly increased to offset such adjustment.
The Merger Agreement contains customary representations, warranties and covenants made by each of Ansys, Synopsys, and Merger Sub, including,
among others, covenants regarding the conduct of our and Synopsys’ businesses during the pendency of the transactions contemplated by the Merger
Agreement, the making of certain public disclosures and other matters as described in the Merger Agreement. We and Synopsys have agreed to use
reasonable best efforts to take all actions necessary to consummate the merger, including cooperating to obtain the regulatory approvals necessary to
complete the merger. We have agreed not to, among other things, (a) solicit proposals relating to alternative transactions or (b) enter into discussions or
negotiations or provide non-public information in connection with any proposal for an alternative transaction from a third party, subject to certain
exceptions to permit our Board of Directors to comply with its fiduciary obligations. We have further agreed to cease and cause to be terminated any
existing discussions or negotiations, if any, with regard to alternative transactions.
The Merger Agreement may be terminated under certain circumstances, including that either party may have the right to terminate if the merger is not
completed by July 15, 2025 (which date may be extended by either party to January 15, 2026 as provided in the Merger Agreement). If the Merger
Agreement is terminated, (A) Synopsys, under specified circumstances, including termination following an injunction arising in connection with certain
antitrust or foreign investment laws, will be required to pay us a termination fee of $1,500.0 million; and (B) we, under specified circumstances, will be
required to pay Synopsys a termination fee of $950.0 million.
The completion of the merger is subject to customary closing conditions, including, among others, approval of the merger under certain applicable antitrust
and foreign investment regimes. We currently expect the transaction to close in the first half of 2025.
As part of our efforts to obtain regulatory approval for the merger, we have entered into a definitive agreement with Keysight Technologies, Inc. for the sale
of our PowerArtist RTL business. The transaction is subject to customary closing conditions, including review by regulatory authorities, and the closing of
Synopsys' proposed acquisition of Ansys. The PowerArtist RTL business has not materially contributed to our financial results.
The foregoing summary of the Merger Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and
qualified in its entirety by, the Merger Agreement, which was filed as Exhibit 2.1 to our Current Report on Form 8-K filed on January 16, 2024, and is
incorporated herein by reference.
Ansys and any and all ANSYS, Inc. brand, product, service and feature names, logos and slogans are registered trademarks or trademarks of ANSYS, Inc.
or its subsidiaries in the United States or other countries. All other brand, product, service and feature names or trademarks are the property of their
respective owners.
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PORTFOLIO
Our portfolio consists of the following capabilities:
Structures
Our structural analysis product suite offers simulation tools for product design and optimization designed to increase productivity, reduce physical
prototyping and help deliver better and more innovative products in less time. These tools tackle real-world analysis problems by making product
development less costly and more reliable.
Our flagship structural product is the Ansys Mechanical™ product, a finite element analysis software used for simulating and analyzing the behavior of
mechanical and structural systems. It is commonly used for structural analysis, allowing engineers to simulate and study the response of materials and
structures to various mechanical loads, including static, dynamic, vibrational and thermal loads. A key attribute is the ability to perform multiphysics
simulations, where multiple physical phenomena, such as structural mechanics, heat transfer, fluid dynamics and electromagnetics, interact with each other.
The software can handle nonlinear problems, including large deformations, material nonlinearity and contact interactions.
Ansys has a long history of technological innovations, including pioneering innovations such as nonlinear adaptivity and separating morphing and adaptive
remeshing technology to solve the toughest structural simulation challenges. We also provide comprehensive topology optimization tools that engineers use
to design structural components to meet loading requirements with reduced material and component weight. Additionally, our comprehensive and scalable
additive manufacturing solutions allow customers to reduce risk and provide high quality, certifiable parts. The 2024 R2 noise, vibration, and harshness
(NVH) toolkit includes new features and enhancements such as a frequency response function calculator, transfer path analysis calculator and XML
converter for electromagnetic (EM) loads, which is especially useful for automotive design.
Our LS-DYNA solver is a leader in explicit dynamics multiphysics simulation and is used worldwide by leaders in automotive crash, drop tests, airbag
deployment and impact analysis. Innovations like multi-scale co-simulation capability for meso-scale effects allow electronics reliability simulations to
predict component failure at a tiny scale when a macro scale printed circuit board drop test is analyzed.
Electronics
Our electronics product suite provides electromagnetic field simulation software for designing high-performance electronic and electromechanical
products. The software streamlines the design process and predicts performance of mobile communication and internet-access devices, broadband
networking components and systems, integrated circuits (ICs) and printed circuit boards (PCBs). It is also used in low-frequency applications such as
electromechanical systems, automotive components, industrial electric motors and power electronics equipment.
The flagship Ansys High Frequency Structure Simulator™ (HFSS) product is used in all aspects of radio frequency and microwave design for 5G/6G
communications, avionics, A&D and biomedical applications. It is used for advanced antenna design and integration, radar systems and electromagnetic
interference analysis. Innovations have enabled the electronics industry to solve some of the most challenging design problems. Advanced automatic
adaptive meshing, tangential vector finite elements and commercial implementation of domain decomposition are a few of the Ansys inventions that power
finite element analysis for electromagnetics. Technologies such as Mesh Fusion allow virtually unlimited size and scope of system-level electromagnetic
simulation by leveraging HPC and the cloud. Capabilities in the 2024 R2 release include new products HFSS-IC™ and Perceive EM™. The new HFSS-IC
product combines three powerful electromagnetic solvers, HFSS, RaptorX™ and Q3D Extractor , all in the Ansys Electronics Desktop™ platform. It
provides advanced packaging teams and radio frequency IC and 3D-IC designers with a unified platform for multiphysics and multi scale heterogeneous
IC-to-systems design. The PerceiveEM product is a graphics processing unit (GPU)-powered shooting and bouncing ray solver for rapid computation radar
systems and wireless communications design. Offered exclusively as an application programming interface, the PerceiveEM solver can be used as a
standalone scripted solution or seamlessly integrate with third-party platforms to support both existing and new workflows.
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Fluids
Our fluids product suite enables modeling of fluid flow and other related physical phenomena. The flagship Ansys Fluent computational fluid dynamics
(CFD) software package is used for simulating and analyzing the behavior of fluids (liquids and gases) and their interactions with solid structures. It is
commonly employed in various industries to perform simulations that help engineers and researchers gain insights into fluid flow, heat transfer and
chemical reactions and related phenomena. Innovations include its mixed-element unstructured solver and interactive architecture with pervasive HPC
scaling. Recent additions to our fluids product suite substantially reduce simulation solve time and total power consumption using the native multi-GPU
solver available in Fluent, with results showing that four typical GPUs have greater performance than 1,000 central processing unit (CPU) cores. In Ansys
2024 R2, we extended multi-GPU support to run on Advanced Micro Devices (AMD) GPU cards to enable broader hardware options for our users. New
models and physics added to the GPU solver open the door to more use cases, including acoustics simulations, subsonic/transonic simulations for aerospace
studies and combustion applications. Parametric studies with GPUs are now available, enabling users to more quickly run concurrent design points to
explore design options and alternatives.
Semiconductors
Advancements in semiconductor design and manufacturing enable smaller electronic architectures. Shrinking geometries, especially in the emerging 3D-
IC, finFET and stacked-die architectures, reveal design challenges related to power and reliability. Our power analysis and optimization software suite
manages the power budget, power delivery integrity and power-induced noise in an electronic design, from initial prototyping to system sign-off. These
solutions deliver accuracy with correlation to silicon measurement and the capacity to handle an entire electronic system, including IC, package and PCB.
Ansys RedHawk-SC™ is the flagship electronic design automation (EDA) software tool, used for the analysis and sign-off of ICs, focusing on power
integrity and reliability issues. It is used by semiconductor designers and engineers to simulate and optimize power delivery networks in ICs and
heterogeneous 3D-ICs ensuring that they operate reliably and efficiently. The Ansys RedHawk-SC product is an industry trusted gold standard voltage drop
and electromigration multiphysics sign-off solution for digital designs. Its powerful analytics quickly identify any weaknesses and allow what-if
explorations to optimize power and performance. The Redhawk-SC product's cloud-based architecture gives it the speed and capacity to handle full-chip
analysis. Sign-off accuracy is certified by all major foundries for all finFET nodes, down to 3 nanometer (nm).
Innovations include 'dynamic' power noise simulation technology, behavior simulation of power distribution networks under realistic, time-varying activity
loading, and with the distributed, big-data data management capacity to handle full-chip analysis with many billions of electrical nodes. The Redhawk-SC
product and other Ansys tools provide the industry's first foundry-validated hierarchical thermal analysis flow for multi-die 3D-IC designs and 5nm/3nm
chips.
Optics, Virtual Reality (VR) and Photonics
Modeling light propagation and its impact is crucial for measuring product performance and human comfort, perception and safety. Ansys Optics™
software uniquely simulates a system's optical performance, evaluates the final illumination effect, and predicts and validates the impact of lighting and
material variations on appearance and perceived quality, all in real conditions. Using optical sensor and closed-loop, real-time simulation, our optics
simulation capabilities now span the simulation of a wide range of sensors, including lidar, cameras and radar; the multiphysics simulation of physical and
electronic components; the analysis of systems functional safety; as well as the automated development of safety-certified embedded software. This
functionality can be integrated into a closed-loop simulation environment that interacts with weather and traffic simulators for automotive applications,
enabling thousands of driving scenarios to be executed virtually.
Our photonic design and simulation tools enable customers to predict light's behavior within complex photonic structures and systems. Silicon photonics is
an expanding market and our solutions provide a comprehensive set of tools for the design and analysis of integrated photonic components and systems,
similar to the traditional EDA environment. The Ansys Lumerical™ product is a complete photonics simulation software solution that enables the design of
photonics components, circuits, and systems. Device and system level tools work together to allow designers to model interacting optical, electrical and
thermal effects. Flexible interoperability between products enables a variety of workflows that combine device multiphysics and photonic circuit simulation
with third-party design automation and productivity tools. Python-based automation and flows for building and using compact models support the
industry's leading foundries.
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Digital Mission Engineering
Our mission-simulation, modeling, testing and analysis software for aerospace, defense and intelligence applications empowers our users to solve
challenges by simulating from the chip level all the way to a customer's entire mission. Digital mission engineering products enable engineers, operators
and analysts to connect modeling and simulation efforts across all phases of the engineering product life cycle. Users can model operational environments
and the interrelationships of assets with accurate, dynamic, physics-based simulations to validate system designs with respect to the mission's outcome.
Modeling of assets may be performed across multiple domains, including land, sea, air and space.
Our technology enables our customers to consider the entire mission engineering of a product or system. Engineered products and systems can involve
thousands of components, subsystems, systems and systems of systems that must work together intricately. Our software simulates these puzzle pieces and
their functional relationships to each other and, increasingly, to their environments.
Materials
With our materials technology, our customers benefit from access to the world's premier system for managing corporate material intelligence and the
market-leading solution for materials sources, selection and management. The Ansys Granta MI system is a leading system for materials information
management in engineering enterprises. Ansys Granta Selector™ technology is the standard tool for materials selection and graphical analysis of materials
properties. A comprehensive materials data library plus unique software tools enable engineers to use materials to innovate and evolve products, quickly
identify solutions to material issues, confirm and validate choice of materials and reduce material and development costs. The CES EduPack product is a
unique set of teaching resources that supports materials education across engineering, design, science and sustainable development. Granta Materials Data
for Simulation™ provides easy access to materials property data from within Ansys Mechanical and the Ansys Electronics Desktop environment.
3D Design
Our Ansys Discovery™ product family allows engineers to benefit from the insight of simulation in their product design. The Discovery products range
from early design exploration tools powered by interactive real-time simulation and intuitive geometry editing, to detailed product validation solutions
utilizing proven flagship solver technology with easy-to-use guided workflows. These tools allow for design engineers to utilize simulation across the
entire product design process and to work seamlessly with simulation experts using our flagship products for even more advanced analysis.
The Discovery product’s ease of use and speed enable more engineers to benefit from simulation. Increasingly, “shifting-left” or moving simulation up
front in the design process has become a critical business initiative for our customers, enabling more engineers, more analysts and more designers to get
early insights into their product design. The Discovery application has become more integrated with the broader Ansys portfolio. This has manifested itself
into many analysts starting in the Discovery product and then moving to more detailed analyses in our other applications.
We continue to invest in and advance the Discovery product and Discover Live physics technology, improving accuracy, expanding capabilities and
accelerating productivity. Advances include the addition of electromagnetics simulation for upfront antenna design for IIoT and 5G, breakthroughs in
solver numerics to support unstructured meshes that deliver both speed and accuracy across all CFD applications, and a Microsoft 365 integration for
enabling data management and collaboration among designers, analysts and stakeholders using a connected digital thread. Additionally, the Discovery
application has become more tightly integrated with the broader Ansys portfolio through new Ansys optiSLang and ModelCenter integrations.
Embedded Software
The Ansys SCADE product suite is a comprehensive solution for embedded software simulation, code production and automated certification. It has been
developed specifically for use in critical systems with high dependability requirements, including aerospace, rail transportation, nuclear, industrial and
automotive applications. The SCADE software supports the entire development workflow, from requirements analysis and design, through verification,
implementation and deployment. The SCADE software solutions easily integrate with each other and the rest of our product suite, allowing for
development optimization and increased communication among team members.
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Safety Analysis
Our safety and cybersecurity threat analysis software facilitates model-based safety analysis, safety concept creation, safety management and cybersecurity
assessment for safety-critical electrical, electronic and software-controlled systems. Using this software, engineers can deliver safer and more secure
products, reduce time to market and comply with industry standards. The Ansys medini analyze™ desktop product supports efficient application of
quality, safety, reliability and cybersecurity analysis engineering methods at system, item, software, hardware and printed circuit board levels. It allows
engineers to deliver safe and secure products. The cloud-based product, Ansys Digital Safety Manager™, provides safety analysis accessible through the
web so that teams may collaborate on the management of safety in product development, deployment and operation.
Digital Twin
Our Twin Builder product allows customers to implement complete virtual prototypes of real-world systems. These can be deployed to manage the entire
lifecycle of products and assets. Our digital twin simulation paradigm allows customers to increase efficiencies over time, scheduling maintenance around
predictive methodologies that become more accurate with real-world testing and response. Access to this information allows engineers to unlock additional
value out of existing assets, preventing unscheduled downtime and lowering operating costs, while working at increased efficiency.
Autonomous Vehicle Simulation
Our autonomous vehicle simulation solutions are designed specifically to support development, testing and validation of safe automated driving and
advanced driver-assistance systems (ADAS) technologies. This autonomous vehicle simulation solution saves time and costs versus traditional
development and testing methods by allowing testing of drive designs on a virtual vehicle in a real-world environment. Ansys autonomous vehicle
simulation solutions offer a set of dedicated features for sensors and headlamps for developing ADAS and autonomous systems. Designers can utilize
component-level model-in-the-loop testing and can dynamically test physics-based sensor and lighting systems. Our autonomous solutions connect to
popular driving simulators to recreate real-world driving conditions to test systems under variable traffic, terrain, weather and lighting conditions. The
Ansys AVxcelerate™ product can generate reliable, synthetic training data enriched with ground truth information for all sensor types; this data is essential
for AI/ML-based perception algorithm training and validation.
Academic
We bundle our commercial software by physics area and work with universities to utilize our software in teaching and research. Currently, there are more
than 2,600 university customers across 91 countries using Ansys. Additionally, our digital engagement strategy has evolved to include an “Access, Learn,
Engage” model that is supported by our free student downloads, free Ansys Innovation Courses and Learning Forum available through Ansys Innovation
Space that makes it easy for learners to access our product, learn how to use it and ask questions to their peers and our experts. We also work to develop
partnerships in areas such as student team sponsorship, strategic curriculum and research opportunities and STEM.
Platform
Our platform is the framework upon which our suite of advanced multiphysics engineering simulation technologies is built. It allows engineers and
designers to incorporate the compounding effects of multiple physics into a virtual prototype of their design and simulate its operation under real-world
conditions. As product architectures become smaller, lighter and more complex, companies must be able to accurately predict how products will behave in
real-world environments where multiple types of physics and various domain disciplines interact in a coupled way. Our software enables engineers to
simulate the interactions between structures, heat transfer, fluids, electronics, optical elements and embedded software all within a single, unified
engineering simulation environment.
Today's engineered products are increasingly complex, demanding new solutions for optimal design. Products have integrated electronics and
semiconductors, embedded software, wired and wireless connectivity and advanced sensors and displays. Product success requires our customers to
consider the full system operation in a broad context. We have extended our platform to support scalable solutions that leverage new algorithms, additional
physics, system solutions, embedded intelligence, HPC and integrated cloud. Our HPC product suite and cloud solutions enable enhanced insight into
product performance and improve the productivity of the design process.
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The following tools are part of our platform and add capability to the core of our offered products:
The Ansys HPC software suite leverages multicore computers to perform more simulations in less time. These simulations can be bigger, more complex
and more accurate using HPC. Various Ansys HPC licensing options allow organizations to scale to whatever computational level of simulation is
preferred, from single-user or small user group options for entry-level parallel processing up to virtually unlimited parallel capacity. Apart from parallel
computing, Ansys also offers solutions for parametric computing, which enables users to explore the design parameters more fully (size, weight, shape,
materials, mechanical properties, etc.) for products early in the development process.
Our cloud portfolio comprises of two marketplace offerings (Ansys Gateway powered by AWS™ and Ansys Access on Microsoft Azure™) and a managed
cloud offering (Ansys Cloud Direct™), providing customers scalable location-independent access to simulation. We continue to enhance our solvers and
collaborate with HPC leaders such as NVIDIA and AMD to maximize scalability and speed.
Our Ansys Minerva platform is a knowledge management application that secures critical simulation data, and provides simulation process and decision
support to simulation teams across geographies and functional silos. Available for both on-premises and cloud deployment, the Minerva platform delivers
benefits by connecting simulation and optimization to customers' existing ecosystem of tools and processes. The Minerva platform provides integration and
automation of chained data flows and design space exploration for optimal performance parameters. With the Ansys Minerva platform, customers can
connect simulation for life cycle traceability and to enable collaboration and decision support.
PyAnsys™ is a collection of Python-based, open-source projects tailored specifically for engineers seeking to extend the capabilities of Ansys products.
Developed as a collection of Python client libraries, the PyAnsys collection offers engineers a comprehensive set of tools and utilities that seamlessly
integrate with Ansys software, empowering them to enhance their simulations and analyses. The PyAnsys collection provides an extensible platform-
centric approach to the development and deployment of new verticalized, or use-case-specific, applications and workflows that leverage simulation.
The Ansys optiSLang product is a leading-edge answer to the challenges posed by computer-aided engineering (CAD)-based robust design optimization
(RDO). Its state-of-the-art algorithms efficiently and automatically search for the most robust design configuration, eliminating the slow, manual process
that used to define RDO.
The Ansys ModelCenter platform is a Model Based Systems Engineering (MBSE) software platform for managing and automating simulation processes in
engineering. It enables the automation of any simulation tool and enables the creation and automation of simulation workflows. A unique capability of the
ModelCenter platform is rigorous MBSE enablement by connecting with system architecture modeling tools to verify system performance throughout the
product design lifecycle. The software provides a centralized environment for managing simulation inputs, outputs and results, as well as for running trade
studies and optimizing system designs in the conceptual design stage. It supports integration with various Ansys simulation tools, as well as with third-
party software tools.
Ansys is leveraging AI and ML to accelerate engineering design. AI-augmented simulation brings speed, innovation, and accessibility to engineering. The
Ansys SimAI™ product is a new cloud-enabled generative AI platform that uses previous simulation results to reliably assess the performance of a new
design within minutes. SimAI enables engineers to rapidly test design alternatives without the constraints of traditional solvers across all design phases.
Ansys AI+ incorporates and extends AI features within our desktop products to enhance core functionalities. For example, machine learning modules are
included in the desktop version of Ansys Granta MI AI+. Ansys optiSLang AI+ allows users to perform efficient optimization, sensitivity studies, and
robust design with advanced field and scalar ML-based meta-models.
PRODUCT DEVELOPMENT
We make significant investments in research and development and emphasize frequent, integrated product releases. These investments are made across five
technology pillars: numerics, HPC, AI/ML, cloud and experience and digital engineering. 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 those pillars, which is benefiting customers by helping them to solve more complex challenges while driving our growth through more
users, more products and more computations. Our products also run on the most widely-used engineering computing platforms and operating systems,
including Windows, Linux and most UNIX workstations. Our customers increasingly leverage GPU computing hardware and cloud computing to solve
large and complex problems. Our machine learning applications enable customers to discover details within their designs and to unlock potential new
designs.
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Our total research and development expenses were $528.0 million, $494.9 million and $433.7 million in 2024, 2023 and 2022, respectively, or 20.7%,
21.8% and 21.0% of total revenue, respectively. As of December 31, 2024 and 2023, our product development staff consisted of 2,500 and 2,400
employees, respectively, many of whom hold advanced degrees and have industry experience in engineering, mathematics, computer science or related
disciplines. We have traditionally invested significant resources in research and development activities and intend to continue to make investments in
expanding the ease of use and capabilities of our broad portfolio of simulation software products.
We recently completed the following major product development activities and releases:
•
In early February 2025, we released Ansys 2025 R1, which features refined digital engineering-enabling technologies that easily integrate with
existing infrastructure, minimizing disruption and empowering teams to collaborate on more innovative products. Supercharged by the power of
AI, cloud computing, GPUs and HPC, Ansys 2025 R1 enhancements enable faster, collaborative decision-making, broader design exploration and
reduced product design timelines. The release highlights new products and capabilities that deliver fast, high-fidelity, physics-based results,
helping teams make informed decisions earlier in the design cycle as well as advancements to its GPU solvers. It also adds web-based, on-demand
capabilities to a variety of applications. The Ansys SimAI cloud-enabled AI solution now allows users to expand the training data to gain further
insight during post-processing. New capabilities in the Ansys System Architecture Modeler (SAM)™ include support for SysML v2, resulting in
more optimized product designs and significant time savings by creating tighter connections across teams while making product requirements
accessible and scalable across the engineering organization. CFD HPC Ultimate is a new product that enables enterprise-level CFD capabilities for
one job on multiple CPU cores or GPUs.
•
In July 2024, we released Ansys 2024 R2, which delivered multiphysics innovation across industries and engineering domains. The release fuels
collaboration and digital transformation by connecting workflows, integrating AI and optimizing complex design tasks. 2024 R2 enhancements
focused on accelerating run times, scaling capacity, enabling digital transformation and providing hardware flexibility, thus making Ansys
multiphysics simulations more accessible and powerful. The new Ansys HFSS-IC solver addresses the growing complexity of today’s advanced
chip designs. Integrating Ansys’ leading electronic and semiconductor technologies, the new HFSS-IC solver excels at deep electromagnetic
analysis for IC signoff across power and signal integrity analysis. Enhancements to Ansys Mechanical structural simulation software for e-
powertrain workflows boost overall productivity of NVH analyses by delivering more accurate test correlation, acoustics simulation and speed
improvements. This release also includes seamless data transfer between the Ansys Zemax optical system design software and the Ansys Speos
optical performance analysis solver to more efficiently evaluate and optimize optical designs. For example, the integration unlocks streamlined
straylight analysis for optical systems to help users eliminate unwanted effects caused by lens flare, light leakage and scattering in optical systems.
Ansys Fluent fluid simulation software boasts new hardware compatibility with AMD GPUs, supporting a broader selection of hardware options.
Users working on acoustics, reacting flows, or subsonic/transonic compressible flows can now leverage the multi-GPU solver to run their
simulations at exponentially faster speeds with the expansion of physics modeling capabilities. Embedded integration of Ansys optiSLang process
integration and design optimization software supports further exploration of design options through built-in parametric optimization.
PRODUCT QUALITY
Our employees generally perform product development tasks according to predefined quality plans, procedures and work instructions. Certain technical
support tasks are also subject to a quality process. These plans define, for each project, the methods to be used, the responsibilities of project participants
and the quality objectives to be met. The majority of our software products are developed under a quality system that is certified to the ISO 9001:2015
standard. We establish quality plans for our products and services, and subject product designs to multiple levels of testing and verification in accordance
with processes established under our quality system.
SALES AND MARKETING
We distribute and support our products through our own direct sales offices, as well as a global network of independent channel partners. Our products are
utilized by organizations ranging in size from small consulting firms to the world's largest high-tech and industrial companies.
Our direct sales organization develops a focused, enterprise-wide sales approach and implements a worldwide go-to-market strategy. Our sales and
technical support organizations partner extensively with our customers to help ensure effective implementation of our solutions and to provide ongoing
support for the usage of our products. The sales organization also provides support to our channel partners in market through the presence of direct sales
offices and local sales, marketing, and technical support teams.
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During 2024, we continued to invest in our existing domestic and international sales and marketing teams. In total, our direct sales and marketing
organization comprised 3,200 and 3,000 employees as of December 31, 2024 and 2023, respectively. Our sales and marketing teams are responsible for
sales, technical support, consulting services and marketing initiatives, as well as operational and administrative activities designed to support our overall
revenue growth and expansion strategies.
Our channel partner network provides us with a cost-effective, highly-specialized channel for distribution and technical support of our products. It also
enables us to draw on business and technical expertise from a global network, provides relative stability to our operations to help mitigate geography-
specific economic trends and provides us with an opportunity to take advantage of new geographic markets or enhance our sales coverage in existing
markets.
Channel partners, under the direction of our sales management team, market and sell our products to new customers, expand installations within the
existing customer base, offer training and consulting services and often provide the first line of our technical support. Our channel partner certification
process helps to confirm that each channel partner has the ongoing capability to adequately represent our expanding product lines and to provide an
appropriate level of training, consultation and customer support. We derived 24.8%, 26.1% and 23.9% of our total revenue through the indirect sales
channel for the years ended December 31, 2024, 2023 and 2022, respectively.
No single customer accounted for more than 5% of our revenue in 2024, 2023 or 2022. Information with respect to foreign and domestic revenue may be
found in Note 18 to the consolidated financial statements in Part IV, Item 15 of this Annual Report on Form 10-K and in the section entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of this Annual Report on Form 10-K.
STRATEGIC ALLIANCES AND MARKETING RELATIONSHIPS
Ansys has and continues to be committed to operating as an open platform, enabling our customers to easily integrate simulation into their R&D
workflows. To further that vision, we have established and continue to pursue strategic alliances with advanced technology suppliers, cloud computing
providers, hardware vendors, software vendors, specialized application developers and CAD, EDA and product lifecycle management (PLM) providers.
We believe that these relationships facilitate accelerated incorporation of advanced technology into our products, provide access to new customers, expand
our sales channels, develop specialized product applications and provide direct integration with leading CAD, EDA, product data management and PLM
systems.
We have technical relationships with leading CAD vendors, such as Autodesk, PTC and Siemens Digital Industries, to provide direct links between
products. These links facilitate the transfer of electronic data models between the CAD systems and our products.
We work with leading EDA software companies, including Altium, Cadence Design Systems, Synopsys, Siemens EDA and Zuken, to support the transfer
of data between electronics design and layout software and our electronics simulation portfolio.
We have strategic relationships with public cloud providers to enable customers to seamlessly access HPC in the cloud. With Microsoft, we have developed
an offering, Ansys Access powered by Azure, which enables customers to launch Ansys products using their Azure enrollment and connect third-party
tools. We also offer Ansys Cloud Direct, which runs on Azure. In addition to our joint initiatives in the cloud, we have a broader relationship with
Microsoft focused on market-specific endeavors in digital twins, autonomy and use of AI in simulation.
We also have a strategic relationship with Amazon Web Services (AWS) to transform cloud-based engineering simulations. Ansys Gateway powered by
AWS facilitates seamless access and deployment of Ansys products on AWS, making simulation workloads more user-friendly, while offering scalability
and flexibility with easy access to software and storage solutions from anywhere with a web browser. Ansys is also building a range of cloud-native and
software-as-a-service applications hosted on AWS.
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In addition to marketing relationships to promote the adoption of HPC, we maintain technical relationships with Intel, NVIDIA and AMD to help optimize
the solver performance and scalability of our portfolio, enabling faster simulations, better graphics and a shorter time to market for our customers. With
NVIDIA, Ansys expanded its collaboration on accelerated computing, advancing 6G communication systems, AI-infused simulation solutions, autonomous
vehicles, digital twins, enhanced graphics and visual rendering. Additionally, Ansys joined the Alliance for OpenUSD to strengthen data interoperability
and deliver enhanced graphics and visual rendering to its portfolio. In the area of GPU computing, we collaborated with Supermicro and NVIDIA to
deliver turnkey hardware, enabling customers to solve larger, more complex models faster. With AMD, we have expanded support in the Ansys Fluent
product for AMD Instinct™ MI200 and MI300 accelerators, AMD's data-center-class GPU family. Support for these new GPUs gives customers more
flexibility when choosing HPC hardware, both on-premises and in the cloud. We collaborated with Intel Foundry to provide multiphysics signoff solutions
with Intel 18A process technology as well as for Intel's innovative 2.5D chip assembly technology. Additionally, we joined the Intel Foundry Accelerator
USMAG Alliance to advance secure design for U.S. security applications, enhancing our Redhawk-SC product with comprehensive thermal management
for Intel's 18A process technology.
Our Partner Program actively encourages developers of specialized software solutions to use our technology as a development platform for their
applications and provides customers with enhanced functionality related to their use of our software. With over 350 technology partnerships, spanning a
wide range of solution areas, including materials, optimization, electronics, optical, mechanical, fluid and systems simulation, our partner ecosystem
extends the depth and breadth of our technology offerings.
COMPETITION
We believe that there are many factors affecting sales of our software, including ease of use, breadth and depth of functionality, flexibility, quality, ease of
integration with other software systems, file compatibility across computer platforms, range of supported computer platforms, performance, price and total
cost of ownership, customer service and support, company reputation and financial viability and effectiveness of sales and marketing efforts.
Our competitors include large, global, publicly traded companies; small, geographically-focused firms; startup firms; and solutions produced in-house by
the end users. Some of our current and possible future competitors have greater financial, technical, marketing and other resources than us, and some have
well-established relationships with current and potential customers of ours. Our current and possible future competitors also include firms that have elected,
or may in the future elect, to compete by means of open source licensing. These competitive pressures may result in decreased sales volumes, price
reductions and/or increased operating costs, and could result in lower revenues, margins and net income.
PROPRIETARY RIGHTS AND LICENSES
We regard our software as proprietary and rely on a combination of trade secret, copyright, patent and trademark laws, license agreements, nondisclosure
and other contractual provisions and technical measures to protect our proprietary rights in our products. We distribute our software products under
software license agreements that predominantly grant customers nonexclusive licenses, which are typically nontransferable, for the use of our products.
License agreements for our products are generally directly between us and end users. Use of the licensed software product is restricted to designated sites
(LAN License) unless the customer obtains a global license (WAN License) for its use of the software product or the software product is by its nature a
global-use product. Customers may also license our software products on a named-user basis, which is deemed to be a global WAN license. Software
security measures are also employed to prevent unauthorized use of our software products and the licensed software is subject to terms and conditions
prohibiting unauthorized use, distribution or reproduction. For most products, customers may lease the product on a fixed-term basis for a fee that includes
the license, maintenance, technical support and upgrades or may purchase a perpetual license of the technology with the right to annually purchase ongoing
maintenance, technical support and upgrades. For some products, customers purchase an annual subscription for a certain number of named users that
includes the license, maintenance, technical support and upgrades or purchase elastic units, which enable the use of any supported product at any time until
their licensed volume is met.
We license our software products utilizing a combination of web-based and hard-copy license terms and forms. For certain software products, we primarily
rely on "click-wrapped" licenses (i.e., online agreements where the website provider posts terms and conditions, and the user clicks on the "accept" button).
The enforceability of these types of agreements under the laws of some jurisdictions is uncertain.
We also seek to protect the source code of our software as a trade secret and as registered unpublished copyrighted work. We have obtained federal
trademark registration protection for Ansys and other marks in the United States and foreign countries. Additionally, we were awarded numerous patents by
the U.S. Patent and Trademark Office or equivalent offices in other jurisdictions and have a number of patent applications pending. To the extent we do not
choose to seek patent protection for our intellectual property, we primarily rely on the protection of our source code and underlying functionality as a trade
secret.
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Our employees have signed agreements under which they have agreed not to disclose trade secrets or confidential information. These agreements, where
legally permitted, restrict engagement in or connection with any business that is competitive with us anywhere in the world while employed by us (and, in
some cases, for specified periods thereafter in relevant geographic areas) and state that any products or technology created by employees during their term
of employment are our property. In addition, we require all channel partners to enter into agreements not to disclose our trade secrets and other proprietary
information.
Despite these precautions, there can be no assurance that misappropriation of our technology and proprietary information (including source code) will be
prevented. Further, there can be no assurance that copyright, trademark, patent and trade secret protection will be available for our products in certain
jurisdictions, or that restrictions on the ability of employees and channel partners to engage in activities competitive with us will be enforceable. Costly and
time-consuming litigation could be necessary in the future to enforce our rights to our trade secrets and proprietary information or to enforce our patent
rights and copyrights, and it is possible that, in the future, our competitors may be able to obtain our trade secrets or to independently develop similar
technology.
The software development industry is characterized by rapid technological change. Therefore, we believe that factors such as the technological and creative
skills of our personnel, new product developments, frequent product enhancements, name recognition and reliable product maintenance are also important
to establishing and maintaining technology leadership in addition to the various available legal protections of our technology.
We do not believe that any of our products infringe upon the proprietary rights of third parties. There can be no assurance, however, that third parties will
not claim such infringement by us or our licensors or licensees with respect to current or future products. In addition, there are non-practicing entities and
patent assertion entities whose business models are built on not producing any products, but rather extracting payments from revenue-generating companies
through patent infringement assertions and/or litigation. We expect that software suppliers will increasingly be subject to the risk of such claims as the
number of products and suppliers continues to expand and the functionality of products continues to increase. Any such claims, with or without merit,
could be time consuming, result in costly litigation, cause product release delays or require us to enter into royalty or licensing agreements. Such royalty or
licensing agreements, if required, may not be available on terms acceptable to us.
SEASONAL VARIATIONS
Our business has experienced seasonality, including quarterly volatility in software sales driven primarily by the timing of customer renewal cycles. It is
typical to see slowdowns of customer activities during the start of the calendar year and in the summer months, particularly in Europe, as well as from the
seasonal purchasing and budgeting patterns of our global customers. Subscription lease and maintenance contract renewals, as well as our revenue, are
typically highest in the fourth quarter.
DEFERRED REVENUE AND BACKLOG
Deferred revenue consists of billings made or payments received in advance of revenue recognition from customer agreements. The deferred revenue on
our consolidated balance sheets does not represent the total value of annual or multi-year, noncancellable agreements. Our backlog represents deferred
revenue associated with installment billings for periods beyond the current quarterly billing cycle and committed contracts with start dates beyond the end
of the current period. Our deferred revenue and backlog as of December 31, 2024 and 2023 consisted of the following:
Balance at December 31, 2024
(in thousands)
Total
Current
Long-Term
Deferred revenue
$
536,305
$
504,527
$
31,778
Backlog
1,181,962
524,617
657,345
Total
$
1,718,267
$
1,029,144
$
689,123
Balance at December 31, 2023
(in thousands)
Total
Current
Long-Term
Deferred revenue
$
479,754
$
457,514
$
22,240
Backlog
992,830
439,879
552,951
Total
$
1,472,584
$
897,393
$
575,191
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Revenue associated with deferred revenue and backlog that will be recognized in the subsequent twelve months is classified as current in the tables above.
HUMAN CAPITAL RESOURCES
At the heart of our culture is a commitment to our people who collectively are powering innovations that drive human advancement. People are our most
important investment and our greatest asset. We have a talented population of qualified and highly-skilled employees at all levels of our organization across
our global workforce. The success and the growth of our business depends on our ability to attract, develop, engage, incentivize and retain employees from
all corners of the globe. We have developed key recruitment, development and retention strategies that serve as the framework for our human capital
management approach. These strategies are advanced through several programs, policies and initiatives that focus on positive employer branding, talent
acquisition and employee training and development. Additionally, we strive to provide competitive compensation and benefits, including incentives linked
to Ansys' and employees' performance and benefits programs that provide choice and value. We also seek to enhance the safety and wellness of all
employees.
As of December 31, 2024, we employed 6,500 people, including: 2,500 in product development, 3,200 in sales, support and marketing, and 800 in general
and administrative functions. Of these employees, 43% were located in the Americas, 29% were located in Europe, Middle East and Africa (EMEA) and
28% were located in Asia-Pacific (APAC). Certain international employees are subject to collective bargaining agreements or have local works councils.
Our Values in Action
Ansys is committed to powering the people who power human advancement. We believe in creating and nurturing a workplace that supports and welcomes
people of all backgrounds; encouraging them to bring their talents and experience to a workplace where they are valued and can thrive. Our culture is
grounded in our four core values of adaptability, courage, generosity and authenticity. Through our behaviors and actions, these values foster higher team
performance and greater innovation for our customers. Ansys runs programs available to all employees to further impact innovation and business
outcomes, such as employee resource groups, networks and learning communities that inform solutions for our globally minded customer base.
As of December 31, 2024, our self-identified gender diversity consisted of the following:
Male
Female
Other/Not Indicated
Global employees
74 %
23 %
3 %
Senior leadership
77 %
21 %
2 %
Board of Directors
70 %
30 %
— %
Senior leadership consists of leaders in our executive career track that report directly to the chief executive officer or within one additional reporting level
of the chief executive officer and those at the highest tier of our management career track who report directly to a leader on our executive track. The senior
leaders, who represent 1% of global employees, are responsible for directing strategic plans aligned with our corporate strategy through multiple levels of
management.
As of December 31, 2024, our self-identified racial/ethnic diversity was:
White
Asian
Hispanic or Latino
Black or African
American
Other*
Not Indicated
United States-based employees
50 %
24 %
2 %
2 %
2 %
20 %
United States-based senior
leadership
70 %
17 %
— %
2 %
— %
11 %
Board of Directors
60 %
30 %
— %
10 %
— %
— %
*Other includes Native Hawaiian, American Indian, Alaskan Native, Pacific Islander, two or more races or not applicable.
Employee Recruitment, Development and Retention
Our talent strategy is focused on (i) attracting high-quality, impassioned talent; (ii) continually developing and engaging our employee base; and (iii)
retaining our people by recognizing and rewarding performance. Our commitment to recruiting top-tier talent is evidenced through our multi-pronged
approach to outreach. Our efforts include maximizing our reach and relationships across dozens of universities, as well as fostering deep connections with
global, national and local engineering societies.
(1)
(1)
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Additionally, we partner with a wide array of technology groups and organizations who are dedicated to creating pathways to STEM careers. In addition to
targeted outreach, we recruit talent through (i) attending career and networking events focused on introducing Ansys to all talent pools, (ii) hiring internally
through our Ansys internship/co-op programs for current students and (iii) valued partnerships, including professional societies that promote our programs.
Our academic product suite is also widely used in research and teaching settings, which allows students to become familiar with our simulation software
and creates opportunities to strengthen our university ties and recruit top talent. We continuously evaluate and evolve our talent acquisition efforts to ensure
maximum reach across talent pools.
New programs in 2024 included people leader connects focusing on ensuring people leaders have tools and resources to drive high performance. Programs
such as developing a global mindset and new employee orientation were expanded, and we continued to design custom learning paths for emerging leaders.
We also further expanded our Ansys digital academy to be the one-stop-shop for all Ansys developers to build the technical skills needed to support our
Pervasive Insights strategy and to support emerging skills such as AI and ML. Additional ongoing programs include mentoring and sponsorship programs
and skills development for technical staff in support of the digital transformation of our internal processes.
Developing our employees helps create an engaged workforce that is ready to embrace future business challenges. It also helps mitigate risks associated
with employee loss and keeping up with rapid technological and social change. For the year ended December 31, 2024, our annual turnover rate was 6%, or
5% on a voluntary basis.
Compensation and Benefits Program
Our compensation programs provide an opportunity for employees to earn higher compensation by excelling in their performance. The program includes
three key elements: (i) competitive annual salaries, (ii) annual cash incentives and sales commission programs, with a majority of our employees eligible to
earn more or less than the target opportunities based on both our and the employee's performance and (iii) long-term equity incentives with over half of
employees receiving equity grants each year in the form of time-based restricted stock units. These grants align the long-term financial interests of our
employees with those of our stockholders.
Health and welfare benefit programs include market-competitive benefits comprised of a mix of company-provided and other benefits, including those for
medical, dental and vision insurance; life and disability insurance; defined contribution retirement plans; and global employee wellness programs. In
addition, we offer many different employee assistance programs, such as financial, legal, emotional and social well-being employee assistance programs.
Our investments in health and welfare benefits and other employee programs focus on providing choice and value to our employees so they can select
market-competitive benefits that support their personal needs.
Local regulations are considered when developing our compensation and benefits packages for employees across the globe.
Employee Feedback
Employee feedback is critical to our success. Our global listening strategy enables us to use real feedback to improve the employee experience in
everything from health and wellness, to benefits, to development programs, and to how we communicate. Feedback mechanisms include leadership
roundtable events, stay conversations and new employee surveys that enable us to stay connected to employee sentiment in our global hybrid work
environment and design programs and solutions to meet employee needs.
AVAILABLE INFORMATION
Information about our products and services is available on the internet at www.ansys.com. We provide information for investors on our corporate website
under "Why Ansys – Investor Relations".
We make available, free of charge, the following under "Why Ansys – Investor Relations" shortly before or promptly following its first use or release, or as
soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC, as applicable: financially-related press releases,
including earnings releases, various SEC filings, including annual, quarterly and current reports and proxy statements and amendments to those reports
filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act and access to live and recorded audio from investor conference calls or events.
We generally include in our posted materials a cautionary statement regarding forward-looking and non-GAAP financial information, and we provide
GAAP reconciliations when we include non-GAAP financial information. Such GAAP reconciliations may be in materials for the applicable presentation,
in materials for prior presentations or in our annual, quarterly or current reports. Other information posted on our corporate website that may not be
available in our filings with the SEC includes information relating to our corporate governance. SEC filings may also be obtained on the SEC’s website at
www.sec.gov.
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Where we have included internet addresses in this Annual Report on Form 10-K, such as our internet address and the internet address of the SEC, we have
included those internet addresses as inactive textual references only. Except as specifically incorporated by reference into this Annual Report on Form 10-
K, information on those websites is not part hereof.
ITEM 1A.
RISK FACTORS
The following are important factors we have identified that could affect our future results and an investment in our securities. Although the risks are
organized by headings and each risk is described separately, many of the risks are interrelated.
You should not interpret the disclosure of any risk factor to imply that the risk has not already materialized. While we believe we have identified and
discussed below the key risk factors affecting our business, there may be additional risks and uncertainties that are not presently known or that are not
currently believed to be significant that may adversely affect our business, prospects, financial condition, results of operations or cash flows in the future.
In addition, from time to time we provide information, including information contained in this Annual Report on Form 10-K, that contains forward-looking
statements concerning, among other things, projected financial performance, total addressable market, market and industry sector growth, product
development and commercialization or other aspects of future operations. Such statements are based on the assumptions and expectations of our
management at the time such statements are made. We caution investors that our performance and any forward-looking statements are subject to risks and
uncertainties, including but not limited to, the following:
Risks Associated with the Proposed Transaction with Synopsys
The proposed transaction with Synopsys may be delayed or not occur at all for a variety of reasons, including that the Merger Agreement is
terminated, and the failure to complete the merger could adversely affect our business, results of operations, financial condition, and the market
price of our common stock.
On January 15, 2024, we entered into the Merger Agreement with Synopsys and Merger Sub, pursuant to which Merger Sub will merge with and into
Ansys with Ansys surviving as a wholly owned subsidiary of Synopsys. Completion of the merger is subject to customary closing conditions, including (1)
approval of the merger under certain antitrust and foreign investment regimes, (2) the absence of any order, injunction or law prohibiting the merger, (3) the
continued effectiveness of the registration statement of Synopsys pursuant to which shares of Synopsys common stock to be issued in connection with the
merger have been registered with the SEC, (4) the shares of Synopsys common stock to be issued in connection with the merger being approved for listing
on Nasdaq, (5) the accuracy of the other party’s representations and warranties, subject to certain standards set forth in the Merger Agreement, (6)
compliance in all material respects by the other party with its obligations under the Merger Agreement, and (7) the absence of a continuing material adverse
effect with respect to each of Ansys and Synopsys. Therefore, there can be no assurance that the merger will be completed in the expected timeframe (first
half of 2025), or at all.
The Merger Agreement may be terminated under certain circumstances, including that either party may have the right to terminate if the merger is not
completed by July 15, 2025 (which may be extended by either party to January 15, 2026 as provided in the Merger Agreement). Upon termination of the
Merger Agreement, (A) Synopsys, under specified circumstances, including termination following a permanent injunction arising under certain antitrust or
foreign investment laws, will be required to pay us a termination fee of $1,500.0 million; and (B) we, under specified circumstances, will be required to pay
Synopsys a termination fee of $950.0 million.
Failure to complete the merger within the expected timeframe or at all could adversely affect our business and the market price of our common stock in a
number of ways, including:
•
the market price of our common stock may decline to the extent that the current market price reflects an assumption that the merger will be
consummated;
•
if the Merger Agreement is terminated under certain circumstances specified in the Merger Agreement, we would be required to pay a termination
fee of $950.0 million;
•
we have incurred, and will continue to incur, significant expenses for professional services in connection with the merger for which we will have
received little or no benefit if the merger is not consummated; and
•
we may experience negative publicity and/or reactions from our investors, employees, customers, channel partners, and other business partners.
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Additionally, as Synopsys common stock will be a component of the merger consideration our stockholders will receive in the merger, our stock price may
be adversely impacted by a decline in Synopsys’ stock price and any adverse developments in Synopsys’ business outlook. Synopsys' stock price changes
may result from a variety of factors, such as changes in its business operations and outlook, changes in general market and economic conditions, and
regulatory considerations. These factors are beyond our control. Also, because the number of shares of Synopsys common stock issuable in connection
with the Merger Agreement in respect to one share of Ansys common stock is based on a fixed exchange ratio and the market price of Synopsys common
stock may fluctuate, our stockholders cannot be sure of the market value of the stock consideration they will receive in exchange for their shares of our
common stock in connection with the merger.
Completion of the proposed merger is subject to the satisfaction or waiver of closing conditions contained in the Merger Agreement, including
certain regulatory approvals which may not be received, may take longer than expected or the receipt of which may impose conditions that are not
presently anticipated or that cannot be met, and if these closing conditions are not satisfied or waived, the proposed merger will not be completed.
Various consents, clearances, approvals, authorizations and declarations of non-objection, or expiration of waiting periods (or extensions thereof), from
certain regulatory and governmental authorities in the United States, the European Union and certain other jurisdictions are included in the Merger
Agreement as conditions to completing the proposed merger. Regulatory and governmental entities may impose conditions on their respective approvals, in
which case lengthy negotiations may ensue among such regulatory or governmental entities, Synopsys and Ansys. These regulatory and governmental
entities may also require changes to the terms of the merger or agreements to be entered into in connection with the merger. Such conditions, changes or
agreements, any such negotiations and the process of obtaining such regulatory approvals, consents or clearances could have the effect of delaying or
preventing consummation of the proposed merger.
As previously announced by Synopsys, Ansys and Synopsys have received conditional clearance from the European Commission. The U.K. Competition
and Markets Authority provisionally accepted our remedies towards a transaction approval in Phase 1. The State Administration for Market Regulation of
the People’s Republic of China has officially accepted our filing, and its review of the proposed transaction is in process. We continue to work with the
regulators in other relevant jurisdictions to conclude their reviews.
Subject to the terms of the Merger Agreement, we have agreed to use our reasonable best efforts to take all actions necessary to consummate the merger,
including cooperating to obtain the regulatory approvals necessary to complete the merger. Nonetheless, certain conditions to the completion of the pending
merger are not within our or Synopsys’ control, and we cannot predict when or if these conditions will be satisfied (or waived, as applicable). Additionally,
as part of our efforts to obtain regulatory approval for the merger, we have entered into a definitive agreement with Keysight Technologies, Inc. for the sale
of our PowerArtist RTL business; there can be no assurances that this transaction will be completed successfully, and the failure to complete this
transaction could delay or prevent our ability to consummate the merger. Further, there can be no assurance that all required approvals will be obtained or
that all closing conditions will otherwise be satisfied (or waived, if applicable), and, if all required approvals are obtained and all closing conditions are
satisfied (or waived, if applicable), we can provide no assurance as to the terms, conditions and timing of such approvals or that the pending merger will be
completed in a timely manner or at all. Even if regulatory approvals are obtained, it is possible conditions will be imposed that could result in a material
delay in, or the abandonment of, the pending merger or otherwise have an adverse effect on Ansys.
Efforts to complete the merger could disrupt our operations and our relationships with third parties and employees, divert management’s
attention, or result in negative publicity or legal proceedings, any of which could negatively impact our operating results and ongoing business.
We have expended, and continue to expend, significant management time and resources in an effort to complete the merger, which may have a negative
impact on our ongoing business and operations. Uncertainty regarding the outcome of the merger and our future, including the proposed sale of the
PowerArtist RTL business, could disrupt our business relationships with our existing and potential customers, channel partners, service providers and other
business partners, who may attempt to negotiate changes in existing business relationships or consider entering into business relationships with parties
other than Ansys, or make it harder to develop new business relationships or otherwise negatively impact the way that we operate our business. Such
uncertainty negatively impacts our business, including through disruption of our regular operations, diversion of the attention of our workforce and
management team, as well as negatively impacting our ability to recruit and retain key personnel and other employees. The pendency of the merger and
related transactions may also result in negative publicity and a negative impression of us in the financial markets, and may lead to litigation against us and
our directors and officers. Such litigation would be distracting to management and, may, in the future, require us to incur significant costs. Such litigation
could result in the merger or related transactions being delayed and/or enjoined by a court of competent jurisdiction, which could prevent the merger or
related transactions from being completed. The occurrence of any of these events individually or in combination could have a material and adverse effect
on our business, financial condition and results of operations.
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The Merger Agreement contains provisions that limit our ability to pursue alternative transactions to the merger which could discourage a
potential competing acquirer from making an alternative transaction proposal.
The Merger Agreement contains provisions that preclude us from soliciting proposals relating to alternative transactions or entering into discussions or
negotiations or providing non-public information in connection with any proposal for an alternative transaction from a third party, subject to certain
exceptions to permit our Board of Directors to comply with its fiduciary obligations. These prohibitions could discourage a potential third-party acquirer or
merger partner from making an alternative transaction proposal. Additionally, if the Merger Agreement is terminated and we determine to seek another
business combination, we may not be able to negotiate a transaction with another party on terms comparable to, or better than, the terms of the Merger
Agreement.
While the Merger Agreement is in effect, we are subject to restrictions on our business activities.
The Merger Agreement contains customary representations, warranties and covenants, including, among others, covenants regarding the conduct of our
business during the pendency of the transactions contemplated by the Merger Agreement. These restrictions could prevent us from pursuing attractive
business opportunities that may arise prior to the consummation of the merger. Although we may be able to pursue such activities with Synopsys’ consent,
there is no guarantee that Synopsys will provide us with the necessary consent.
Global Operational Risks
Adverse economic and geopolitical conditions have impacted, and may continue to impact, our operations and financial performance.
Our operations and performance depend significantly on global macroeconomic, specific foreign country and U.S. domestic economic conditions. A
deterioration in the macroeconomic environment, including the impact of inflation, may result in decreased demand for our products and services,
constrained credit and liquidity, reduced government spending and volatility in equity and foreign exchange markets. In addition, significant downturns and
volatility in the global economy expose us to impairments of certain assets if their values deteriorate. Tighter credit due to economic conditions may
diminish our future borrowing ability and increase borrowing costs under our existing credit facilities. Customers' ability to pay for our products and
services may also be impaired, which could lead to an increase in our allowance for doubtful accounts and write-offs of accounts receivable.
Furthermore, escalating global tensions, including due to the deterioration of the diplomatic and political relationships between the United States and other
countries where we conduct business (such as China), and the ongoing global volatility due to wars, conflicts, insurrections and civil and political unrest
(such as the conflicts between Russia and Ukraine and/or Israel and Hamas and other countries and groups in the Middle East), could adversely affect our
future operations and lead to a decline in financial performance.
A significant portion of our business comes from outside the United States and our customers supply a wide array of goods and services to most of the
world's major economic regions. International revenue represented 50.8%, 53.4% and 54.9% of our total revenue for the years ended December 31, 2024,
2023 and 2022, respectively. In fiscal year 2024, our largest geographic revenue bases were the United States, Germany and Japan.
When the significant economies in which we do business deteriorate or suffer a period of uncertainty, our business and financial performance may be
impacted through reduced customer and government spending, changes in purchasing cycles or timing and reduced access to credit for our customers,
among other factors. Furthermore, customer spending levels in any foreign jurisdiction may be adversely impacted by changes in domestic policies,
including tax and trade policies. A substantial portion of our license and maintenance revenue is derived from annual subscription lease and maintenance
contracts, which typically have a high rate of customer renewal. When the rate of renewal for these contracts is adversely affected by economic or other
factors, our subscription lease license and maintenance growth is adversely affected.
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We are subject to trade restrictions that could impact our ability to sell to customers and result in liabilities for violations.
Due to the global nature of our business, we are subject to domestic and international trade protection laws, policies, sanctions and other regulatory
requirements affecting trade and investment. For example, we are subject to import and export restrictions and regulations that prohibit the shipment or
provision of certain products and services to certain countries, regions and persons targeted by the United States and certain end uses identified by the
United States, including the Export Administration Regulations administered by the U.S. Department of Commerce’s Bureau of Industry and Security
(BIS), economic and trade sanctions administered by the U.S. Department of Treasury's Office of Foreign Assets Control (OFAC) and International Traffic
in Arms Regulations (ITAR) administered by the Department of State’s Directorate of Defense Trade Controls (DDTC).
BIS continues to expand its export control restrictions, including with respect to the export to China of certain technologies, impose new export licensing
requirements, and require enhanced denied party screening processes. These additional restrictions have limited and could continue to limit our ability to
sell and deliver products and services to certain customers, including to entities performing research and development and certain controlled activities in
China. Export control restrictions and enhanced screening processes have led to, and, in the future may continue to lead to, elongated transaction cycles
with certain customers. In addition, export control restrictions have resulted, and may continue to result, in reduced sales and/or delays in our ability to
deliver products and services to certain prospects, adversely affecting our business and consolidated financial statements. In certain cases, when an export
license may be required to deliver products and services to certain customers, the receipt of licenses to export to certain countries, including China, is not
guaranteed and, in the absence of a license or applicable license exception, our ability to sell and deliver products and services to certain customers may be
negatively impacted.
BIS continues to add more companies, including existing and prospective customers, to its Entity List, and OFAC continues to increase the number of
companies subject to its sanctions, which continues to limit the companies with which we can do business.
Furthermore, our products, including their end uses and services have been and may continue to be subjected to ongoing trade restrictions. Adding
companies as restricted parties, or restricting additional products, end users or services, and subjecting companies to heightened export control restrictions
may increase our operating costs or time to market, and additionally may encourage those companies to seek substitute products from competitors whose
products are not subject to these restrictions or to develop their own products.
Additional trade restrictions on our business such as the imposition of tariffs, changes to international trade agreements and treaties or other increases in
trade protectionism and barriers to market participation by or against the United States, China or other countries may result in increased costs or decreased
revenues, which could have a significant adverse effect on our business and consolidated financial statements.
Our products could also be delivered to restricted parties by third parties, including our channel partners. We take measures to confirm that our channel
partners comply with all applicable trade restrictions, but any failure by channel partners to comply with such restrictions could have negative
consequences for us.
Violators of trade restrictions or restricted end uses may be subject to significant penalties, which may include considerable monetary fines, criminal
proceedings against them and their officers and employees, a denial of export privileges and suspension or debarment from selling products or services to
the federal government. Any such penalties could have a significant adverse effect on our business and consolidated financial statements. In addition, the
political and media scrutiny surrounding any governmental investigation could cause significant expense and reputational harm and distract senior
executives from managing normal day-to-day operations.
If we are unable to attract and retain key talent, our business could be adversely affected.
Due to the highly technical nature of our products and services, our continued success depends on our ability to attract and retain particular employees with
specialized skill sets. These skilled roles have been and are expected to continue to be challenging to fill given the recent job market dynamics, including
wage inflation and the general labor market shortage, which has caused an increase in competition for talent within the technology industry. Additionally,
our talent has been, and continues to be, the subject of recruitment by our competitors (particularly following the announcement of the proposed merger
with Synopsys), and we may incur significant cost to attract and retain our skilled employees. Remote and hybrid options remain our primary means of
work. Our working environment options may adversely affect our ability to recruit and retain employees who prefer a different working environment.
While we have non-competition and non-solicitation agreements with many of our current employees, the enforceability of these agreements may be
limited by legislation and by the courts.
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In addition, our success depends upon the continued service of our senior executives and our key technical and sales employees. Most of these individuals
could terminate their relationship with us at any time (observing their respective notice period, as applicable). The loss of any of them for which there has
not been adequate knowledge-sharing and transfer might significantly delay or prevent the achievement of our business objectives and could materially
harm our business and customer relationships.
While we have historically recruited globally for positions in the United States, in recent years our ability to do so has been curbed by more restrictive
domestic immigration laws. If the immigration laws become even stricter or the processing of immigration requests becomes even more cumbersome or
less efficient, or if we have less success in recruiting and retaining key personnel, our business, reputation and operating results could be materially and
adversely affected.
Failure to comply with global data privacy laws could give rise to regulatory enforcement action, monetary penalties, loss of the ability to do
business in certain jurisdictions or reputational harm.
We are subject to global data privacy laws and regulations addressing the processing of personal data. As the global focus on data privacy regulation
continues to increase, standards governing the processing of personal data continue to become more strict, conflicting and numerous. As a result, potential
risks may intensify as our global business pursues data privacy compliance.
The General Data Protection Regulation (European Union), the Data Protection Act (United Kingdom), the Personal Information Protection and Electronic
Documents Act (Canada), the Personal Information Protection Law (China), the Law Concerning the Protection of Personal Information (Japan), the
Personal Information Protection Act (South Korea), many state and federal privacy laws within the United States and other similar global laws in locations
in which we do business (collectively, "Privacy Laws") govern our global data privacy practices. Additionally, Privacy Laws impose abundant compliance
obligations related to our processing of personal data arising from: (i) the delivery of our products and services to our customers; and (ii) our business
operations involving employee data.
Compliance with Privacy Laws has and will continue to require the deployment of substantial resources and increased costs. As the global data privacy
landscape continues to change, including: (i) new and varying restrictions on the transfer of personal data across borders; (ii) the growing list of privacy
rights afforded to individuals of certain jurisdictions; (iii) data minimization requirements; and (iv) the growing number of governmental agencies
dedicated to the preservation of data privacy rights, we may be required to make significant changes to our software applications or business operations.
Such changes may increase the cost and complexity of delivering our products and services in some markets, require an investment in additional resources
or tools to manage our data privacy compliance, give rise to operational interruption in the performance of services for customers or adversely affect the
internal processing of employee information.
Failure to comply with Privacy Laws may lead to regulatory enforcement actions, loss of the ability to do business in certain jurisdictions or inquiries and
investigations into our activities; all of which could result in monetary penalties, reputational damage, lawsuits, extensive and prescriptive consent decrees
or judgments. Additional software resources, increased workforce or added expenses may be required to return us to a compliant data privacy status.
Failure to comply with laws and regulations could harm our business.
We develop and sell software and consulting services and maintain support operations in various countries whose laws and practices differ from one
another and are subject to unexpected changes. Furthermore, our business is subject to regulation by various global governmental agencies, including
agencies responsible for monitoring and enforcing employment and labor laws, workplace safety, environmental laws, consumer protection laws, anti-
bribery laws, import/export controls, securities laws, laws related to compliance with U.S. government contracts and tax laws and regulations. In certain
jurisdictions, these regulatory requirements may be more stringent than those in the United States. Managing these geographically diverse operations
requires significant attention and resources to promote compliance.
Our global reach includes countries considered high-risk environments for public corruption. This exposes us to risks associated with violations of anti-
corruption laws and regulations such as the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act. To promote compliance, we forbid our agents,
channel partners and employees from engaging in corrupt behavior and we have a compliance program to prevent and detect violations of anti-corruption
laws. There remains, however, a risk that illegal conduct could occur thereby exposing us to the financial and reputational risks associated with a violation
of anti-corruption laws.
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Non-compliance with applicable regulations or requirements could subject us to investigations, sanctions, enforcement actions, disgorgement of profits,
fines, damages, civil and criminal penalties or injunctions and may result in our inability to provide certain products and services to existing or prospective
customers. If any governmental sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation or if customers make claims
against us for compensation, our business and consolidated financial statements could be harmed. In addition, responding to any action will likely result in
a significant diversion of management’s attention and resources and an increase in professional fees and costs. Enforcement actions and sanctions could
have a significant adverse effect on our business and consolidated financial statements.
A catastrophic event or infrastructure failure could result in the loss of business and adverse financial consequences.
Our personnel, source code and computer equipment is located in various regions throughout the United States and the world. A natural disaster (including
significant disruptions in weather as a result of global climate change), cyberattack, terrorist act, pandemic or other unforeseen catastrophe in any of these
areas or a breakdown in our business infrastructure, such as an interruption in power supply, telephone system or information technology systems, could
cause disruptions to our sales, operations, services and product development activities. As our sales are generally greater at the end of a quarter, the
potential adverse effects resulting from any of these events would be accentuated if they occurred at quarter end.
Effective business continuity, disaster recovery and crisis management plans are critical to minimizing the impact of such unplanned or unexpected events.
We also face increasing customer certification requirements with respect to such systems. Failure to establish plans that effectively mitigate the impacts of
these disruptions or meet customer certification requirements could have a significant adverse effect on our business and consolidated financial statements.
Industry Operational Risks
Our industry is highly competitive, which could result in downward pressure on our prices.
We continue to experience competition across all markets for our products and services. Some of our current and potential competitors have greater
financial, technical, marketing and other resources than we do, some could establish strategic alliances with one another, and some have well-established
relationships with our current and potential customers. Our current and potential competitors also include firms that have competed, or may in the future
compete, by means of open source licensing. Companies we have, or could have, strategic alliances with could reduce or discontinue technical, software
development and marketing relationships with us for competitive purposes.
Our competitors may offer deep discounts on certain products or services, or develop products that the marketplace considers more valuable. If we are
unable to provide products or services that address our customers’ needs or preferences, or we are unable to match favorable pricing offered by our
competitors, we could lose customers or fail to attract new customers. Further, we may be required to lower prices or offer discounts or other favorable
terms to compete successfully. Our maintenance products, which include software license updates and product support fees, are generally priced as a
percentage of new software license fees. Our competitors may offer lower percentage pricing on product updates and support. Some competitors may
bundle software products for promotional purposes or as a long-term pricing strategy or provide guarantees of prices, product implementations or wider
geographical license usage provisions. Any of these practices could, over time, significantly constrain the prices that we can charge for certain products.
Furthermore, if we do not adapt pricing models to reflect changes in customer usage of our products or changes in customer demand, our software license
revenues could decrease. Additionally, increased distribution of applications through application service providers, including software-as-a-service
providers, may reduce the average price or margin of our products or adversely affect other sales of our products, reducing new software license revenues
or profitability.
These competitive pressures may result in decreased sales volumes, price reductions and/or increased operating costs, and could result in lower revenues,
margins and net income.
We may not be successful in integrating emerging technologies or developing and marketing new products to adequately address the rapidly
changing technology industry.
We operate in an industry generally characterized by rapidly changing technology and frequent new product introductions. A major factor in our future
success will be our ability to anticipate technological changes and to successfully integrate emerging technologies (including AI) to develop and introduce,
in a timely manner, new products and new ways to deliver them to meet those changes. The growth and continuous investment in AI by our competitors as
well as start-ups may lead to the development of new or improved products by other companies that may provide better features, faster or more accurate
simulation, or better pricing and may render our current and future products less competitive.
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Our ability to grow revenue will be dependent on our ability to respond to customer needs in the areas of, among others, AI/ML, next generation
connectivity, autonomous vehicles, IIoT, electrification and sustainability, and to leverage cloud computing and new computing platforms. In addition, our
future success may depend on our ability to continue to develop a systems integrator ecosystem able to handle integrations and process and application
development to address the challenge of the increasingly complex integration of our products' different functionalities to address customers' requirements.
For those customers who authorize a third-party technology partner to access their data, we do not provide any warranty related to the functionality,
security and integrity of the data transmission or processing. Despite contract provisions to protect us, customers may look to us to support and provide
warranties for the third-party applications, integrations, data and content, even though not developed or sold by us, which may expose us to potential
claims, liabilities and obligations, all of which could harm our business.
We devote substantial resources to research and development, which could cause our operating profits to decline.
We devote substantial resources to research and development. New competitors, technological advances in the software development industry by us or our
competitors, acquisitions, entry into new markets or other competitive factors may require us to invest significantly greater resources than anticipated. If we
are required to invest significantly greater resources than anticipated without a corresponding increase in revenue, operating profits could decline. In
addition, our periodic research and development expenses may be independent of our level of revenue, which could negatively impact financial results.
There can be no assurance that we will be successful in developing and marketing, on a timely basis, new products or product enhancements or that the new
products will adequately address the changing needs of the marketplace or that we will successfully manage the transition from existing products. Software
products as complex as those we offer may contain undetected errors, defects or vulnerabilities when first introduced or as new versions are released, and
the likelihood of errors, defects or vulnerabilities is increased as a result of our commitment to the frequency of product releases.
There can be no assurance that errors, defects or vulnerabilities will not be found in any new or enhanced products after the commencement of commercial
shipments. The occurrence of any defects or errors in our products could result in lost or delayed market acceptance and sales of our products, delays in
payment to us by customers, loss of customers or market share, product returns, damage to our reputation, diversion of our resources, increased service and
warranty expenses or financial concessions, increased insurance costs and liability for damages.
Company Operational Risks
We are dependent upon our channel partners for a significant percentage of our revenue and usage of channel partners presents certain
heightened compliance risks.
We distribute our products through a global network of independent channel partners, which accounted for 24.8%, 26.1% and 23.9% of our revenue during
the years ended December 31, 2024, 2023 and 2022, respectively. Channel partners sell our software products to new and existing customers, expand
installations within the existing customer base, offer consulting services and provide the first line of technical support. A meaningful amount of our APAC
and EMEA revenue is from channel partners. Difficulties in ongoing relationships with channel partners, such as failure to meet performance criteria and
differences in handling customer relationships, could adversely affect our performance. Additionally, the loss of any major channel partner, including a
channel partner's decision to sell competing products rather than ours, could result in reduced revenue. Moreover, our future success will depend
substantially on the ability and willingness of our channel partners to dedicate the resources necessary to understand and promote our expanding portfolio
of products and to support a larger installed base within each of our geographic regions. If the channel partners are unable or unwilling to do so, we may be
unable to sustain revenue growth.
Establishing relationships with new channel partners could result in additional compliance burdens for us. In addition, new channel partners may have a
less-established payment history and revenue from these channel partners could come with a higher rate of bad debt expense. Where channel partners
operate on our behalf to collect and process personal data of customer contacts, failure to comply with relevant data privacy laws in the handling of such
personal data could result in liability to us for any fines, civil suits or non-financial performance obligations imposed by regulatory authorities on these
partners with respect to our customer data.
Certain products require a higher level of sales and support expertise. Failure of our sales channel, particularly the independent channel partners, to obtain
this expertise and to sell the new product offerings effectively could have an adverse impact on our sales in future periods. Any of these problems may
result in the loss of or delay in customer acceptance, diversion of development resources, damage to our reputation or increased service and warranty costs,
any of which could have a significant adverse effect on our business and consolidated financial statements.
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We may not be able to realize the potential benefit of our acquisitions and such acquisitions could pose risks to our business.
We have a track record of acquiring businesses and technology to support our long-term strategic direction.
Each acquisition that we complete may present risks, including: difficulty in integrating the management teams, strategies, cultures and operations of the
companies or businesses; failing to achieve anticipated synergies, including product synergies, revenue increases or cost savings; difficulty incorporating
and integrating the acquired technologies or products with our existing product lines; difficulty with coordinating and integrating sales, distribution and
marketing functions; failure to develop new products and services that utilize the technologies and resources of the companies; disruption of our ongoing
business and diversion of management's attention to transition or integration issues; liabilities that were not identified during the acquisition process; the
loss of our key employees, customers, partners and channel partners or those of the acquired companies or businesses; and cybersecurity and data privacy
risks.
Future acquisitions may involve the expenditure of significant cash resources; the incurrence of debt, which increases our interest expense and leverage; or
the issuance of equity, which could be dilutive to stockholders and may decrease earnings per share. We allocate a portion of the purchase price to goodwill
and intangible assets. If we do not realize all the economic benefits of an acquisition, there could be an impairment of goodwill or intangible assets.
Furthermore, impairment charges are generally not tax-deductible and will result in an increased effective income tax rate in the period the impairment is
recorded.
If we do not achieve the anticipated benefits of our acquisitions as rapidly or to the extent anticipated by our management or financial and industry analysts,
there could be a significant adverse effect on our stock price, business and consolidated financial statements.
The ongoing transformation of our operational processes may not achieve the benefits identified.
In the normal course of our business, we implement new processes, tools and technology to transform our business operations and to enable future
scalability. While these transformations are intended to streamline, automate and deliver efficiencies across multiple commercial and operational processes
within the business, there is a risk that the systems or processes could be more difficult to implement than anticipated, that the new processes will not be
effectively or efficiently used, and that the benefits of such systems and processes could be substantially delayed. There is also a risk that we will have to
write off previously capitalized expenditures if the projects are not successful or if implementation decisions regarding the project are modified. Factors
that could further delay the timing or impact of benefits realization include (i) changes in leadership and project objectives; (ii) diversion of management's
attention to different projects; (iii) additional needs for technical expertise and manpower; and (iv) longer than anticipated time horizon for employee
adoption and mastery.
Any of the above could divert efforts of key operational management away from other aspects of the business, including the maintenance of current
commercial and business platforms, and result in increased consulting and software costs. These factors could have a significant negative impact on our
business and consolidated financial statements.
We may be subject to proceedings that could harm our business.
We are subject to various investigations, claims and legal proceedings that arise in the ordinary course of business, including commercial disputes, labor
and employment matters, tax audits and litigation, alleged infringement of intellectual property rights and other matters. Use or distribution of our products
could generate product liability, particularly with respect to new ways of going to market, including offering our products in cloud environments, selling
software as a service and licensing or otherwise providing our products as part of a third-party developer ecosystem, or regulatory infraction or similar
claims by our customers, end users, channel partners, government entities or other third parties. Sales and marketing activities that impact processing of
personal data, as well as measures taken to promote license compliance, may also result in claims by customers and individual employees of customers.
Each of these matters is subject to various uncertainties, and it is possible that an unfavorable resolution of one or more of these matters could have a
significant adverse effect on our consolidated financial statements as well as cause reputational damage.
We may suffer reputational or financial harm if we have product standard or quality issues.
We have separate quality systems and registrations under the ISO 9001:2015 standard in addition to other governmental and industrial regulations. Our
continued compliance with quality standards and favorable outcomes in periodic examinations is important to retain current customers and vital to procure
new sales. If it was determined that we were not in compliance with various regulatory or ISO 9001 standards, our certificates of registration could be
suspended, requiring remedial action and a time-consuming re-registration process. Product quality issues or failures could result in our reputation
becoming diminished, resulting in a material adverse impact on our business and consolidated financial statements.
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Our short-term and long-term sales forecast may not be accurate, which could result in an adverse impact on our business and consolidated
financial statements.
The software business is generally characterized by long sales cycles. These long sales cycles increase the difficulty of predicting sales for any particular
quarter. Many operational and strategic decisions are based upon short- and long-term sales forecasts. Our sales personnel monitor the status of proposals,
including the estimated closing date and the value of the sale, in order to forecast quarterly sales. These forecasts are subject to significant estimation and
are impacted by many external factors, including global economic conditions and the performance of our customers.
A variation in actual sales activity from that forecasted could cause us to plan or budget incorrectly and, therefore, could have a significant adverse effect
on our business and consolidated financial statements. Management also forecasts macroeconomic trends and developments and integrates them through
long-range planning into budgets, research and development strategies and a wide variety of general management duties. Global economic conditions, and
the effect those conditions and any disruptions in global markets have on our customers, may have a significant impact on the accuracy of our sales
forecasts. These conditions may increase the likelihood or the magnitude of variations between actual sales activity and our sales forecasts and, as a result,
our performance may be hindered because of a failure to properly match corporate strategy with economic conditions. This, in turn, could have a significant
adverse effect on our business and consolidated financial statements. To the extent our forecasts are incorrect and, as a result, we fail to meet analyst
expectations regarding financial performance or miss or reduce the outlook we give to investors, our share price may be adversely impacted.
We may not meet our targets and strategies relating to environmental, social and governance (ESG) considerations, which could expose us to
potential liabilities, increased costs, reputational harm and other adverse effects on our business.
We have established targets and strategies related to our reduction of greenhouse gas emissions. Our ability to achieve any such targets or strategies is
subject to numerous factors and conditions, many of which are outside of our control. Examples of such factors include, but are not limited to, evolving
legal, regulatory and other standards, processes and assumptions, the pace of scientific and technological developments, increased costs, the availability of
requisite financing and changes in carbon markets. Failures or delays (whether actual or perceived) in achieving our targets or strategies related to climate
change and other environmental matters could adversely affect our reputation, business, operations and increase risk of litigation.
Furthermore, many governments, regulators, investors, employees, customers and other stakeholders are increasingly focused on environmental, social and
governance considerations relating to businesses, including climate change and greenhouse gas emissions, human capital and diversity, equity and
inclusion. We make statements about our ESG targets and strategies through information provided on our website, press statements and other
communications, including through our Corporate Responsibility Report. Responding to these environmental, social and governance considerations and
implementation of these targets and strategies involves risks and uncertainties, including those described under "Note About Forward-Looking Statements".
In addition, some stakeholders may disagree with our targets and strategies and the focus of stakeholders may change and evolve over time. Stakeholders
also may have very different views on where environmental, social and governance focus should be placed, including differing views of regulators in
various jurisdictions in which we operate. Any failure, or perceived failure, by us to achieve our targets, further our strategies, adhere to public statements,
comply with federal, state or international environmental, social and governance laws and regulations or meet evolving and varied stakeholder expectations
and standards could result in legal and regulatory proceedings against us and materially adversely affect our business, reputation, results of operations,
financial condition and stock price.
Additionally, new laws, regulations, policies, and international accords relating to environmental, social and governance matters, including sustainability,
climate change, human capital and diversity, are being developed and formalized in the United States, Europe and elsewhere, which may require specific,
target-driven frameworks or disclosure requirements. The California Legislature passed two bills that will impose climate-related reporting requirements
for many companies doing business in the state, including Ansys. Standards for reporting ESG metrics are complex and evolving, and the implementation
and oversight of controls to comply with applicable reporting and disclosure standards could impose significant compliance costs. In addition, such
disclosure requirements could result in revisions to our previous ESG-related disclosures or challenges in meeting evolving and varied regulatory and other
stakeholder expectations and standards, which could expose us to liability or harm our reputation and prospects.
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Intellectual Property Risks
Our success is highly dependent upon the legal protection of our proprietary technology.
We primarily rely upon contracts, copyright, patent, trademark and trade secrets laws to protect our technology. We maintain intellectual property
programs, including applying for patents, registering trademarks and copyrights, protecting trade secrets, entering into confidentiality agreements with our
employees, customers and partners and limiting access to and distribution of our software, documentation and other proprietary information. However,
software programs are particularly prone to piracy, which is a global phenomenon, and as a result we may lose revenue from piracy or usage and
distribution of unlicensed software. Additionally, patent, copyright, trademark and trade secret protection do not provide the same coverage in every
country in which we sell our products and services and some forms of contractual protections (including limited licenses, "click-wrapped" licenses and
online agreement) may not be adequately enforced. Policing the unauthorized distribution and use of our products is difficult, and software piracy
(including online piracy) is a persistent problem. While we continue to develop better mechanisms to detect and report or investigate unauthorized use of
our software, we are also constrained by data privacy laws that restrict our ability to collect data about unlawful usage in some countries. We cannot assure
that the steps we take to protect our proprietary technology are adequate to prevent misappropriation of our software by third parties, or that third parties
will not copy our technology or develop similar technology independently to compete with our products. Despite our efforts to prevent such activities, we
may nonetheless lose significant revenue due to illegal use of our software or technology.
In the event of an infringement or misappropriation of our intellectual property, costly and time-consuming litigation may be necessary to enforce our
rights. In addition, third parties may subject us to infringement claims with respect to their intellectual property rights. Any such litigation could be costly
to defend, damage our reputation and distract our employees from their daily work. Any successful infringement claims asserted against us could require us
to develop technology workarounds for the impacted technologies, products or solutions, which could be costly, disrupt product development and delay go-
to-market activities. Such disruption and delay could negatively impact our financial results.
We may not be able to continue to obtain licenses to third-party software and intellectual property on reasonable terms or at all, which may
disrupt our business and harm our financial results.
We license third-party software, including third-party open source software, and other intellectual property for use in product research and development
and, in some instances, for inclusion in our products. We also license third-party software, including the software of our competitors, to test the
interoperability of our products with other industry products and in connection with our solutions and professional services. These licenses may need to be
renegotiated or renewed from time to time, or we may need to obtain new licenses in the future. Third parties may stop adequately supporting or
maintaining their technology, or they or their technology may be acquired by our competitors who elect to terminate our contractual relationship.
Furthermore, third parties may challenge our use of open source software and compliance with the open source software license terms, or we may
inadvertently use third-party open source software in a manner that exposes us to non-compliance claims. We may, additionally, acquire companies that
license third-party software from our competitors or others who may elect to terminate the contractual relationship once the acquisition is announced. If we
are unable to obtain licenses to such third-party software and intellectual property on reasonable terms or at all, we may not be able to sell the affected
products, our customers' usage of the products may be interrupted or our product development processes and professional services offerings may be
disrupted, which could in turn harm our financial results, our customers' ability to utilize our software and our reputation.
Cybersecurity Risks
Cyberattacks and security vulnerabilities could lead to reduced revenue, increased costs, liability claims or harm to our reputation.
While we undertake commercially reasonable efforts to maintain and improve the security and integrity of our products, source code, computer systems
and data with respect to the relative sensitivity of such software, systems and data, the number of computer "hackers" developing and deploying destructive
software programs that attack our products and computer systems continues to increase. We have incurred and will continue to incur additional costs to
enhance and maintain our cybersecurity efforts. Because the tactics and tools used to obtain unauthorized access to networks or to sabotage systems are
constantly evolving, we may be unable to implement adequate preventive measures. Furthermore, employees working from remote work environments
could expose us to increased security risks and attacks. Such attacks could disrupt the proper functioning of our products, cause errors in the output of our
customers' work, or allow unauthorized access to and disclosure of our sensitive, proprietary or confidential information or that of our customers and
employees. In the event of a serious breach of our products or systems, or where a breach occurs due to our failure to implement reasonable and appropriate
safeguards, our reputation may suffer, customers may stop buying products or may terminate current services, we could face lawsuits and potential civil
liability, as well as regulatory fines and non-financial penalties for any personal data breach and our financial performance could be negatively impacted.
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There is also a danger of industrial espionage, cyberattacks (including state-sponsored attacks), ransomware attacks, misuse, theft of information or assets
(including source code) or damage to assets by people who have gained unauthorized access to our facilities, systems or information. We have in the past,
and may in the future, experience such attacks. This includes access to systems or information through email phishing attacks on our employees, which has
become a very prevalent technique used against companies, often delaying detection through increasingly complex practices. The objective of these attacks
is often to acquire user account credentials in order to access other computer systems through linked accounts or where users have recycled passwords
across systems. There is also risk of infection of software while it is under assembly, known as a supply chain attack. As a software provider, there is the
risk that we could become the subject of a significant network breach through our usage of compromised third-party software. Similarly, the subversion of
popular open source modules presents a widespread and ongoing risk across the software development sector. Increasing use of artificial intelligence may
increase these risks.
Inadequate security practices or inadvertent acts or omissions by our employees and partners may also result in unauthorized access to our data. Employees
or third parties may also intentionally compromise our or our customers' security or systems. Such cybersecurity breaches, misuse of data or other
disruptions could lead to loss of or unauthorized disclosure of our source code or other confidential information, unlicensed use and distribution of our
products without compensation, illegal use of our products that could jeopardize the security of customer information stored in and transmitted through our
computer systems and theft, manipulation and destruction of proprietary data, resulting in defective products, performance downtimes and possible
violation of export laws and other regulatory compliance requirements. Although we actively employ measures to combat such activities, preventing
unauthorized access to our systems and data is inherently difficult. In addition, litigation to either pursue our legal rights or defend any claims against us
could be costly and time-consuming and may divert management's attention and adversely affect the market's perception of us and our products.
We have experienced targeted and non-targeted cybersecurity attacks and incidents in the past that have resulted in unauthorized persons gaining access to
our information and systems, and we could in the future experience similar attacks. To date, no cybersecurity incident or attack described herein has had a
material impact on our business or consolidated financial statements.
A number of our core processes, such as software development, sales and marketing, customer service and financial transactions, rely on IT infrastructure
and applications. We also rely on third-party service providers and products, which are exposed to various security vulnerabilities outside of our control.
Malicious software, sabotage and other cybersecurity breaches of the types discussed above could cause an outage of our infrastructure, which could cause
short-term disruption in operations or, in the event of a longer disruption, lead to a substantial denial of service to our customers and ultimately to
production downtime, recovery costs and customer claims for breach of contract, as well as reputational damage and impact to employee morale and
productivity.
We rely on service providers for infrastructure and cloud-based products.
We use a number of third-party service providers, which we do not control, for key components of our infrastructure, including the development and
delivery of our cloud-based products. The utilization of these service providers gives us greater flexibility in efficiently delivering a more tailored, scalable
customer experience, but also exposes us to additional risks and vulnerabilities. Third-party service providers operate their own platforms that we access,
and we are, therefore, vulnerable to their service interruptions. We may experience interruptions, delays and outages in service and availability from time to
time as a result of problems with our third-party service providers' infrastructure. Lack of availability of this infrastructure could be due to a number of
potential causes including technical failures, natural disasters (including significant disruptions in weather as a result of global climate change), fraud or
security attacks that we cannot predict or prevent. Such outages could lead to the triggering of our service level agreements and the issuance of credits to
our cloud-based product customers, which may impact our business and consolidated financial statements. In addition, those of our products and services
that depend upon hosted components are vulnerable to security risks inherent in web-based technologies, including greater risk of unauthorized access to or
use of customers' protected data. Interception of data transmission, misappropriation or modification of data, corruption of data and attacks by bad actors
against our service providers may also adversely affect our products or product and service delivery. Malicious code, viruses or vulnerabilities that are
undetected by our service providers may disrupt our business operations generally and may have a disproportionate effect on those of our products that are
developed and delivered in the cloud environment. If our security, or that of any of our third-party service providers, is compromised, our software is
unavailable or our customers are unable to use our software within a reasonable amount of time or at all, then our business and financial statements could
be adversely affected.
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These risks, though largely outside our control, may impact customer perception of our products, service and support, and may damage our brand. While
we devote resources to maintaining the security and integrity of our products and systems, as well as ensuring adequate due diligence for our third-party
service providers, cloud security and reliability is inherently challenging. In the event of a material breach of data hosted by our service providers or a
serious security incident on behalf of, caused by or experienced by a service provider, we may experience significant operational and technical difficulties,
loss of data including customer data, diminished competitive position or reputation and loss of customer engagement, which could result in civil liabilities
and a negative impact to financial performance. It is also possible that our customers and potential customers would hold us accountable for any breach of
security affecting a third-party service provider's infrastructure and we may incur significant liability from those customers and from third parties with
respect to any breach affecting these systems. We may not be able to recover a material portion of our liabilities to our customers and third parties from a
third-party cloud provider.
Financial Risks
Foreign exchange rate fluctuations may adversely affect our consolidated financial statements.
As a result of our significant international presence, we have revenue, expenses, cash, accounts receivable and payment obligations denominated in foreign
currencies, most notably the Euro and Japanese Yen. Our operating results are adversely affected when the U.S. Dollar strengthens relative to foreign
currencies and are positively affected when the U.S. Dollar weakens relative to foreign currencies. Additionally, when the U.S. Dollar strengthens relative
to other currencies, certain channel partners who pay us in U.S. Dollars may have trouble paying on time or may have trouble distributing our products due
to the impact of the currency exchange fluctuation on their cash flows. This may impact our ability to distribute our products into certain regions and
markets.
We seek to reduce our currency exchange transaction risks primarily through our normal operating and treasury activities, including derivative instruments,
but there can be no assurance that these activities will be successful in reducing these risks. Changes in currency exchange rates may adversely affect or
create considerable volatility in our consolidated financial statements.
Changes to tax laws, variable tax estimates and tax authority audits could impact our financial results and operations.
Our operations are subject to income and transaction taxes in the United States and in multiple foreign jurisdictions. A change in the tax law in the
jurisdictions in which we do business, including an increase in tax rates, an adverse change in the treatment of an item of income or expense or a decrease
in tax rates in a jurisdiction in which we have significant deferred tax assets, could result in a material increase in tax expense. Furthermore, we have
recorded significant deferred tax liabilities related to acquired intangible assets that are generally not deductible for tax purposes. These deferred tax
liabilities are based on future statutory tax rates in the locations in which the intangible assets are recorded. Any future changes in statutory tax rates would
be recorded as an adjustment to the deferred tax liabilities in the period the change is announced and could have a material impact on our effective tax rate
during that period. Additionally, changes in tax laws could impact operating cash flow due to changes in timing of payments required as well as the overall
rate we are required to pay.
The Organisation for Economic Co-operation and Development ("OECD"), in coordination with the G20, has suggested a number of fundamental changes
as part of an effort to address the global tax issue of base erosion and profit shifting. In particular, and as a way to address the tax challenges arising from
the digitalization of the economy, the OECD has introduced a two-pillar approach which provides for the allocation of profits among taxing jurisdictions in
which companies do business, and the implementation of a 15 percent global minimum tax rate (namely the "Pillar One" and "Pillar Two" proposals).
Many countries have implemented laws or are in the process of implementing laws based on the Pillar Two proposal which may adversely affect our
provision for income taxes, net income, and cash flows depending on the specifics of the laws passed in each jurisdiction. These proposals also entail
significant compliance obligations and if we are unable to successfully transition our business systems, processes and internal controls, it could impact our
ability to meet financial and tax reporting deadlines.
We also make significant estimates in determining our worldwide income tax provision. These estimates involve complex tax regulations in many
jurisdictions and are subject to many transactions and calculations in which the ultimate tax outcome is uncertain. The outcome of tax matters could be
different than the estimates reflected in the historical income tax provision and related accruals. Such differences could have a material impact on income
tax expense and net income in the periods in which such determinations are made.
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The amount of income tax we pay is subject to ongoing audits by federal, state and foreign tax authorities. These audits can result in additional
assessments, including interest and penalties. Our estimates for liabilities associated with uncertain tax positions are highly judgmental and actual future
outcomes may result in favorable or unfavorable adjustments to our estimated tax liabilities, including estimates for uncertain tax positions, in the period
the assessments are made or resolved, audits are closed or when statutes of limitation on potential assessments expire. As a result, our effective tax rate may
fluctuate significantly on a quarterly or annual basis.
Our indebtedness could adversely affect our business, financial condition and results of operations.
We have outstanding borrowings of $755.0 million under a term loan facility, which matures on June 30, 2027. We also have access to a $500.0 million
revolving loan facility, which includes a $50.0 million sublimit for the issuance of letters of credit. The credit agreement governing these loans contains
customary representations and warranties, affirmative and negative covenants and events of default. The credit agreement also contains a financial
covenant requiring us to maintain a consolidated net leverage ratio not in excess of 3.50 to 1.00 as of the end of any fiscal quarter (for the four-quarter
period ending on such date) with an opportunity for a temporary increase in such consolidated net leverage ratio to 4.00 to 1.00 upon the consummation of
certain qualified acquisitions for which the aggregate consideration is at least $250.0 million.
Notwithstanding the limits contained in the credit agreement governing our term loan facility and revolving loan facility, we may be able to incur
substantial additional debt from time to time to finance working capital, capital expenditures, share repurchases, investments or acquisitions or for other
purposes. If we do so, the risks related to our level of debt could intensify. Specifically, our level of debt could:
•
make it more difficult for us to satisfy our debt obligations and other ongoing business obligations, which may result in defaults;
•
result in an event of default if we fail to comply with the financial and other covenants contained in the agreement governing our debt, which
could result in all of our debt becoming immediately due and payable or require us to negotiate an amendment to financial or other covenants that
could cause us to incur additional fees and expenses;
•
limit our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate
requirements;
•
reduce the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes;
•
increase our vulnerability to the impact of adverse economic and industry conditions;
•
expose us to the risk of increased interest rates as our borrowings are at variable rates of interest, which can adversely impact our operating cash
flow;
•
limit our flexibility in planning for, or reacting to, and increasing our vulnerability to, changes in our business, the industries in which we operate
and the overall economy;
•
place us at a competitive disadvantage compared to other, less leveraged competitors;
•
increase our cost of borrowing; and
•
increase our effective tax rate as interest expense could become non-deductible.
Any of the above-listed factors could have an adverse effect on our business, financial condition and results of operations and our ability to meet our
payment obligations under our debt agreement.
ITEM 1B.
UNRESOLVED STAFF COMMENTS
None.
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ITEM 1C.
CYBERSECURITY
Risk Management and Strategy
We are subject to various cybersecurity risks in connection with our business. See the section entitled “Cybersecurity Risks” in Part I, Item 1A. Risk
Factors of this Annual Report on Form 10-K. Our cybersecurity program is led by an experienced team of cybersecurity professionals headed by our Chief
Information Security Officer (CISO), reporting to our General Counsel.
Our Cybersecurity Management System (CSMS) is part of our cybersecurity program and operates under the Ansys CSMS Risk Management
Methodology and Policy (Policy), which establishes a process to identify, assess and mitigate potential cybersecurity threats. The Policy provides for
conducting risk assessments to identify Ansys information assets (such as software assets or data), identifying potential vulnerabilities related to those
assets, assessing the potential impact should the vulnerability be exploited and working with our internal cybersecurity team to provide recommendations to
eliminate or mitigate the potential risk. The risk assessments allow our management to validate threats and investigate potential vulnerabilities to more
effectively make risk management decisions and assign resources to mitigate risk.
Our CSMS uses third-party software to identify and prioritize cybersecurity threats and has dedicated personnel whose core responsibilities are to
document and track cybersecurity threats. We use security technology tools and methodologies to protect our information systems. We also use tools for
risk and vulnerability management and perform periodic penetration testing and vulnerability scanning. Further, we provide our employees information
security awareness training upon hire and annually thereafter.
We conduct an enterprise risk assessment that is updated on an annual basis and includes periodic monitoring of new and emerging risks and preparation
for and progress on mitigation efforts. Cybersecurity is directly integrated into this process as an operational risk and has been classified within the
enterprise risk management program based on the risk assessment. Any identified gaps are incorporated and monitored through a cybersecurity roadmap,
with progress reported to management. Controls put in place to manage any identified risks are evaluated against an established risk-mitigation framework.
We engage multiple third-party consultants to advise us on our cybersecurity processes. We conduct external, third-party assessments of our cybersecurity
program against specified industry frameworks, as well as annual re-assessments designed to help us understand program changes and the impact that they
have had on overall program maturity. Additionally, we engage an external third-party penetration testing entity to measure the effectiveness of our
cybersecurity strategy against cybersecurity threats.
Lastly, we use third-party intelligence resources to help identify cybersecurity threats via finished intelligence, alerts and consulting services that help
answer requests for information. We have collaborative relationships with The Information Technology - Information Sharing and Analysis Center and
several governmental agencies for identification of threats that target technology.
Ansys also has an established Third-Party Risk Management Program and Policy that is designed to identify and manage cybersecurity risks associated
with third-party service providers. The program includes processes designed to identify, assess and mitigate and/or manage third-party service provider
risks. Under the Third-Party Risk Management Program and Policy, we evaluate third-party service providers through five stages: planning, due diligence,
contracting/onboarding, ongoing monitoring and termination/off-boarding.
We have in the past, and may in the future, experience cybersecurity incidents. Although prior incidents have not materially affected Ansys, future
incidents from cybersecurity threats could have a materially adverse impact on us, including on our reputation, the results of our operations and our
financial condition and could implicate lawsuits and potential civil liability, as well as regulatory fines and non-financial penalties.
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Governance
Our cybersecurity program is overseen by the Audit Committee of the Ansys Board of Directors. This oversight is anchored in the Audit Committee’s
charter, which specifically grants the Audit Committee oversight responsibility on our risks related to cybersecurity, including a review of the state of our
cybersecurity program, emerging cybersecurity developments and threats and our strategy to mitigate cybersecurity risks. The Senior Director of Internal
Audit and Risk Management, with input from the CISO, reports on the status of the cybersecurity program to the Audit Committee and, periodically or
where appropriate, to the Ansys Board of Directors. These reports generally include recent updates and improvements to the cybersecurity program,
information on the cybersecurity program’s status and intelligence on recent cybersecurity threats, actions we have taken to mitigate such threats and recent
material incidents, or potentially material incidents, if any. In addition, the Senior Director of Internal Audit and Risk Management reports to the Audit
Committee on the enterprise risk management program, which includes risks associated with cybersecurity.
Our cybersecurity program, and its associated CSMS, is led by an experienced team of cybersecurity professionals headed by the CISO. In the event of a
cybersecurity incident, we have a dedicated Cybersecurity Incident Response Team that is responsible for identifying, escalating, responding to and
managing cybersecurity incidents, including interdiction and remediation, as well as conducting the initial investigation, gathering and analyzing data,
mitigating damage to the informational assets and infrastructure of Ansys, restoring normal services and system integrity and implementing actions
designed to prevent future cybersecurity incidents. This team reports to the CISO. In the event of a significant cybersecurity incident, a cross-functional
team comprised of cyber, legal and finance personnel work together to determine the materiality of an incident.
Our Cybersecurity Steering Committee, which includes the CISO and several members of management, is responsible for the daily operational oversight of
our cybersecurity program. The CISO has over 20 years of experience in cybersecurity. Members of this committee include our General Counsel, Chief
Financial Officer and the Senior Director of Internal Audit and Risk Management, all of whom have significant experience in managing enterprise risk,
including risk from cybersecurity threats. The Cybersecurity Steering Committee meets routinely to discuss the status of the cybersecurity program, the
status of responses to cybersecurity incidents or threats, any updates on certification programs and any emerging cybersecurity threats. Information
received by management through the Cybersecurity Steering Committee is regularly included in the quarterly updates to the Audit Committee.
ITEM 2.
PROPERTIES
Our executive offices and those related to certain domestic product development, marketing, production and administration are located in a LEED certified,
186,000 square foot office facility in Canonsburg, Pennsylvania. The lease for this facility began on October 1, 2014 and expires on December 31, 2029,
excluding any renewal or termination options.
We also lease office space in various locations throughout the world. We own substantially all equipment used in our facilities. Management believes that
our facilities generally allow for sufficient space to support present and future foreseeable needs, including such expansion and growth as the business may
require.
Our properties and equipment are in good operating condition and are adequate for our current needs. We do not anticipate difficulty in renewing existing
leases as they expire or in finding alternative facilities.
ITEM 3.
LEGAL PROCEEDINGS
We are subject to various claims, investigations and legal and regulatory proceedings that arise in the ordinary course of business, including, but not limited
to, commercial disputes, labor and employment matters, tax audits, alleged infringement of third parties' intellectual property rights and other matters. Use
or distribution of our products could generate product liability, regulatory infraction or claims by our customers, end users, channel partners, government
entities or third parties. Sales and marketing activities that impact processing of personal data, as well as measures taken to promote license compliance
against pirated or unauthorized usage of our commercial products, may also result in claims by customers and individual employees of customers or by
non-customers using pirated versions of our products. Each of these matters is subject to various uncertainties, and it is possible that an unfavorable
resolution of one or more of these matters could have a significant adverse effect on our consolidated financial statements as well as cause reputational
damage. In our opinion, the resolution of pending matters is not expected to have a material adverse effect on our financial position, results of operations or
cash flows.
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ITEM 4.
MINE SAFETY DISCLOSURES
Not applicable.
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PART II
ITEM 5.
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
Our common stock trades on the Nasdaq Global Select Market tier of the Nasdaq Stock Market under the symbol: "ANSS".
On February 5, 2025, there were 217 stockholders of record of our common stock.
We have not historically paid cash dividends on our common stock as we have retained earnings primarily for acquisitions, for future business
opportunities, to make payments on outstanding debt balances and to repurchase stock when authorized by the Board of Directors and when such
repurchase meets our objectives. We review our policy with respect to the payment of dividends from time to time; however, there can be no assurance that
any dividends will be paid in the future. In addition, pursuant to the Merger Agreement, we may not declare, accrue, set aside, establish a record date for or
pay any dividend or other distribution (whether in cash, stock or otherwise) in respect of any shares of capital stock or other securities, without obtaining
Synopsys’ approval (which may not be unreasonably withheld, conditioned or delayed).
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Performance Graph
Set forth below is a line graph comparing the yearly percentage change in the cumulative total stockholder return of our common stock, based on the
market price per share of our common stock, with the total return of companies included within the NASDAQ Composite Stock Market Index, the
NASDAQ 100 Stock Market Index, the S&P 500 Stock Index and an industry peer group of seven companies (Altair Engineering Inc., Aspen Technology,
Inc., Autodesk, Inc., Cadence Design Systems, Inc., Dassault Systemes SE, PTC Inc., and Synopsys, Inc.) for the period commencing December 31, 2019
and ending December 31, 2024. The calculation of total cumulative returns assumes a $100 investment in our common stock, the NASDAQ Composite
Stock Market Index, the NASDAQ 100 Stock Market Index, the S&P 500 Stock Index and the peer group on December 31, 2019, and the reinvestment of
all dividends, and accounts for all stock splits. The historical information set forth below is not necessarily indicative of future performance.
ASSUMES $100 INVESTED ON DECEMBER 31, 2019
ASSUMES DIVIDENDS REINVESTED
FIVE FISCAL YEARS ENDED DECEMBER 31, 2024
As of December 31,
2019
2020
2021
2022
2023
2024
ANSYS, Inc.
$100
$141
$156
$94
$141
$131
NASDAQ Composite
$100
$145
$177
$119
$173
$224
NASDAQ 100
$100
$149
$190
$128
$199
$251
S&P 500 Stock Index
$100
$118
$152
$125
$158
$197
Peer Group
$100
$157
$194
$148
$219
$219
36
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Unregistered Sale of Equity Securities and Use of Proceeds
None.
ITEM 6.
[RESERVED]
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ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with our consolidated financial statements and notes thereto. This section generally
discusses our results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023. For discussion and analysis of
our results for the year ended December 31, 2023 compared to the year ended December 31, 2022, refer to "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in Part II, Item 7 of our 2023 Form 10-K, filed with the SEC on February 21, 2024.
Business
Ansys, a corporation formed in 1994, develops and globally markets engineering simulation software and services widely used by engineers, designers,
researchers and students across a broad spectrum of industries and academia, including high-tech, aerospace and defense, automotive, energy, industrial
equipment, materials and chemicals, consumer products, healthcare and construction. Headquartered south of Pittsburgh, Pennsylvania, we employed 6,500
and 6,200 people as of December 31, 2024 and 2023, respectively. We focus on the development of open and flexible solutions that enable users to analyze
designs on-premises and/or via the cloud, providing a common platform for fast, efficient and cost-conscious product development, from design concept to
final-stage testing, validation and deployment. We distribute our suite of simulation technologies through direct sales offices in strategic, global locations
and a global network of independent resellers and distributors (collectively, channel partners). It is our intention to continue to maintain this hybrid sales
and distribution model. We operate and report as one segment.
When visionary companies need to know how their world-changing ideas will perform, they close the gap between design and reality using Ansys
simulation. For more than 50 years, Ansys software has enabled innovators across industries to push the boundaries of product design by using the
predictive power of simulation. From sustainable transportation and advanced satellite systems to life-saving medical devices, Ansys powers innovation
that drives human advancement.
Our strategy of Pervasive Insights seeks to deepen the use of simulation in our core market, to inject simulation throughout the product lifecycle and extend
the accessibility to a broader set of users and use cases. Our business has three vectors of growth:
•
More products. Our broad and deep multiphysics portfolio enables us to grow with customers as they use simulation to solve more complex
problems across a broad set of industries.
•
More users. Investments in simulation education and user experience simplification has made simulation more accessible to a broader user base.
•
More computations. Larger and more complex simulations drive more computation, requiring customers to use more Ansys licenses to complete
their simulations.
Through decades of investments in the academic community and enhanced user experiences, our solutions have become accessible and relevant beyond our
core "engineering" end user, to reach more users upstream and downstream from our core, which is the product validation process. Our multiphysics
solutions enable our customers to address increasingly complex R&D challenges from the component through the system and mission level of analysis.
Our products seamlessly enable access to high performance compute capacity to run simulations, on-premises or in the cloud, which means our customers'
R&D teams are unencumbered by compute capacity limitations that can hinder R&D cycle times. Through our updated product strategy, we have embraced
five key technology pillars: numerics, HPC, cloud, AI and ML, and digital engineering. Innovation across these pillars has helped us transform and
modernize processes and techniques across our business and deliver products that our customers rely on to win in the marketplace. For example, our
investments in AI capabilities across our simulation portfolio and technical support services enhance the customer experience, democratize and accelerate
simulation, unlock greater design exploration and further next-generation innovation.
The engineering software simulation market is strong and growing. The market growth is driven by customers' need for rapid, quality innovation in a cost-
efficient manner, enabling faster time to market for new products, streamlined certification and lower warranty costs. Increasing product complexity is
driving sustained demand for simulations. Key industry trends fueling customers' increasing needs for simulation include:
•
Electrification;
•
Autonomy;
•
Connectivity;
•
IIoT;
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•
Digital transformation/shift to fully digital engineering ecosystem; and
•
Sustainability, including minimizing waste and physical prototyping, and improving circularity and development time.
We have been investing and intend to continue to invest in our portfolio to broaden the range of physics and enable customers to analyze the interactions
among physics at the component, system and mission level. Our strategy of Pervasive Insights is aligned with the near-term market growth opportunities
and is laying the foundation for a future where simulation can be further democratized to broader classes of end-users and end-use cases. In addition, we
have and expect to continue to partner with industry leaders to extend simulation into other ecosystems and customer R&D workflows.
We license our technology to businesses in a diverse set of industries, educational institutions and governmental agencies. We believe that the features,
functionality and integrated multiphysics capabilities of our software products are as strong as they have ever been. The software business is generally
characterized by long sales cycles which increase the difficulty of predicting sales for any particular quarter. We make many operational and strategic
decisions based upon short- and long-term sales forecasts that are impacted not only by these long sales cycles, but also by current global economic
conditions. As a result, we believe that our overall performance is best measured by fiscal year results rather than by quarterly results. Please see the sub-
section entitled "Company Operational Risks" under Part I, Item 1A. of this Annual Report on Form 10-K for additional discussion of the potential impact
of our sales forecasts on our financial condition, cash flows and operating results.
We address the competition and price pressure that we face in the short- and long-term by focusing on expanding the breadth, depth, ease of use and quality
of the technologies, features, functionality and integrated multiphysics capabilities of our software products as compared to our competitors; investing in
research and development to develop new and innovative products and increasing the capabilities of our existing products; maintaining a diverse industry
footprint and focusing on customer needs, training, consulting and support; and enhancing our distribution channels. We also evaluate and execute strategic
acquisitions to supplement our global engineering talent, product offerings and distribution channels.
Synopsys Merger Agreement
On January 15, 2024, we entered into the Merger Agreement with Synopsys and Merger Sub. The Merger Agreement provides for the merger of Merger
Sub with and into Ansys, with Ansys surviving the merger as a wholly owned subsidiary of Synopsys. Our Board of Directors and stockholders have
approved the Merger Agreement. If the merger is consummated, our common stock will be delisted from the Nasdaq Global Select Market and deregistered
under the Exchange Act.
Under the Merger Agreement, at the effective time of the merger, each issued and outstanding share of our common stock (subject to certain exceptions set
forth in the Merger Agreement) will be cancelled and converted into the right to receive (i) 0.3450 of a share of common stock, par value $0.01 per share,
of Synopsys and (ii) $197.00 in cash, without interest, subject to applicable withholding taxes. With regard to the Stock Consideration, if the aggregate
number of shares of Synopsys common stock to be issued in connection with the merger would exceed the Maximum Share Number (19.9999% of the
shares of Synopsys common stock issued and outstanding immediately prior to the effective time of the merger), (a) the Exchange Ratio will be reduced to
the minimum extent necessary such that the aggregate number of shares of Synopsys common stock to be issued in connection with the merger does not
exceed the Maximum Share Number and (b) the Per Share Cash Amount will be correspondingly increased to offset such adjustment.
The Merger Agreement contains customary representations, warranties and covenants made by each of Ansys, Synopsys, and Merger Sub, including,
among others, covenants regarding the conduct of our and Synopsys’ businesses during the pendency of the transactions contemplated by the Merger
Agreement, the making of certain public disclosures and other matters as described in the Merger Agreement. We and Synopsys have agreed to use
reasonable best efforts to take all actions necessary to consummate the merger, including cooperating to obtain the regulatory approvals necessary to
complete the merger. We have agreed not to, among other things, (a) solicit proposals relating to alternative transactions or (b) enter into discussions or
negotiations or provide non-public information in connection with any proposal for an alternative transaction from a third party, subject to certain
exceptions to permit our Board of Directors to comply with its fiduciary obligations. We have further agreed to cease and cause to be terminated any
existing discussions or negotiations, if any, with regard to alternative transactions.
The Merger Agreement may be terminated under certain circumstances, including that either party may have the right to terminate if the merger is not
completed by July 15, 2025 (which date may be extended by either party to January 15, 2026 as provided in the Merger Agreement). If the Merger
Agreement is terminated, (A) Synopsys, under specified circumstances, including termination following an injunction arising in connection with certain
antitrust or foreign investment laws, will be required to pay us a termination fee of $1,500.0 million; and (B) we, under specified circumstances, will be
required to pay Synopsys a termination fee of $950.0 million.
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The completion of the merger is subject to customary closing conditions, including, among others, approval of the merger under certain applicable antitrust
and foreign investment regimes. We currently expect the transaction to close in the first half of 2025.
As previously announced by Synopsys, Ansys and Synopsys have received conditional clearance from the European Commission. The U.K. Competition
and Markets Authority provisionally accepted our remedies towards a transaction approval in Phase 1. The State Administration for Market Regulation of
the People’s Republic of China has officially accepted our filing, and its review of the proposed transaction is in process. We continue to work with the
regulators in other relevant jurisdictions to conclude their reviews.
As part of our efforts to obtain regulatory approval for the merger, we have entered into a definitive agreement with Keysight Technologies, Inc. for the sale
of our PowerArtist RTL business. The transaction is subject to customary closing conditions, including review by regulatory authorities, and the closing of
Synopsys' proposed acquisition of Ansys. The PowerArtist RTL business has not materially contributed to our financial results.
Overview
Overall GAAP and Non-GAAP Results
This section includes a discussion of GAAP and Non-GAAP results. For reconciliations of Non-GAAP results to GAAP results, see the section titled "Non-
GAAP Results" herein.
The 2024 and 2023 period non-GAAP results exclude the income statement effects of stock-based compensation, excess payroll taxes related to stock-
based compensation, amortization of acquired intangible assets, expenses related to business combinations and adjustments for the income tax effect of the
excluded items.
Our GAAP and non-GAAP results for the year ended December 31, 2024 as compared to the year ended December 31, 2023 reflected the following
variances:
Year Ended December 31,
2024
Revenue
12.1 %
GAAP Operating income
14.7 %
Non-GAAP Operating income
20.3 %
GAAP Diluted earnings per share
14.3 %
Non-GAAP Diluted earnings per share
24.0 %
Our results reflect an increase in revenue during the year ended December 31, 2024 due to growth in subscription lease license and maintenance revenue.
We also experienced increased operating expenses during the year ended December 31, 2024, primarily due to increased personnel and acquisition costs.
Acquisition costs primarily consist of costs related to the Merger Agreement with Synopsys. In addition, the actual U.S. Dollar reported results were
impacted by a stronger U.S. Dollar.
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This section also includes a discussion of constant currency results, which we use for financial and operational decision-making and as a means to evaluate
period-to-period comparisons by excluding the effects of foreign currency fluctuations on the reported results. Constant currency is a non-GAAP measure.
All constant currency results presented in this Item 7 exclude the effects of foreign currency fluctuations on the reported results. To present this
information, the 2024 results for entities whose functional currency is a currency other than the U.S. Dollar were converted to U.S. Dollars at rates that
were in effect for the 2023 comparable period, rather than the actual exchange rates in effect for 2024. Constant currency growth rates are calculated by
adjusting the 2024 reported amounts by the 2024 currency fluctuation impacts and comparing to the 2023 comparable period reported amounts.
Impact of Foreign Currency
Our comparative financial results were impacted by fluctuations in the U.S. Dollar during the year ended December 31, 2024 as compared to the year
ended December 31, 2023. The impacts on our revenue and operating income as a result of the fluctuations of the U.S. Dollar when measured against our
foreign currencies based on 2023 exchange rates are reflected in the table below. Amounts in brackets indicate an adverse impact from currency
fluctuations.
(in thousands)
Year Ended December
31, 2024
Revenue
$
(25,398)
GAAP Operating income
$
(19,588)
Non-GAAP Operating income
$
(19,335)
In constant currency, our variances were as follows:
Year Ended December 31,
2024
Revenue
13.2 %
GAAP Operating income
17.8 %
Non-GAAP Operating income
22.3 %
Other Key Business Metric
Annual Contract Value (ACV) is a key performance metric and is useful to investors in assessing the strength and trajectory of our business. ACV is a
supplemental metric to help evaluate the annual performance of the business. Over the life of the contract, ACV equals the total value realized from a
customer. ACV is not impacted by the timing of license revenue recognition. ACV is used by management in financial and operational decision-making
and in setting sales targets used for compensation. ACV is not a replacement for, and should be viewed independently of, GAAP revenue and deferred
revenue as ACV is a performance metric and is not intended to be combined with any of these items. There is no GAAP measure comparable to ACV.
ACV is composed of the following:
•
the annualized value of maintenance and subscription lease contracts with start dates or anniversary dates during the period, plus
•
the value of perpetual license contracts with start dates during the period, plus
•
the annualized value of fixed-term services contracts with start dates or anniversary dates during the period, plus
•
the value of work performed during the period on fixed-deliverable services contracts.
When we refer to the anniversary dates in the definition of ACV above, we are referencing the date of the beginning of the next twelve-month period in a
contractually committed multi-year contract. If a contract is three years in duration, with a start date of July 1, 2024, the anniversary dates would be July 1,
2025 and July 1, 2026. We label these anniversary dates as they are contractually committed. While this contract would be up for renewal on July 1, 2027,
our ACV performance metric does not assume any contract renewals.
Example 1: For purposes of calculating ACV, a $100,000 subscription lease contract or a $100,000 maintenance contract with a term of July 1, 2024 – June
30, 2025, would each contribute $100,000 to ACV for fiscal year 2024 with no contribution to ACV for fiscal year 2025.
Example 2: For purposes of calculating ACV, a $300,000 subscription lease contract or a $300,000 maintenance contract with a term of July 1, 2024 – June
30, 2027, would each contribute $100,000 to ACV in each of fiscal years 2024, 2025 and 2026. There would be no contribution to ACV for fiscal year
2027 as each period captures the full annual value upon the anniversary date.
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Example 3: A perpetual license valued at $200,000 with a contract start date of March 1, 2024 would contribute $200,000 to ACV in fiscal year 2024.
During the year ended December 31, 2024 and 2023 our ACV was as follows:
Year Ended December 31,
(in thousands, except percentages)
2024
2023
Change
Actual
Constant
Currency
Actual
Actual
Constant
Currency
Amount
Amount
%
Amount
%
ACV
$
2,563,029
$
2,593,819
$
2,300,466
$
262,563
11.4
$
293,353
12.8
Recurring ACV
$
2,172,759
$
2,200,009
$
1,919,467
$
253,292
13.2
$
280,542
14.6
Recurring ACV includes both subscription lease license and maintenance ACV and excludes perpetual license and service ACV.
Industry Commentary
In 2024, ACV growth was supported by our core industries of A&D, high-tech and automotive. Our A&D customers increasingly invest in simulation to
support applications across space, defense, commercial aviation and advanced air mobility verticals. A&D customers are investing in our technology to
support digital transformation initiatives to shift to a fully digital engineering ecosystem connected by a single digital thread, further enhancing efficiency,
innovation and collaboration. Customers are also applying our solutions to better execute digital engineering-based approaches for defense programs,
advancing certification in the commercial aviation space and reducing cycle times. High-tech customers increasingly rely on our multiphysics platform to
model multiple interconnected physical phenomena simultaneously and develop advanced multi-die technologies that overcome integration density
constraints and meet the needs of compute-intensive applications. The combination of our multiphysics platform, AI/ML technologies and cloud and HPC
solutions help customers achieve higher product performance and reliability while reducing development costs. Growth in the automotive industry stems
from the need for quick innovation in a time of regulatory uncertainty. Companies are continuing to innovate electric vehicle technologies, including hybrid
options. Customers use our multiphysics solutions augmented by AI/ML to reduce engineering and product costs as pressure to shorten design cycles
increases.
Geographic Trends
The following table presents our geographic revenue variances using actual and constant currency rates during the year ended December 31, 2024 as
compared to the year ended December 31, 2023:
Year Ended December 31, 2024
Actual
Constant Currency
Americas
17.3 %
17.3 %
EMEA
8.2 %
8.8 %
Asia-Pacific
6.1 %
10.0 %
Total
12.1 %
13.2 %
Revenue results can fluctuate due to the timing, duration and size of multi-year lease subscription contracts in any particular period and are not necessarily
indicative of customers' software usage changes or cash flows during the period presented. To drive growth, we continue to focus on a number of sales
improvement activities across the geographic regions, including sales hiring, pipeline building, productivity initiatives and customer engagement activities.
Acquisitions
We make targeted acquisitions in order to support our long-term strategic direction, accelerate innovation, provide increased capabilities to our existing
products, supply new products and services, expand our customer base and enhance our distribution channels.
For further information on our acquisition expenses and business combinations during the years ended December 31, 2024 and 2023, see Note 4 to the
consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K.
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Results of Operations
The results of operations discussed below are on a GAAP basis unless otherwise stated.
For purposes of the following discussion and analysis, the table below sets forth certain consolidated financial data for the years 2024 and 2023.
Year Ended December 31,
(in thousands)
2024
2023
Revenue:
Software licenses
$
1,263,916
$
1,088,748
Maintenance and service
1,280,893
1,181,201
Total revenue
2,544,809
2,269,949
Cost of sales:
Software licenses
45,367
40,004
Amortization
88,560
80,990
Maintenance and service
145,892
150,304
Total cost of sales
279,819
271,298
Gross profit
2,264,990
1,998,651
Operating expenses:
Selling, general and administrative
995,340
855,135
Research and development
528,014
494,869
Amortization
23,748
22,512
Total operating expenses
1,547,102
1,372,516
Operating income
717,888
626,135
Interest income
51,131
19,588
Interest expense
(47,849)
(47,145)
Other expense, net
(3,132)
(6,440)
Income before income tax provision
718,038
592,138
Income tax provision
142,346
91,726
Net income
$
575,692
$
500,412
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Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
Revenue:
Year Ended December 31,
(in thousands, except percentages)
2024
2023
Change
GAAP
Constant
Currency
GAAP
GAAP
Constant Currency
Amount
Amount
%
Amount
%
Revenue:
Subscription lease licenses
$
948,831 $
959,393 $
786,050 $
162,781
20.7 $
173,343
22.1
Perpetual licenses
315,085
318,184
302,698
12,387
4.1
15,486
5.1
Software licenses
1,263,916
1,277,577
1,088,748
175,168
16.1
188,829
17.3
Maintenance
1,209,217
1,220,688
1,103,523
105,694
9.6
117,165
10.6
Service
71,676
71,942
77,678
(6,002)
(7.7)
(5,736)
(7.4)
Maintenance and service
1,280,893
1,292,630
1,181,201
99,692
8.4
111,429
9.4
Total revenue
$
2,544,809 $
2,570,207 $
2,269,949 $
274,860
12.1 $
300,258
13.2
Revenue for the year ended December 31, 2024 increased 12.1% compared to the year ended December 31, 2023, or 13.2% in constant currency.
Subscription lease license revenue increased 20.7%, or 22.1% in constant currency, as compared to the year ended December 31, 2023, with substantially
all of the increase attributable to incremental sales to our existing customers. The reported $162.8 million increase in lease license revenue was attributable
to a $119.1 million increase in value from multi-year licenses and a $43.7 million increase in value from annual licenses. Maintenance revenue growth of
9.6%, or 10.6% in constant currency, is correlated with license sales and is driven substantially by our existing customer base. The reported $105.7 million
growth in maintenance revenue was attributable to a $117.1 million increase in maintenance associated with lease licenses, partially offset by an
$11.4 million decrease in maintenance associated with perpetual sales. Perpetual license revenue, which is derived from new sales during the year ended
December 31, 2024, increased 4.1%, or 5.1% in constant currency, as compared to the year ended December 31, 2023. Driving the increase in perpetual
license revenue was a 19.0% increase in average deal size, partially offset by a 14.9% decrease in the volume of deals.
We continue to experience strong demand from our customers for contracts that often include longer-term, subscription leases involving a larger number of
our software products. These arrangements typically involve a higher overall transaction price. The upfront recognition of license revenue related to these
larger transactions can result in significant subscription lease revenue volatility. Software products, across a large variety of applications and industries, are
increasingly distributed in software-as-a-service, cloud and other subscription environments in which the licensing approach is time-based rather than
perpetual. This preference could result in a shift from perpetual licenses to time-based licenses, such as subscription leases, over the long term.
With respect to revenue, on average for the year ended December 31, 2024, the U.S. Dollar was 2.4% stronger, when measured against our foreign
currencies, than for the year ended December 31, 2023. The table below presents the net impacts of currency fluctuations on revenue for the year ended
December 31, 2024. Amounts in brackets indicate a net adverse impact from currency fluctuations.
(in thousands)
Year Ended December 31,
2024
Japanese Yen
$
(14,241)
South Korean Won
(5,329)
Euro
(4,893)
Taiwan Dollar
(1,306)
British Pound
1,674
Other
(1,303)
Total
$
(25,398)
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As a percentage of revenue, our international and domestic revenues, and our direct and indirect revenues, were as follows:
Year Ended December 31,
2024
2023
International
50.8 %
53.4 %
Domestic
49.2 %
46.6 %
Direct
75.2 %
73.9 %
Indirect
24.8 %
26.1 %
Cost of Sales and Operating Expenses:
The tables below reflect our operating results on both a GAAP and constant currency basis. Amounts included in the discussions that follow each table are
provided in constant currency. The impact of foreign exchange translation is discussed separately, where material.
Year Ended December 31,
2024
2023
Change
GAAP
Constant Currency
GAAP
GAAP
Constant Currency
(in thousands, except
percentages)
Amount
% of
Revenue
Amount
% of
Revenue
Amount
% of
Revenue
Amount
%
Amount
%
Cost of sales:
Software licenses $
45,367
1.8
$
45,425
1.8 $
40,004
1.8
$
5,363
13.4 $
5,421
13.6
Amortization
88,560
3.5
88,434
3.4
80,990
3.6
7,570
9.3
7,444
9.2
Maintenance and
service
145,892
5.7
146,644
5.7
150,304
6.6
(4,412)
(2.9)
(3,660)
(2.4)
Total cost of
sales
279,819
11.0
280,503
10.9
271,298
12.0
8,521
3.1
9,205
3.4
Gross profit
$
2,264,990
89.0
$
2,289,704
89.1 $
1,998,651
88.0
$
266,339
13.3 $
291,053
14.6
Software Licenses: The increase in the cost of software licenses was primarily due to increased third-party royalties of $5.1 million.
Amortization: The increase in amortization expense was due to acquired intangible assets related to our business combinations.
Maintenance and Service: The net decrease in maintenance and service costs was primarily due to the following:
•
Decreased third-party technical support of $4.1 million.
•
Decreased other headcount-related costs of $1.6 million.
•
Increased stock-based compensation of $1.0 million.
The improvement in gross profit was a result of the increase in revenue.
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Year Ended December 31,
2024
2023
Change
GAAP
Constant Currency
GAAP
GAAP
Constant Currency
(in thousands, except
percentages)
Amount
% of
Revenue
Amount
% of
Revenue
Amount
% of
Revenue
Amount
%
Amount
%
Operating expenses:
Selling, general
and administrative $
995,340
39.1
1,000,258
38.9 $
855,135
37.7
$
140,205
16.4 $
145,123
17.0
Research and
development
528,014
20.7
528,279
20.6
494,869
21.8
33,145
6.7
33,410
6.8
Amortization
23,748
0.9
23,691
0.9
22,512
1.0
1,236
5.5
1,179
5.2
Total operating
expenses
1,547,102
60.8
1,552,228
60.4
1,372,516
60.5
174,586
12.7
179,712
13.1
Operating income
$
717,888
28.2
$
737,476
28.7 $
626,135
27.6
$
91,753
14.7 $
111,341
17.8
Selling, General and Administrative: The increase in selling, general and administrative costs was primarily due to the following:
•
Increased salaries, incentive compensation and other headcount-related costs of $46.1 million.
•
Increased acquisition costs of $44.5 million primarily due to costs related to the Merger Agreement with Synopsys.
•
Increased stock-based compensation of $35.7 million.
•
Increased third-party commissions of $5.9 million.
We anticipate that we will continue to make targeted investments in our global sales and marketing organizations and our global business infrastructure to
enhance and support our revenue-generating activities.
Research and Development: The increase in research and development costs was primarily due to the following:
•
Increased salaries, incentive compensation and other headcount-related expenses of $22.6 million.
•
Increased stock-based compensation of $12.3 million.
We have traditionally invested significant resources in research and development activities and intend to continue to make investments in expanding the
ease of use and capabilities of our broad portfolio of simulation software products.
The impacts from currency fluctuations resulted in decreased operating income of $19.6 million for the year ended December 31, 2024 as compared to the
year ended December 31, 2023.
Interest Income: Interest income for the year ended December 31, 2024 was $51.1 million as compared to $19.6 million for the year ended December 31,
2023. Interest income increased as a result of a higher invested cash balance, a higher interest rate environment and the related increase in the average rate
of return on invested cash balances.
Other Expense, net: Our other expense consisted of the following:
Year Ended December 31,
(in thousands)
2024
2023
Investment gain (loss), net
$
199
$
(2,233)
Foreign currency losses, net
(3,109)
(3,981)
Other
(222)
(226)
Total other expense, net
$
(3,132)
$
(6,440)
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Income Tax Provision: Our income before income tax provision, income tax provision and effective tax rate were as follows:
Year Ended December 31,
(in thousands, except percentages)
2024
2023
Income before income tax provision
$
718,038
$
592,138
Income tax provision
$
142,346
$
91,726
Effective tax rate
19.8 %
15.5 %
The increase in the effective tax rate from the prior year was primarily due to a $12.4 million increase in taxes related to non-deductible expenses, an $8.1
million decrease in U.S. tax benefits on foreign earnings and a $7.2 million increase in state tax expense.
When compared to the federal and state combined statutory rate for each respective period, the effective tax rates for the years ended December 31, 2024
and 2023 were favorably impacted by tax benefits from the Foreign-Derived Intangible Income (FDII) deduction and research and development credits,
partially offset by the impact of non-deductible compensation.
The OECD has introduced a two-pillar approach to address the tax challenges arising from the digitalization of the economy. Pillar Two defines global
minimum tax rules and includes a 15 percent minimum tax rate. We have not recorded any income tax provision related to Pillar Two for the year ended
December 31, 2024 based on the laws currently enacted in the jurisdictions in which we operate.
Net Income: Our net income, diluted earnings per share and weighted average shares used in computing diluted earnings per share were as follows:
Year Ended December 31,
(in thousands, except per share data)
2024
2023
Net income
$
575,692
$
500,412
Diluted earnings per share
$
6.55
$
5.73
Weighted average shares outstanding - diluted
87,895
87,386
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Non-GAAP Results
We provide non-GAAP gross profit, non-GAAP gross profit margin, non-GAAP operating income, non-GAAP operating profit margin, non-GAAP net
income and non-GAAP diluted earnings per share as supplemental measures to GAAP regarding our operational performance. These financial measures
exclude the impact of certain items and, therefore, have not been calculated in accordance with GAAP. A detailed explanation and a reconciliation of each
non-GAAP financial measure to its most comparable GAAP financial measure are included below, as applicable.
ANSYS, INC. AND SUBSIDIARIES
Reconciliations of GAAP to Non-GAAP Measures
(Unaudited)
Year Ended December 31, 2024
(in thousands, except percentages and per share data)
Gross Profit
% of Revenue
Operating
Income
% of
Revenue
Net Income
EPS - Diluted
Total GAAP
$
2,264,990
89.0 % $
717,888
28.2 % $
575,692 $
6.55
Stock-based compensation expense
14,313
0.6 %
270,900
10.7 %
270,900
3.08
Excess payroll taxes related to stock-based awards
506
— %
8,643
0.3 %
8,643
0.10
Amortization of intangible assets from acquisitions
88,560
3.5 %
112,308
4.4 %
112,308
1.28
Expenses related to business combinations
—
— %
52,841
2.1 %
52,841
0.60
Adjustment for income tax effect
—
— %
—
— %
(61,132)
(0.70)
Total non-GAAP
$
2,368,369
93.1 % $
1,162,580
45.7 % $
959,252 $
10.91
Diluted weighted average shares were 87,895.
Year Ended December 31, 2023
(in thousands, except percentages and per share data)
Gross Profit
% of Revenue
Operating
Income
% of
Revenue
Net Income
EPS - Diluted
Total GAAP
$
1,998,651
88.0 % $
626,135
27.6 % $
500,412 $
5.73
Stock-based compensation expense
13,337
0.6 %
221,891
9.9 %
221,891
2.54
Excess payroll taxes related to stock-based awards
307
0.1 %
5,541
0.2 %
5,541
0.06
Amortization of intangible assets from acquisitions
80,990
3.5 %
103,502
4.5 %
103,502
1.18
Expenses related to business combinations
—
— %
9,422
0.4 %
9,422
0.11
Adjustment for income tax effect
—
— %
—
— %
(71,460)
(0.82)
Total non-GAAP
$
2,093,285
92.2 % $
966,491
42.6 % $
769,308 $
8.80
Diluted weighted average shares were 87,386.
1
1
1
1
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We use non-GAAP financial measures (a) to evaluate our historical and prospective financial performance as well as our performance relative to our
competitors, (b) to set internal sales targets and spending budgets, (c) to allocate resources, (d) to measure operational profitability and the accuracy of
forecasting, (e) to assess financial discipline over operational expenditures and (f) as an important factor in determining variable compensation for
management and employees. In addition, many financial analysts that follow us focus on and publish both historical results and future projections based on
non-GAAP financial measures. We believe that it is in the best interest of our investors to provide this information to analysts so that they accurately report
the non-GAAP financial information. Moreover, investors have historically requested, and we have historically reported, these non-GAAP financial
measures as a means of providing consistent and comparable information with past reports of financial results.
While we believe that these non-GAAP financial measures provide useful supplemental information to investors, there are limitations associated with the
use of these non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with GAAP, are not reported by all our
competitors and may not be directly comparable to similarly titled measures of our competitors due to potential differences in the exact method of
calculation. We compensate for these limitations by using these non-GAAP financial measures as supplements to GAAP financial measures and by
reviewing the reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measures.
The adjustments to these non-GAAP financial measures, and the basis for such adjustments, are outlined below:
Amortization of intangible assets from acquisitions. We incur amortization of intangible assets, included in our GAAP presentation of amortization
expense, related to various acquisitions we have made. We exclude these expenses for the purpose of calculating non-GAAP gross profit, non-GAAP gross
profit margin, non-GAAP operating income, non-GAAP operating profit margin, non-GAAP net income and non-GAAP diluted earnings per share when
we evaluate our continuing operational performance because these costs are fixed at the time of an acquisition, are then amortized over a period of several
years after the acquisition and generally cannot be changed or influenced by us after the acquisition. Accordingly, we do not consider these expenses for
purposes of evaluating our performance during the applicable time period after the acquisition, and we exclude such expenses when making decisions to
allocate resources. We believe that these non-GAAP financial measures are useful to investors because they allow investors to (a) evaluate the effectiveness
of the methodology and information used by us in our financial and operational decision-making, and (b) compare our past reports of financial results as we
have historically reported these non-GAAP financial measures.
Stock-based compensation expense. We incur expense related to stock-based compensation included in our GAAP presentation of cost of maintenance
and service; research and development expense; and selling, general and administrative expense. We also incur excess payroll tax expense related to stock-
based compensation, which is an additional non-GAAP adjustment. Although stock-based compensation is an expense and viewed as a form of
compensation, we exclude these expenses for the purpose of calculating non-GAAP gross profit, non-GAAP gross profit margin, non-GAAP operating
income, non-GAAP operating profit margin, non-GAAP net income and non-GAAP diluted earnings per share when we evaluate our continuing
operational performance. Specifically, we exclude stock-based compensation during our annual budgeting process and our quarterly and annual
assessments of our performance. The annual budgeting process is the primary mechanism whereby we allocate resources to various initiatives and
operational requirements. Additionally, the annual review by our Board of Directors during which it compares our historical business model and
profitability to the planned business model and profitability for the forthcoming year excludes the impact of stock-based compensation. In evaluating the
performance of our senior management and department managers, charges related to stock-based compensation are excluded from expenditure and
profitability results. In fact, we record stock-based compensation expense into a stand-alone cost center for which no single operational manager is
responsible or accountable. In this way, we can review, on a period-to-period basis, each manager’s performance and assess financial discipline over
operational expenditures without the effect of stock-based compensation. We believe that these non-GAAP financial measures are useful to investors
because they allow investors to (a) evaluate our operating results and the effectiveness of the methodology used by us to review our operating results, and
(b) review historical comparability in our financial reporting as well as comparability with competitors’ operating results.
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Expenses related to business combinations. We incur expenses for professional services rendered in connection with acquisitions and divestitures, which
are included in our GAAP presentation of selling, general and administrative expense. We also incur other expenses directly related to business
combinations, including compensation expenses and concurrent restructuring activities, such as employee severances and other exit costs. These costs are
included in our GAAP presentation of selling, general and administrative and research and development expenses. We exclude these acquisition-related
expenses for the purpose of calculating non-GAAP operating income, non-GAAP operating profit margin, non-GAAP net income and non-GAAP diluted
earnings per share when we evaluate our continuing operational performance, as we generally would not have otherwise incurred these expenses in the
periods presented as a part of our operations. We believe that these non-GAAP financial measures are useful to investors because they allow investors to (a)
evaluate our operating results and the effectiveness of the methodology used by us to review our operating results, and (b) review historical comparability
in our financial reporting as well as comparability with competitors’ operating results.
Non-GAAP tax provision. We utilize a normalized non-GAAP annual effective tax rate (AETR) to calculate non-GAAP measures. This methodology
provides better consistency across interim reporting periods by eliminating the effects of non-recurring items and aligning the non-GAAP tax rate with our
expected geographic earnings mix. To project this rate, we analyzed our historic and projected non-GAAP earnings mix by geography along with other
factors such as our current tax structure, recurring tax credits and incentives, and expected tax positions. On an annual basis we re-evaluate and update this
rate for significant items that may materially affect our projections.
Non-GAAP financial measures are not in accordance with, or an alternative for, GAAP. Our non-GAAP financial measures are not meant to be considered
in isolation or as a substitute for comparable GAAP financial measures and should be read only in conjunction with our consolidated financial statements
prepared in accordance with GAAP.
We have provided a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures as listed below:
GAAP Reporting Measure
Non-GAAP Reporting Measure
Gross Profit
Non-GAAP Gross Profit
Gross Profit Margin
Non-GAAP Gross Profit Margin
Operating Income
Non-GAAP Operating Income
Operating Profit Margin
Non-GAAP Operating Profit Margin
Net Income
Non-GAAP Net Income
Diluted Earnings Per Share
Non-GAAP Diluted Earnings Per Share
Constant currency. In addition to the non-GAAP financial measures detailed above, we use constant currency results for financial and operational
decision-making and as a means to evaluate period-to-period comparisons by excluding the effects of foreign currency fluctuations on the reported results.
To present this information, the 2024 period results for entities whose functional currency is a currency other than the U.S. Dollar were converted to U.S.
Dollars at rates that were in effect for the 2023 comparable period, rather than the actual exchange rates in effect for 2024. Constant currency growth rates
are calculated by adjusting the 2024 period reported amounts by the 2024 currency fluctuation impacts and comparing the adjusted amounts to the 2023
comparable period reported amounts. We believe that these non-GAAP financial measures are useful to investors because they allow investors to
(a) evaluate the effectiveness of the methodology and information used by us in our financial and operational decision-making, and (b) compare our
reported results to our past reports of financial results without the effects of foreign currency fluctuations.
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Liquidity and Capital Resources
As of December 31,
Change
(in thousands, except percentages)
2024
2023
Amount
%
Cash, cash equivalents and short-term investments
$
1,497,517
$
860,390
$
637,127
74.1
Working capital
$
1,890,309
$
1,160,273
$
730,036
62.9
Cash, Cash Equivalents and Short-Term Investments
Cash and cash equivalents consist primarily of highly liquid investments such as money market funds and deposits held at major banks. Short-term
investments consist of available-for-sale debt securities with remaining maturities greater than three months at the date of purchase and time deposits. The
following table presents our foreign and domestic holdings of cash, cash equivalents and short-term investments as of December 31, 2024 and 2023:
As of December 31,
(in thousands, except percentages)
2024
% of Total
2023
% of Total
Domestic
$
1,052,003
70.2
$
529,092
61.5
Foreign
445,514
29.8
331,298
38.5
Total
$
1,497,517
$
860,390
In general, it is our intention to permanently reinvest all earnings in excess of previously taxed amounts. Substantially all of the pre-2018 earnings of our
non-U.S. subsidiaries were taxed through the transition tax and post-2018 current earnings are taxed as part of global intangible low-taxed income tax
expense. These taxes increase our previously taxed earnings and allow for the repatriation of the majority of our foreign earnings without any residual U.S.
federal tax. Unrecognized provisions for taxes on indefinitely reinvested undistributed earnings of foreign subsidiaries would not be significant.
The amount of cash, cash equivalents and short-term investments held by foreign subsidiaries is subject to translation adjustments caused by changes in
foreign currency exchange rates as of the end of each respective reporting period, the offset to which is recorded in accumulated other comprehensive loss
on our consolidated balance sheet.
Cash Flows from Operating Activities
Year Ended December 31,
Change
(in thousands, except percentages)
2024
2023
Amount
%
Net cash provided by operating activities
$
795,740
$
717,122
$
78,618
11.0
Net cash provided by operating activities increased during the current fiscal year due to increased customer receipts driven primarily by ACV growth,
partially offset by payments related to higher operating expenses and increased income tax payments associated with higher taxable income.
Cash Flows from Investing Activities
Year Ended December 31,
Change
(in thousands, except percentages)
2024
2023
Amount
%
Net cash used in investing activities
$
(99,562)
$
(240,042)
$
140,480
58.5
Net cash used in investing activities decreased during the current fiscal year due primarily to decreased cash outlays for acquisitions of $207.3 million,
partially offset by increased purchases of short-term investments of $53.2 million and capital expenditures of $18.7 million. We currently plan capital
spending of $45.0 million to $55.0 million during fiscal year 2025 as compared to the $44.0 million that was spent in fiscal year 2024. The level of
spending will depend on various factors, including the growth of the business and general economic conditions.
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Cash Flows from Financing Activities
Year Ended December 31,
Change
(in thousands, except percentages)
2024
2023
Amount
%
Net cash used in financing activities
$
(98,544)
$
(231,319)
$
132,775
57.4
Net cash used in financing activities decreased during the current fiscal year primarily due to decreased stock repurchases of $196.5 million, partially offset
by increased restricted stock withholding taxes paid in lieu of issuing shares of $42.5 million and decreased proceeds from shares issued for stock-based
compensation of $19.6 million.
Other Cash Flow Information
On June 30, 2022, we entered into a credit agreement (the 2022 Credit Agreement) with PNC Bank, National Association as administrative agent, swing
line lender, and an L/C issuer, the lenders party thereto, and the other L/C issuers party thereto. The 2022 Credit Agreement refinanced our previous credit
agreements in their entirety. The 2022 Credit Agreement provides for a $755.0 million unsecured term loan facility and a $500.0 million unsecured
revolving loan facility. Terms used in this description of the 2022 Credit Agreement with initial capital letters that are not otherwise defined herein are as
defined in the 2022 Credit Agreement.
As of December 31, 2024, the carrying value of our term loan was $754.2 million, with no principal payments due in the next twelve months. Borrowings
under the term loan and revolving loan facilities accrue interest at a rate that is based on the Term SOFR plus an applicable margin or at the base rate plus
an applicable margin, at our election. The base rate is the highest of (i) the Overnight Bank Funding Rate, plus 0.500%, (ii) the PNC Bank, National
Association prime rate, and (iii) Daily Simple SOFR plus an adjustment for SOFR plus 1.00%. The applicable margin for the borrowings is a percentage
per annum based on the lower of (1) a pricing level determined by our then-current consolidated net leverage ratio and (2) a pricing level determined by our
public debt rating (if available).
On September 29, 2023, the 2022 Credit Agreement was amended to provide for an interest rate adjustment (Sustainability Rate Adjustment) based upon
the achievement of certain environmental, social and governance key performance indicators (KPIs). The Sustainability Rate Adjustment range is +/-
0.05% and will be adjusted annually based on the KPIs of the preceding year.
The rate in effect for the first quarter of 2025 under the 2022 Credit Agreement is 5.25%.
We previously entered into operating lease commitments, primarily for our domestic and international offices. The commitments related to these operating
leases is $122.6 million, of which $27.8 million is due in the next twelve months.
There were no share repurchases in 2024. For the year ended December 31, 2023, 650 thousand shares were repurchased at an average price of $302.34 per
share, with a total cost of $196.5 million. As of December 31, 2024, 1.1 million shares remained available for repurchase under the program.
We continue to generate positive cash flows from operating activities and believe that the best uses of our excess cash are to invest in the business; acquire
or make investments in complementary companies, products, services and technologies; and make payments on our outstanding debt balances. Any future
acquisitions may be funded by available cash and investments, cash generated from operations, debt financing or the issuance of additional securities.
We believe that existing cash and cash equivalent balances, together with cash generated from operations and access to the $500.0 million revolving loan
facility, will be sufficient to meet our working capital, capital expenditure requirements and contractual obligations through at least the next twelve months
and the foreseeable future thereafter. Our cash requirements in the future may also be financed through additional equity or debt financings. However,
future disruptions in the capital markets could make financing more challenging and there can be no assurance that such financing can be obtained on
commercially reasonable terms, or at all.
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Contractual and Other Obligations
Our significant contractual and other obligations as of December 31, 2024 are summarized below:
(in thousands)
Total
Current
Long-Term
Long-term debt:
Principal payments
$
755,000
$
—
$
755,000
Interest payments
100,377
40,217
60,160
Global headquarters operating lease
22,863
4,650
18,213
Other operating leases
99,690
23,131
76,559
Unconditional purchase obligations
96,395
66,763
29,632
Obligations related to uncertain tax positions, including interest and penalties
—
—
—
Total contractual obligations
$
1,074,325
$
134,761
$
939,564
(1) Borrowings under long-term debt accrue interest at a rate that is based on the Term SOFR plus an applicable margin or at the base rate plus an
applicable margin, at our election. The base rate is the highest of (i) the Overnight Bank Funding Rate, plus 0.500%, (ii) the PNC Bank, National
Association prime rate, and (iii) Daily Simple SOFR plus an adjustment for SOFR plus 1.00%. The applicable margin for the borrowings is a
percentage per annum based on the lower of (1) a pricing level determined by our then-current consolidated net leverage ratio and (2) a pricing
level determined by our public debt rating (if available). As the interest rate is variable, interest on the long-term debt is estimated using the interest
rate as of December 31, 2024. For additional information, see Note 11 to the consolidated financial statements included in Part IV, Item 15 of this
Annual Report on Form 10-K.
(2) We previously entered into a lease agreement for 186,000 square feet of rentable space located in an office facility in Canonsburg, Pennsylvania,
which serves as our headquarters. The term of the lease is 183 months, beginning on October 1, 2014 and expiring on December 31, 2029.
(3) Other operating leases primarily include lease commitments for our other domestic and international offices as well as certain operating equipment.
(4) Unconditional purchase obligations primarily include minimum royalty contracts and software licenses and support, which are unrecorded as of
December 31, 2024. The unconditional purchase obligations are in addition to the current and long-term liabilities recorded on our December 31,
2024 consolidated balance sheet.
(5) We have $68.6 million of unrecognized tax benefits, including estimated interest and penalties, that have been recorded as liabilities in accordance
with income tax accounting guidance for which we are uncertain as to if or when such amounts may be settled. As a result, such amounts are
excluded from the table above.
If the Merger Agreement is terminated under certain circumstances specified in the Merger Agreement, we would be required to pay a termination fee of
$950.0 million.
(1)
(2)
(3)
(4)
(5)
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Critical Accounting Estimates
We have prepared our consolidated financial statements in accordance with GAAP. In preparing our consolidated financial statements, we make
assumptions, judgments and estimates that can have a significant impact on our financial position and results of operations. These estimates, assumptions
and judgments are made based on our historical experience and on other assumptions that we believe to be reasonable under the circumstances. Actual
results could materially differ from any of our estimates under different assumptions or conditions.
The accounting policies, methods and estimates used to prepare our consolidated financial statements are described in Note 2 to the consolidated financial
statements included in Part IV, Item 15 of this Annual Report on Form 10-K. The most critical accounting judgments and estimates that we made in
preparing our consolidated financial statements involved:
•
Revenue recognition;
•
Valuation of assets acquired and liabilities assumed in business combinations; and
•
Income taxes.
Revenue Recognition
Description
Our revenue is derived principally from the licensing of computer software products and from related maintenance contracts. We enter into contracts that
include combinations of products, maintenance and services, which are accounted for as separate performance obligations with differing revenue
recognition patterns.
Judgments and Estimates
Our contracts with customers typically include promises to transfer licenses and services to a customer. Judgment is required to determine if the promises
are separate performance obligations, and if so, to allocate the transaction price to each performance obligation. We use the estimated standalone selling
price method to allocate the transaction price for each performance obligation. The estimated standalone selling price is determined using all information
reasonably available to us, including market conditions and other observable inputs. The corresponding revenues are recognized as the related performance
obligations are satisfied.
Our time-based subscription lease license contracts with customers are sold as a bundled arrangement that includes the rights to a term software license as
well as post-contract support (PCS), which includes unspecified technical enhancements and customer support. Revenue is recognized up front at the
commencement of the lease for the term software lease license and recognized ratably over the term of the contract for the PCS in the arrangement.
Utilizing observable inputs, we determined that 50% of the estimated standalone selling price of the subscription lease license is attributable to the term
software license, while 50% is attributable to PCS. This determination involved judgment, particularly as it relates to the value relationship between our
PCS and subscription lease licenses, the value relationship between PCS and our perpetual licenses and its linkage to the shortened term of a subscription
lease license, the average economic life of our software, renewal rates of our customers and the price of the bundled arrangement in relation to the
perpetual licensing approach.
Changes in these estimates could significantly impact the recognition of revenue in a given period.
Valuation of Assets Acquired and Liabilities Assumed in Business Combinations
Description
In accordance with business combination accounting, we allocate the purchase price of an acquired business to its identifiable assets acquired and liabilities
assumed at the acquisition date based upon their estimated fair values. The excess of the fair value of consideration transferred over the fair value of net
identifiable assets acquired, if any, is recorded as goodwill. Intangible assets are recognized apart from goodwill whenever an acquired intangible asset
arises from contractual or other legal rights, or whenever it is capable of being separated or divided from the acquired entity and sold, transferred, licensed,
rented or exchanged, either individually or in combination with a related contract, asset or liability.
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Judgments and Estimates
Determining these fair values requires us to make significant estimates and assumptions, particularly with respect to acquired intangible assets. We
determined the fair value of our intangible assets using various valuation techniques, including the relief-from-royalty method and the multi-period excess
earnings method. These models utilize certain unobservable inputs classified as Level 3 measurements as defined by ASC 820, Fair Value Measurements
and Disclosures. The determination of fair value requires considerable judgment and is sensitive to changes in underlying assumptions, estimates and
market factors. Estimating fair value requires us to make assumptions and estimates regarding our future plans, as well as industry and economic
conditions. These assumptions and estimates include, but are not limited to: royalty rate, discount rate, customer attrition rate and obsolescence rate. The
fair values of the intangible assets will be amortized over their useful lives.
If actual results are materially different than the assumptions we used to determine fair value of the assets acquired and liabilities assumed through a
business combination, it is possible that adjustments to the carrying values of such assets and liabilities will have a material impact on our financial position
and results of operations. See Note 4 to the consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K for
information regarding our business acquisitions.
Income Taxes
Description
Our income tax expense reflects management's best estimate of current and future taxes to be paid. We account for income taxes under the asset and
liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been
included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial
statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a
change in tax rates on deferred tax assets and liabilities is recognized in income in the period of the enactment date.
Additionally, as part of our accounting for income taxes, tax benefits related to uncertain tax positions taken or expected to be taken on a tax return are
recorded when such benefits meet a more-likely-than-not threshold. Otherwise, these tax benefits are recorded when a tax position has been effectively
settled, which means that the statute of limitations has expired or the appropriate taxing authority has completed its examination even though the statute of
limitations remains open.
Judgments and Estimates
We are subject to tax in the United States and numerous foreign jurisdictions. Significant judgements and estimates are required in the determination of
consolidated income tax expense. We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making
such determination, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future
taxable income, tax planning strategies and recent financial operations. The assumptions about future taxable income require the use of significant
judgement and are consistent with the plans and estimates we are using to manage the underlying business. In the event we determine that we will be able
to realize deferred tax assets for which a valuation allowance was used to reduce their carrying value, the adjustment to the valuation allowance will be
recorded as a reduction to the provision for income taxes in the period such determination is made.
The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude of
jurisdictions across our global operations. Significant judgment is required in the identification and measurement of uncertain tax positions. Our liability
for unrecognized tax benefits contains uncertainties because we are required to make assumptions and to apply judgment to estimate the exposures
associated with our various filing positions. We adjust the liabilities when our judgement changes as a result of new information not previously available.
Although we believe that the judgments and estimates discussed herein are reasonable, actual results could differ and we may be exposed to losses or gains
that could be material. To the extent actual results differ from estimated amounts recorded, such differences will impact the income tax provision in the
period in which the determination is made.
Recent Accounting Guidance
For information regarding recent accounting guidance and its impact on our consolidated financial statements, see Note 2 to the consolidated financial
statements in Part IV, Item 15 of this Annual Report on Form 10-K.
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ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Foreign Currency Exchange Risk. As we operate in international regions, a portion of our revenue, expenses, cash, accounts receivable and payment
obligations are denominated in foreign currencies. As a result, changes in currency exchange rates will affect our financial position, results of operations
and cash flows. We seek to reduce our currency exchange transaction risks primarily through our normal operating and treasury activities, including the use
of derivative instruments.
With respect to revenue, on average for the year ended December 31, 2024, the U.S. Dollar was 2.4% stronger, when measured against our foreign
currencies, than for the year ended December 31, 2023. The table below presents the net impacts of currency fluctuations on revenue for the year ended
December 31, 2024. Amounts in brackets indicate a net adverse impact from currency fluctuations.
(in thousands)
Year Ended December 31,
2024
Japanese Yen
$
(14,241)
South Korean Won
(5,329)
Euro
(4,893)
Taiwan Dollar
(1,306)
British Pound
1,674
Other
(1,303)
Total
$
(25,398)
The impacts from currency fluctuations resulted in decreased operating income of $19.6 million for the year ended December 31, 2024 as compared to the
year ended December 31, 2023.
A hypothetical 10% strengthening in the U.S. Dollar against other currencies would have decreased our revenue by $105.3 million and decreased our
operating income by $46.0 million for the year ended December 31, 2024.
The most meaningful currency impacts on revenue and operating income are typically attributable to U.S. Dollar exchange rate changes against the Euro
and Japanese Yen. Historical exchange rates for these currency pairs are reflected in the charts below:
Period End Exchange Rates
As of
EUR/USD
USD/JPY
December 31, 2024
1.04
157
December 31, 2023
1.10
141
December 31, 2022
1.07
131
December 31, 2021
1.14
115
Average Exchange Rates
Year Ended
EUR/USD
USD/JPY
December 31, 2024
1.08
151
December 31, 2023
1.08
140
December 31, 2022
1.05
131
Interest Rate Risk. Changes in the overall level of interest rates affect the interest income that is generated from our cash, cash equivalents and short-term
investments and the interest expense that is generated from our outstanding borrowings. For the year ended December 31, 2024, interest income was $51.1
million and interest expense was $47.8 million.
Cash and cash equivalents consist primarily of highly liquid investments such as money market funds and deposits held at major banks. Short-term
investments consist of available-for-sale debt securities with remaining maturities greater than three months at the date of purchase and time deposits. A
hypothetical 100 basis point change in interest rates on these holdings could have a $15.0 million impact on our financial results.
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Our outstanding term loan borrowings of $755.0 million as of December 31, 2024 accrue interest at a rate that is based on the Term SOFR plus an
applicable margin or at the base rate plus an applicable margin, at our election. The base rate is the highest of (i) the Overnight Bank Funding Rate, plus
0.500%, (ii) the PNC Bank, National Association prime rate, and (iii) Daily Simple SOFR plus an adjustment for SOFR plus 1.00%. The applicable margin
for the borrowings is a percentage per annum based on the lower of (1) a pricing level determined by our then-current consolidated net leverage ratio and
(2) a pricing level determined by our public debt rating (if available).
On September 29, 2023, the 2022 Credit Agreement was amended to provide for an interest rate adjustment (Sustainability Rate Adjustment) based upon
the achievement of certain environmental, social and governance KPIs. The Sustainability Rate Adjustment range is +/- 0.05% and will be adjusted
annually based on the KPIs of the preceding year.
Because interest rates applicable to the outstanding borrowings are variable, we are exposed to interest rate risk from changes in the underlying index rates,
which affects our interest expense. A hypothetical increase of 100 basis points in interest rates would result in an increase in interest expense of $7.7
million and a corresponding decrease in cash flows over the next twelve months, based on outstanding borrowings at December 31, 2024.
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is included in Part IV, Item 15 of this Annual Report on Form 10-K.
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A.
CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures. As required by Rules 13a-15 and 15d-15 of the Exchange Act, we have evaluated, with the
participation of management, including the Chief Executive Officer and the Chief Financial Officer, the effectiveness of the design and operation of our
disclosure controls and procedures as of the end of the period covered by this report. Based on such evaluation, the Chief Executive Officer and Chief
Financial Officer have concluded that such disclosure controls and procedures are effective, as defined in Rule 13a-15(e) or Rule 15d-15(e) of the
Exchange Act.
We believe, based on our knowledge, that the financial statements and other financial information included in this report fairly present, in all material
respects, our financial condition, results of operations and cash flows as of and for the periods presented in this report. We are committed to both a sound
internal control environment and to good corporate governance.
From time to time, we review the disclosure controls and procedures and may periodically make changes to enhance their effectiveness and to confirm that
our systems evolve with our business.
Management's Annual Report on Internal Control over Financial Reporting. Management is responsible for establishing and maintaining adequate
internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f) or Rule 15d-15(f). Under the supervision and with the
participation of management, including our Chief Executive Officer and Chief Financial Officer, we have conducted an evaluation of the effectiveness of
our internal control over financial reporting based upon the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of
compliance with policies or procedures may deteriorate. Our system of internal control over financial reporting is designed to provide reasonable assurance
to management and the Board of Directors regarding the reliability of financial records used in preparation of our published financial statements. As all
internal control systems have inherent limitations, even systems determined to be effective can provide only reasonable assurance with respect to financial
statement preparation and presentation. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our internal
control over financial reporting was effective at December 31, 2024.
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Additionally, Deloitte & Touche LLP, an independent registered public accounting firm, has audited the financial statements included in this Annual Report
on Form 10-K and has issued an attestation report on our internal control over financial reporting. This report is included in Item 15 of this Annual Report
on Form 10-K.
Changes in Internal Controls. There were no changes in our internal control over financial reporting that occurred during the three months ended
December 31, 2024 that materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B.
OTHER INFORMATION
Trading Arrangements
None of the directors or "officers" of ANSYS, Inc. (as defined in Rule 16a-1(f) promulgated under the Exchange Act of 1934) adopted, modified or
terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K,
during the fiscal quarter ended December 31, 2024.
Sixth Amended and Restated By-Laws
On February 13, 2025, our Board of Directors approved the adoption of the Company’s Sixth Amended and Restated By-Laws (the Sixth Amended and
Restated By-Laws), effective February 13, 2025, to create a new stockholder right to call a special meeting of stockholders. The Sixth Amended and
Restated By-Laws provide that a special meeting of stockholders will be called by the Board of Directors upon a written request from holders of record of
shares of voting stock representing in the aggregate at least 20% of our outstanding voting stock held continuously for a period of at least one year prior to
the date such request is delivered to the Company’s Secretary, subject to certain requirements and limitations set forth in the Sixth Amended and Restated
By-Laws. The Sixth Amended and Restated By-Laws also include certain other ministerial clarifications and conforming changes.
The foregoing summary does not purport to be complete and is qualified in its entirety by reference to the full text of the Sixth Amended and Restated By-
Laws, a copy of which is filed as Exhibit 3.2 to this Annual Report on Form 10-K and is incorporated herein by reference.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
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PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
We have an insider trading policy governing the purchase, sale and other dispositions of our securities that applies to all company personnel, including
directors, officers, employees and other covered persons. We also have procedures in place to govern share repurchases. We believe that our insider trading
policy and repurchase procedures are reasonably designed to promote compliance with insider trading laws, rules and regulations and listing standards
applicable to us. A copy of our insider trading policy is filed as Exhibit 19.1 to this Form 10-K.
We have a Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer and principal accounting officer,
and all of our directors and employees. Our Code of Business Conduct and Ethics is posted under the Governance tab of the Investor Relations section of
our website at https://investors.ansys.com. We post any amendments to, or waiver of, our Code of Business Conduct and Ethics that apply to our principal
executive officer, principal financial officer and principal accounting officer on our website.
The remaining information required by this Item is incorporated by reference to our 2025 Proxy Statement and is set forth under "Corporate Governance at
Ansys," "Director Nominees," "Continuing Directors Following the 2025 Annual Meeting" and "Our Executive Officers" therein.
ITEM 11.
EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference to our 2025 Proxy Statement and is set forth under "Compensation Discussion and
Analysis," "Compensation Policies and Practices Related to Risk Management," "Fiscal 2024 Compensation Tables," "2024 CEO Pay Ratio,"
"Compensation Committee Report," "Corporate Governance at Ansys--Compensation Committee Interlocks and Insider Participation," "Non-Employee
Director Compensation" and "Director Compensation Table Fiscal Year 2024" therein.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
The information required by this Item is incorporated by reference to our 2025 Proxy Statement and is set forth under "Equity Compensation Plans" and
"Ownership of Our Common Stock" therein.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this Item is incorporated by reference to our 2025 Proxy Statement and is set forth under "Corporate Governance at Ansys--
Director Independence" and "Corporate Governance at Ansys--Related-Party Transactions" therein.
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this Item is incorporated by reference to our 2025 Proxy Statement and is set forth under "Independent Registered Accounting
Firm Services and Fees" therein.
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PART IV
ITEM 15.
EXHIBIT AND FINANCIAL STATEMENT SCHEDULES
(a)
Documents Filed as Part of this Annual Report on Form 10-K:
i.
Financial Statements: The following consolidated financial statements and reports are filed as part of this report:
- Reports of Independent Registered Public Accounting Firm (PCAOB ID: 34)
61
- Consolidated Balance Sheets as of December 31, 2024 and 2023
64
- Consolidated Statements of Income for the years ended December 31, 2024, 2023 and 2022
65
- Consolidated Statements of Comprehensive Income for the years ended December 31, 2024, 2023 and 2022
66
- Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023 and 2022
67
- Consolidated Statements of Stockholders' Equity for the years ended December 31, 2024, 2023 and 2022
68
- Notes to Consolidated Financial Statements
69
ii.
Financial Statement Schedules: Schedules have been omitted because they are not applicable, are not required or the information required to
be set forth therein is included in the consolidated financial statements or notes thereto.
iii.
Exhibits: The exhibits listed in the accompanying Exhibit Index are filed as part of, or incorporated by reference into, this Annual Report on
Form 10-K.
(b)
Exhibits:
We hereby file as part of this Annual Report on Form 10-K the exhibits listed in the Exhibit Index of this Annual Report on Form 10-K.
(c)
Financial Statement Schedules:
None.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of ANSYS, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of ANSYS, Inc. and subsidiaries (the “Company”) as of December 31, 2024 and 2023, the
related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended
December 31, 2024, and the related notes in the Index at Item 15 (collectively referred to as the “financial statements”). In our opinion, the financial
statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations
and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the
United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s
internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework (2013) issued
by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 19, 2025, expressed an unqualified opinion on
the Company’s internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial
statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing
procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to
those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits
also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current‐period audit of the financial statements that was communicated or
required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2)
involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion
on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical
audit matter or on the accounts or disclosures to which it relates.
Revenue—Time-Based Subscription Lease Licenses—Refer to Notes 2 and 3 to the financial statements
Critical Audit Matter Description
The Company sells time‐based subscription lease license contracts with customers that are sold as a bundled arrangement that include the rights to a term
software license as well as post‐contract support (PCS). Revenue is recognized up front at the commencement of the lease for the term software license and
recognized ratably over the term of the contract for the PCS in the arrangement. Utilizing observable inputs, the Company determined that 50% of the
estimated standalone selling price of the subscription lease license is attributable to the term license, while 50% is attributable to PCS. This determination
involved judgment, particularly as it relates to the value relationship between the Company’s PCS to subscription lease licenses, the value relationship
between PCS and the Company’s perpetual licenses and its linkage to the shortened term of a subscription lease license, the average economic life of the
Company’s software, renewal rates of its customers, and the price of the bundled arrangement in relation to the perpetual licensing approach.
Given the judgments necessary to determine the allocation between the term software license and PCS, auditing this estimate involved a high degree of
auditor judgment.
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How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to management’s estimate of the allocation between the term software license and PCS in a subscription lease license included
the following, among others:
•
We tested the effectiveness of controls over subscription lease license revenue, including those over the determination of the estimated standalone
selling price of the Company’s licenses and services, as well as the allocation of this standalone selling price within the arrangement.
•
We evaluated the pricing relationship between PCS and perpetual licenses on the net licensing fee of the arrangement, as well as the Company’s
renewal rate of PCS sales on perpetual licenses through those arrangements selected for testing that contained both elements as a consideration
point of the value relationship between the term software license and PCS when a customer purchases a bundled subscription lease license.
•
We evaluated the estimated economic life of the Company’s software through observable data points.
•
Through our current and historical audit procedures, we confirmed that the term software license portion and PCS portion of an arrangement are
not sold separately from one another.
•
We selected a sample of arrangements and performed the following:
–
Compared the list price of the subscription lease license to the consideration received from the customer and recalculated the discount
from list price for each arrangement.
–
Evaluated whether management appropriately calculated the estimated standalone selling price for the subscription lease license.
–
Tested management’s identification of distinct performance obligations.
–
Tested the mathematical accuracy of revenue recognized at a point in time or over time based upon the identification of subscription lease
licenses within the arrangement.
/s/ Deloitte & Touche LLP
Pittsburgh, Pennsylvania
February 19, 2025
We have served as the Company's auditor since 2002.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of ANSYS, Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of ANSYS, Inc. and subsidiaries (the “Company”) as of December 31, 2024, based on criteria
established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024,
based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated
financial statements as of and for the year ended December 31, 2024, of the Company and our report dated February 19, 2025, expressed an unqualified
opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting, included in the accompanying Management’s report on Internal Control over Financial Reporting. Our
responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control
over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
Pittsburgh, Pennsylvania
February 19, 2025
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ANSYS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,
(in thousands, except share and per share data)
2024
2023
ASSETS
Current assets:
Cash and cash equivalents
$
1,446,743
$
860,201
Short-term investments
50,774
189
Accounts receivable, less allowance for doubtful accounts of $16,500 and $20,700, respectively
1,022,850
864,526
Other receivables and current assets
311,126
324,651
Total current assets
2,831,493
2,049,567
Long-term assets:
Property and equipment, net
89,646
77,780
Operating lease right-of-use assets
105,122
116,980
Goodwill
3,778,128
3,805,874
Other intangible assets, net
716,244
835,417
Other long-term assets
308,333
273,030
Deferred income taxes
222,465
164,227
Total long-term assets
5,219,938
5,273,308
Total assets
$
8,051,431
$
7,322,875
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
27,062
$
22,772
Accrued bonuses and commissions
189,521
170,909
Accrued income taxes
15,105
22,454
Other accrued expenses and liabilities
204,969
215,645
Deferred revenue
504,527
457,514
Total current liabilities
941,184
889,294
Long-term liabilities:
Deferred income taxes
55,863
75,301
Long-term operating lease liabilities
86,936
100,505
Long-term debt
754,208
753,891
Other long-term liabilities
126,800
113,520
Total long-term liabilities
1,023,807
1,043,217
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value; 2,000,000 shares authorized; zero shares issued or outstanding
—
—
Common stock, $0.01 par value; 300,000,000 shares authorized; 95,267,307 shares issued
953
953
Additional paid-in capital
1,790,688
1,670,450
Retained earnings
5,859,034
5,283,342
Treasury stock, at cost: 7,731,667 and 8,361,447 shares, respectively
(1,416,655)
(1,474,110)
Accumulated other comprehensive loss
(147,580)
(90,271)
Total stockholders' equity
6,086,440
5,390,364
Total liabilities and stockholders' equity
$
8,051,431
$
7,322,875
The accompanying notes are an integral part of the consolidated financial statements.
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ANSYS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Year Ended December 31,
(in thousands, except per share data)
2024
2023
2022
Revenue:
Software licenses
$
1,263,916
$
1,088,748
$
988,978
Maintenance and service
1,280,893
1,181,201
1,076,575
Total revenue
2,544,809
2,269,949
2,065,553
Cost of sales:
Software licenses
45,367
40,004
33,081
Amortization
88,560
80,990
69,372
Maintenance and service
145,892
150,304
148,188
Total cost of sales
279,819
271,298
250,641
Gross profit
2,264,990
1,998,651
1,814,912
Operating expenses:
Selling, general and administrative
995,340
855,135
772,871
Research and development
528,014
494,869
433,661
Amortization
23,748
22,512
15,722
Total operating expenses
1,547,102
1,372,516
1,222,254
Operating income
717,888
626,135
592,658
Interest income
51,131
19,588
5,717
Interest expense
(47,849)
(47,145)
(22,726)
Other expense, net
(3,132)
(6,440)
(334)
Income before income tax provision
718,038
592,138
575,315
Income tax provision
142,346
91,726
51,605
Net income
$
575,692
$
500,412
$
523,710
Earnings per share – basic:
Earnings per share
$
6.59
$
5.76
$
6.02
Weighted average shares
87,313
86,833
87,051
Earnings per share – diluted:
Earnings per share
$
6.55
$
5.73
$
5.99
Weighted average shares
87,895
87,386
87,490
The accompanying notes are an integral part of the consolidated financial statements.
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ANSYS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Year Ended December 31,
(in thousands)
2024
2023
2022
Net income
$
575,692
$
500,412
$
523,710
Other comprehensive (loss) income:
Foreign currency translation adjustments
(57,298)
32,451
(66,610)
Unrealized losses on available-for-sale securities, net of tax
(11)
—
—
Comprehensive income
$
518,383
$
532,863
$
457,100
The accompanying notes are an integral part of the consolidated financial statements.
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ANSYS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
(in thousands)
2024
2023
2022
Cash flows from operating activities:
Net income
$
575,692
$
500,412
$
523,710
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
142,672
132,504
114,563
Operating lease right-of-use assets expense
22,620
23,514
22,721
Deferred income tax benefit
(80,403)
(91,306)
(130,716)
Provision for bad debts
2,598
2,704
6,222
Stock-based compensation expense
270,900
221,891
168,128
Other
1,242
1,238
4,680
Changes in operating assets and liabilities:
Accounts receivable
(231,900)
(102,516)
(114,986)
Other receivables and current assets
4,910
(30,204)
30,259
Other long-term assets
6,841
(8,563)
(3,613)
Accounts payable, accrued expenses and current liabilities
23,620
27,853
(8,250)
Accrued income taxes
(6,917)
13,731
99
Deferred revenue
62,005
34,507
33,003
Other long-term liabilities
1,860
(8,643)
(14,817)
Net cash provided by operating activities
795,740
717,122
631,003
Cash flows from investing activities:
Acquisitions, net of cash acquired
(1,586)
(208,911)
(386,264)
Capital expenditures
(44,045)
(25,318)
(24,370)
Purchases of short-term investments
(53,415)
(172)
(230)
Other investing activities
(516)
(5,641)
(504)
Net cash used in investing activities
(99,562)
(240,042)
(411,368)
Cash flows from financing activities:
Purchase of treasury stock
—
(196,494)
(205,571)
Restricted stock withholding taxes paid in lieu of issued shares
(106,097)
(63,645)
(64,242)
Proceeds from shares issued for stock-based compensation
10,475
30,114
25,595
Other financing activities
(2,922)
(1,294)
(1,290)
Net cash used in financing activities
(98,544)
(231,319)
(245,508)
Effect of exchange rate fluctuations on cash and cash equivalents
(11,092)
49
(27,403)
Net increase (decrease) in cash and cash equivalents
586,542
245,810
(53,276)
Cash and cash equivalents, beginning of period
860,201
614,391
667,667
Cash and cash equivalents, end of period
$
1,446,743
$
860,201
$
614,391
Supplemental disclosures of cash flow information:
Income taxes paid
$
184,415
$
144,117
$
115,339
Interest paid
$
47,081
$
46,069
$
20,844
Non-cash and unpaid consideration in connection with acquisitions
$
—
$
5,056
$
5,391
The accompanying notes are an integral part of the consolidated financial statements.
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ANSYS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Common Stock
Additional
Paid-In
Capital
Retained
Earnings
Treasury Stock
Accumulated
Other
Comprehensive
(Loss)/Income
Total
Stockholders'
Equity
(in thousands)
Shares
Amount
Shares
Amount
Balance, January 1, 2022
95,267
$
953
$
1,465,694
$
4,259,220
8,188
$
(1,185,707)
$
(56,112)
$
4,484,048
Acquisition of Analytical
Graphics Inc.
511
(3)
300
811
Treasury shares acquired
725
(205,571)
(205,571)
Stock-based compensation
activity
74,112
(593)
55,351
129,463
Other comprehensive loss
(66,610)
(66,610)
Net income for the year
523,710
523,710
Balance, December 31, 2022
95,267
953
1,540,317
4,782,930
8,317
(1,335,627)
(122,722)
4,865,851
Treasury shares acquired,
including excise tax
650
(196,609)
(196,609)
Stock-based compensation
activity
130,133
(606)
58,126
188,259
Other comprehensive income
32,451
32,451
Net income for the year
500,412
500,412
Balance, December 31, 2023
95,267
953
1,670,450
5,283,342
8,361
(1,474,110)
(90,271)
5,390,364
Acquisition activity of
previously acquired
businesses
1,818
(8)
719
2,537
Stock-based compensation
activity
118,420
(621)
56,736
175,156
Other comprehensive loss, net
of tax effects
(57,309)
(57,309)
Net income for the year
575,692
575,692
Balance, December 31, 2024
95,267
$
953
$
1,790,688
$
5,859,034
7,732
$
(1,416,655)
$
(147,580)
$
6,086,440
The accompanying notes are an integral part of the consolidated financial statements.
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ANSYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024
1.
Organization
We develop and globally market engineering simulation software and services widely used by engineers, designers, researchers and students across a broad
spectrum of industries and academia, including high-tech, aerospace and defense, automotive, energy, industrial equipment, materials and chemicals,
consumer products, healthcare and construction.
As defined by the accounting guidance for segment reporting, we operate as one segment.
Given the integrated approach to the multi-discipline problem-solving needs of our customers, a single sale of software may contain components from
multiple product areas and include combined technologies. We also have a multi-year product and integration strategy that will result in new, combined
products or changes to the historical product offerings. As a result, it is impracticable for us to provide accurate historical or current reporting among our
various product lines.
Pending Acquisition
On January 15, 2024, we entered into the Merger Agreement with Synopsys and Merger Sub, under which Synopsys will acquire Ansys. The transaction is
anticipated to close in the first half of 2025, subject to the receipt of required regulatory approvals and other customary closing conditions. As part of our
efforts to obtain regulatory approval for the merger, we have entered into a definitive agreement with Keysight Technologies, Inc. for the sale of our
PowerArtist RTL business. The transaction is subject to customary closing conditions, including review by regulatory authorities, and the closing of
Synopsys' proposed acquisition of Ansys. As such, the assets and liabilities of the PowerArtist RTL business have not been classified as assets held for sale
in the consolidated balance sheets. The PowerArtist RTL business has not materially contributed to our financial results.
2.
Accounting Policies
Accounting Principles
The consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United
States. Certain items in the consolidated statement of cash flows and notes to the consolidated financial statements of prior years have been conformed to
the current year's presentation. These presentation changes had no effect on reported net income, comprehensive income, cash flows, total assets or total
liabilities and stockholders' equity.
Principles of Consolidation
The accompanying consolidated financial statements include our accounts and those of our wholly owned subsidiaries. All intercompany accounts and
transactions have been eliminated.
Recently Adopted Accounting Guidance
Segment reporting: In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment
Disclosures (ASU 2023-07). ASU 2023-07 requires enhanced disclosures related to segment information, including for entities with one reportable
segment. It does not change the determination of reportable segments. The enhanced disclosures in accordance with the new guidance are required to be
reported in the annual period beginning after December 15, 2023. The standard only impacts footnote disclosures. We have adopted the reporting
requirements in the report herein. See Note 21, "Segment Disclosure."
Accounting Guidance Issued and Not Yet Adopted
Income tax disclosures: In December 2023, the Financial Accounting Standards Board (FASB) issued ASU No. 2023-09, Income Taxes (Topic 740):
Improvements to Income Tax Disclosures (ASU 2023-09). ASU 2023-09 requires disclosure of greater disaggregation of information in the rate
reconciliation and income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax
disclosures. The standard is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The standard only impacts
footnote disclosures.
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Expense disaggregation disclosures: In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income -
Expense Disaggregation Disclosures (Topic 220): Disaggregation of Income Statement Expenses (ASU 2024-03). ASU 2024-03 requires disclosure of
disaggregation of expense captions. It also includes certain other disclosure requirements to improve the reporting of expense information. The standard is
effective for annual periods beginning after December 15, 2026. Early adoption is permitted. The standard only impacts footnote disclosures.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements. Estimates also affect the amounts of revenue and expenses during the reported periods. Significant estimates included in or impacting
these consolidated financial statements include:
•
Contract revenue
•
Standalone selling prices of our products and services
•
Allowance for doubtful accounts receivable
•
Valuation of goodwill and other intangible assets
•
Useful lives for depreciation and amortization
•
Operating lease assets and liabilities
•
Fair values of stock awards
•
Income taxes
•
Uncertain tax positions
•
Tax valuation reserves
•
Contingencies and litigation
Actual results could differ from these estimates. Changes in estimates are recorded in the results of operations in the period that the changes occur.
Revenue Recognition
Our revenue is derived principally from the licensing of computer software products and from related maintenance contracts. We enter into contracts that
include combinations of products, maintenance and services, which are accounted for as separate performance obligations with differing revenue
recognition patterns.
Revenue from perpetual licenses is classified as software license revenue. Software license revenue is recognized up front upon delivery of the licensed
product and/or the utility that enables the customer to access authorization keys, provided that an enforceable contract has been received. Typically, our
perpetual licenses are sold with post-contract support (PCS), which includes unspecified technical enhancements and customer support. We allocate value
in bundled perpetual and PCS arrangements based on the standalone selling prices of the perpetual license and PCS. Revenue from PCS is classified as
maintenance revenue and is recognized ratably over the term of the contract, as we satisfy the PCS performance obligation.
In addition to perpetual licenses, we sell time-based subscription lease licenses. Subscription lease licenses are sold only as a bundled arrangement that
includes the rights to a term software license and PCS. Utilizing observable inputs, we determined that 50% of the estimated standalone selling price of the
subscription lease license is attributable to the term license and 50% is attributable to the PCS. This determination considered the value relationship for our
products between PCS and time-based subscription lease licenses, the value relationship between PCS and perpetual licenses, the average economic life of
our products, software renewal rates and the price of the bundled arrangement in relation to the perpetual licensing approach. Consistent with the perpetual
sales, the license component is classified as software license revenue and recognized as revenue up front at the commencement of the lease upon delivery
of the licensed product and/or utility that enables the customer to access authorization keys. The PCS is classified as maintenance revenue and is
recognized ratably over the term of the contract, as we satisfy the PCS performance obligation.
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Revenue from training, consulting and other services is recognized as the services are performed. For contracts in which the service consists of a single
performance obligation, such as providing a training class to a customer, we recognize revenue upon completion of the performance obligation. For service
contracts that are longer in duration and often include multiple performance obligations (for example, both training and consulting), we measure the
progress toward completion of the obligations and recognize revenue accordingly. In measuring progress towards the completion of performance
obligations, we typically utilize output-based estimates for services with contractual billing arrangements that are not based on time and materials, and
estimate output based on the total tasks completed as compared to the total tasks required for each work contract. Input-based estimates are utilized for
services that involve general consultations with contractual billing arrangements based on time and materials, utilizing direct labor as the input measure.
We also execute arrangements through independent channel partners in which the channel partners are authorized to market and distribute our software
products to end users of our products and services. In sales facilitated by channel partners, the channel partner is the principal to the transaction with the
end user. We recognize revenue from transactions with channel partners in a manner consistent with the direct sales described above for both perpetual and
time-based licenses. Revenue from channel partner transactions is the amount remitted to us by the channel partners. This amount includes a fee for PCS
that is compensation for providing technical enhancements and the second level of technical support to the end user, which is recognized over the period
that PCS is to be provided.
Non-income related taxes collected from customers and remitted to governmental authorities are recorded on the consolidated balance sheet as accounts
receivable and accrued expenses. The collection and payment of these amounts are reported on a net basis in the consolidated statements of income and do
not impact reported revenues or expenses.
We do not offer right of return. We warrant to our customers that our software will perform substantially as specified in our current user manuals. We have
not experienced significant claims related to software warranties beyond the scope of maintenance support, which we are already obligated to provide. The
warranty is not sold, and cannot be purchased, separately.
The warranty does not provide any type of additional service to the customer or performance obligation for us.
Our agreements with our customers generally require us to indemnify the customer against claims that our software infringes third-party patent, copyright,
trademark or other proprietary rights. Such indemnification obligations are generally limited in a variety of industry-standard respects, including our right
to replace an infringing product.
Significant Judgments
Our contracts with customers typically include promises to transfer licenses and services to a customer. Judgment is required to determine if the promises
are separate performance obligations, and if so, to allocate the transaction price to each performance obligation. We use the estimated standalone selling
price method to allocate the transaction price for each performance obligation. The estimated standalone selling price is determined using all information
reasonably available to us, including market conditions and other observable inputs. The corresponding revenues are recognized as the related performance
obligations are satisfied.
We apply a practical expedient to expense sales commissions as incurred when the amortization period would have been one year or less. Sales
commissions associated with the initial year of multi-year contracts are expensed as incurred due to their immateriality. Sales commissions associated with
multi-year contracts beyond the initial year are subject to an employee service requirement and are expensed as incurred as they are not considered
incremental costs to obtain a contract.
We are required to adjust promised amounts of consideration for the effects of the time value of money if the timing of the payments provides the customer
or us with a significant financing benefit. We consider various factors in assessing whether a financing component exists, including the duration of the
contract, market interest rates and the timing of payments. Our contracts do not include a significant financing component requiring adjustment to the
transaction price.
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Cash, Cash Equivalents and Short-Term Investments
Cash and cash equivalents consist primarily of highly liquid investments such as deposits held at major banks and money market funds. Cash equivalents
are carried at cost, which approximates fair value. Our money market fund balances were held in various funds of a single issuer at December 31, 2024.
Short-term investments consist of available-for-sale debt securities with remaining maturities greater than three months at the date of purchase and time
deposits. Investments in debt securities with remaining maturities greater than three months at the date of purchase are designated as short-term available-
for-sale securities, as we may convert these investments into cash at any time, including to fund general operations. We invest in debt securities that have
an effective maturity term of less than three years. The debt securities are carried at fair value, with unrealized gains and losses included in the consolidated
balance sheets as a component of accumulated other comprehensive (loss) income. For available-for-sale debt securities in an unrealized loss position, we
evaluate whether a current expected credit loss exists based on available information relevant to the credit rating of the security, current economic
conditions and reasonable and supportable forecasts. The allowance for any credit loss will be recorded in other expense, net, on the condensed
consolidated statements of income, not to exceed the amount of the unrealized loss. Any excess unrealized loss other than the credit loss is generally
recognized in accumulated other comprehensive loss. The cost of securities sold is based on the specific identification method and realized gains and losses
are included in other expense, net. To date, we have not recorded any credit loss or realized gains or losses.
Property and Equipment
Property and equipment is stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the various classes of
assets, which range from one year to forty years. Repairs and maintenance are charged to expense as incurred. Gains or losses from the sale or retirement of
property and equipment are included in operating income.
Research and Development
Research and development costs are expensed as incurred. Internally developed software costs required to be capitalized as defined by the accounting
guidance are not material to our consolidated financial statements.
Business Combinations
When we consummate an acquisition, the assets acquired and the liabilities assumed are recognized separately from goodwill at their acquisition date fair
values. Goodwill as of the acquisition date is measured as the excess of the fair value of consideration transferred over the acquisition date fair value of the
net identifiable assets acquired. While best estimates and assumptions are used to accurately value assets acquired and liabilities assumed at the acquisition
date as well as contingent consideration, where applicable, our estimates are inherently uncertain and subject to refinement. As a result, during the
measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed with the
corresponding offset to goodwill as we obtain new information about facts and circumstances that existed as of the acquisition date that, if known, would
have affected the measurement of the amounts recognized as of that date.
Goodwill and Other Intangible Assets
Goodwill represents the excess of the fair value of consideration transferred over the fair value of net identifiable assets acquired. Other intangible assets
consist of acquired software and technology, customer lists and trade names. Intangible assets that are not considered to have an indefinite useful life are
amortized over their useful lives, which range from two years to seventeen years. Amortization expense for intangible assets was $112.3 million, $103.5
million and $85.1 million for the years ended December 31, 2024, 2023 and 2022, respectively.
We test goodwill and indefinite-lived intangible assets for impairment at least annually by performing a quantitative assessment of whether the fair value of
each reporting unit or asset exceeds its carrying amount. We have one reporting unit. Goodwill is tested at this reporting unit level and indefinite-lived
intangible assets are tested at the individual asset level. This requires us to assess and make judgments regarding a variety of factors which impact the fair
value of the reporting unit or asset being tested, including business plans, anticipated future cash flows, economic projections and other market data.
During the first quarter of 2024, we completed the annual impairment test for goodwill and the indefinite-lived intangible asset and determined that these
assets had not been impaired as of the test date, January 1, 2024. No other events or circumstances changed during the year ended December 31, 2024 that
would indicate that the fair values of our reporting unit and indefinite-lived intangible asset are below their carrying amounts.
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Concentrations of Credit Risk
We have a concentration of credit risk with respect to revenue and trade receivables due to the use of channel partners to market and sell our products. We
perform periodic credit evaluations of our customers' financial condition and generally do not require collateral. The following table outlines concentrations
of risk with respect to our revenue:
Year Ended December 31,
(as a % of revenue)
2024
2023
2022
Revenue from channel partners
25 %
26 %
24 %
No single customer or channel partner accounted for more than 5% of our revenue in 2024, 2023 or 2022.
In addition to the concentration of credit risk with respect to trade receivables, our cash, cash equivalents and short-term investments are also exposed to
concentration risk. Our cash and cash equivalent accounts are insured through various public and private bank deposit insurance programs, foreign and
domestic; however, a significant portion of our funds are not insured. The following table outlines concentrations of risk with respect to our cash, cash
equivalents and short-term investments:
As of December 31,
(in thousands)
2024
2023
Cash, cash equivalents and short-term investments held domestically
$
1,052,003
$
529,092
Cash, cash equivalents and short-term investments held by foreign subsidiaries
445,514
331,298
Cash and cash equivalents held in excess of deposit insurance, foreign and domestic
1,434,694
846,723
Largest balance of cash and cash equivalents held with one financial institution, foreign and domestic
720,577
359,362
Allowance for Doubtful Accounts
ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments requires us to use the
current expected credit loss methodology to make judgments as to our ability to collect outstanding receivables and provide allowances for a portion of
receivables over the lifetime of the receivables. Provisions are made based upon a specific review of all significant outstanding invoices from both value
and delinquency perspectives. For those invoices not specifically reviewed, provisions are estimated at differing rates based upon the age of the receivable.
In determining these percentages, we consider our historical loss experience, current economic trends and future conditions.
The changes in the allowance for doubtful accounts during the years ended December 31, 2024, 2023 and 2022 were as follows:
(in thousands)
2024
2023
2022
Beginning balance – January 1
$
20,700
$
18,300
$
14,600
Additions: Charges to expense
2,598
$
2,704
6,222
Deductions: Write-offs
(6,798)
(304)
(2,522)
Ending balance – December 31
$
16,500
$
20,700
$
18,300
Income Taxes
We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected
future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined
based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period of the
enactment date.
We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all
available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies
and recent financial operations. In the event we determine that we will be able to realize deferred tax assets for which a valuation allowance was used to
reduce their carrying value, the adjustment to the valuation allowance will be recorded as a reduction to the provision for income taxes.
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Tax benefits related to uncertain tax positions taken or expected to be taken on a tax return are recorded when such benefits meet a more-likely-than-not
threshold. Otherwise, these tax benefits are recorded when a tax position has been effectively settled, which means that the statute of limitations has expired
or the appropriate taxing authority has completed its examination even though the statute of limitations remains open.
We recognize interest and penalties related to income taxes within the income tax expense line in the consolidated statements of income. Accrued interest
and penalties are included within the related tax liability line in the consolidated balance sheets.
Foreign Currencies
Certain of our sales and intercompany transactions are denominated in foreign currencies. These transactions are converted to the functional currency in the
period in which they occur. Assets and liabilities denominated in a currency other than our functional currency or our subsidiaries' functional currencies are
translated at the effective exchange rate on the balance sheet date. Gains and losses resulting from foreign exchange transactions are included in other
expense, net. We recorded net foreign exchange losses of $3.1 million and $4.0 million for the years ended December 31, 2024 and 2023, respectively, and
net foreign exchange gains of $1.6 million for the year ended December 31, 2022.
The financial statements of our foreign subsidiaries are translated from the functional currency to U.S. Dollars. Assets and liabilities are translated at the
exchange rates on the balance sheet date. Results of operations are translated at average exchange rates, which approximate rates in effect when the
underlying transactions occurred.
Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss is composed of foreign currency translation adjustments and unrealized losses on available-for-sale securities, net
of tax effects.
Earnings Per Share
Basic earnings per share (EPS) amounts are computed by dividing earnings by the weighted average number of common shares outstanding during the
period. Diluted EPS amounts assume the issuance of common stock for all potentially dilutive equivalents outstanding. To the extent stock awards are anti-
dilutive, they are excluded from the calculation of diluted EPS.
The details of basic and diluted EPS are as follows:
Year Ended December 31,
(in thousands, except per share data)
2024
2023
2022
Net income
$
575,692
$
500,412
$
523,710
Weighted average shares outstanding – basic
87,313
86,833
87,051
Dilutive effect of stock plans
582
553
439
Weighted average shares outstanding – diluted
87,895
87,386
87,490
Basic earnings per share
$
6.59
$
5.76
$
6.02
Diluted earnings per share
$
6.55
$
5.73
$
5.99
Anti-dilutive shares
43
218
300
Stock-Based Compensation
We account for stock-based compensation in accordance with share-based payment accounting guidance. The guidance requires an entity to measure the
cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The cost is recognized
over the period during which an employee is required to provide services in exchange for the award, typically the vesting period.
Fair Value of Financial Instruments
We account for certain assets and liabilities at fair value in accordance with the accounting guidance applicable to fair value measurements and disclosures.
The carrying values of cash, cash equivalents, accounts receivable, accounts payable, accrued expenses, other accrued liabilities, fixed forward contracts
and short-term obligations are deemed to be reasonable estimates of their fair values because of their short-term nature. Our term loan is a variable rate debt
obligation and, therefore, the carrying amount approximates the fair value.
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3.
Revenue from Contracts with Customers
Disaggregation of Revenue
The following table summarizes revenue:
Year Ended December 31,
(in thousands, except percentages)
2024
2023
2022
Revenue:
Subscription lease licenses
$
948,831
$
786,050
$
687,665
Perpetual licenses
315,085
302,698
301,313
Software licenses
1,263,916
1,088,748
988,978
Maintenance
1,209,217
1,103,523
1,004,245
Service
71,676
77,678
72,330
Maintenance and service
1,280,893
1,181,201
1,076,575
Total revenue
$
2,544,809
$
2,269,949
$
2,065,553
Direct revenue, as a percentage of total revenue
75.2 %
73.9 %
76.1 %
Indirect revenue, as a percentage of total revenue
24.8 %
26.1 %
23.9 %
Our software licenses revenue is recognized up front, while maintenance and service revenue is recognized over the term of the contract.
Deferred Revenue
Deferred revenue consists of billings made or payments received in advance of revenue recognition from customer agreements. The timing of revenue
recognition may differ from the timing of billings to customers. Payment terms vary by the type and location of customer and the products or services
offered. The time between invoicing and when payment is due is not significant.
The changes in deferred revenue, inclusive of both current and long-term deferred revenue, during the years ended December 31, 2024 and 2023 were as
follows:
(in thousands)
2024
2023
Beginning balance – January 1
$
479,754
$
435,758
Acquired deferred revenue
—
8,030
Deferral of revenue
2,617,131
2,305,294
Recognition of deferred revenue
(2,544,809)
(2,269,949)
Currency translation
(15,771)
621
Ending balance – December 31
$
536,305
$
479,754
Total revenue allocated to remaining performance obligations as of December 31, 2024 will be recognized as revenue as follows:
(in thousands)
Next 12 months
$
1,029,144
Months 13-24
419,744
Months 25-36
206,327
Thereafter
63,052
Total revenue allocated to remaining performance obligations
$
1,718,267
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Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes both deferred
revenue and backlog. Our backlog represents deferred revenue associated with installment billings for periods beyond the current quarterly billing cycle
and committed contracts with start dates beyond the end of the current period. Revenue recognized during the years ended December 31, 2024 and 2023
included amounts in deferred revenue and backlog at the beginning of the period of $897.4 million, of which $457.5 million was in deferred revenue, and
$846.3 million, of which $414.0 million was in deferred revenue, respectively.
4.
Acquisitions
During the year ended December 31, 2024, we incurred acquisition-related expenses of $52.8 million, primarily consisting of costs related to the Merger
Agreement with Synopsys. Acquisition-related expenses are recognized as selling, general and administrative and research and development expenses on
the consolidated statements of income.
On December 5, 2023, we entered into an agreement to make a strategic equity investment in Humanetics in the amount of $300.0 million, subject to
receipt of regulatory approvals among other customary closing conditions. As a result of our interactions with regulators, the parties mutually agreed to
terminate the investment agreement in July 2024.
2023 Acquisitions
On January 3, 2023, we completed the acquisition of DYNAmore for a purchase price of $140.8 million, or $128.0 million net of cash acquired. The
acquisition expands our position as a simulation solution provider within the automotive industry. The effects of the acquisition were not material to our
consolidated results of operations.
Additionally, during the year ended December 31, 2023, we completed other acquisitions to expand our solution offerings and enhance our customers'
experience. These acquisitions were not significant, individually or in the aggregate. The combined purchase price of these acquisitions during the year
ended December 31, 2023 was approximately $94.4 million, or $88.3 million net of cash acquired.
During the year ended December 31, 2023, we incurred acquisition-related expenses of $9.4 million. Acquisition-related expenses are recognized as
selling, general and administrative and research and development expenses on the consolidated statements of income.
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The assets acquired and liabilities assumed in connection with the acquisitions have been recorded based upon management's estimates of their fair market
values as of each respective date of acquisition. The following tables summarize the fair value of consideration and the fair values of identified assets
acquired and liabilities assumed at each respective date of acquisition:
Fair Value of Consideration:
(in thousands)
Cash
$
230,106
Non-cash consideration
5,056
Total consideration
$
235,162
Recognized Amounts of Identifiable Assets Acquired and Liabilities Assumed:
(in thousands)
Cash
$
18,870
Accounts receivable and other tangible assets
19,294
Developed software and core technologies
28,110
Customer lists
83,790
Trade names
2,910
Accounts payable and other liabilities
(8,845)
Deferred revenue
(8,030)
Net deferred tax liabilities
(31,980)
Total identifiable net assets
$
104,119
Goodwill
$
131,043
The goodwill, which is generally not tax-deductible, is attributed to intangible assets that do not qualify for separate recognition, including the assembled
workforces of the acquired businesses and the synergies expected to arise as a result of the acquisitions.
We determined the fair value of our intangible assets using various valuation techniques, including the relief-from-royalty method and the multi-period
excess earnings method. These models utilize certain unobservable inputs classified as Level 3 measurements as defined by ASC 820, Fair Value
Measurements and Disclosures. The determination of fair value requires considerable judgment and is sensitive to changes in underlying assumptions,
estimates and market factors. Estimating fair value requires us to make assumptions and estimates regarding our future plans, as well as industry and
economic conditions. These assumptions and estimates include, but are not limited to: selection of a valuation methodology, royalty rate, discount rate,
attrition rate and obsolescence rate.
The weighted-average useful life, valuation method and assumptions used to determine the fair value of the intangible assets related to the 2023
acquisitions are as follows:
Intangible Asset
Weighted-Average
Useful Life
Valuation Method
Assumptions
Developed software and core technologies
5 years
Relief-from-royalty or multi-period
excess earnings
Royalty rate: 20.0%
Obsolescence rate: 15.0% - 20.0%
Discount rate: 12.5% - 22.0%
Trade names
5 years
Relief-from-royalty
Royalty rate: 1.0% - 2.0%
Discount rate: 15.5% - 22.0%
Customer lists
13 years
Multi-period excess earnings
Attrition rate: 5.0%
Discount rate: 15.5% - 22.0%
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The operating results of each acquisition have been included in our consolidated financial statements since each respective date of acquisition. The effects
of the business combinations were not material to our consolidated results of operations individually or in the aggregate during 2023.
5. Cash Equivalents and Short-Term Investments
During the year ended December 31, 2024, we invested in available-for-sale debt securities, which are included in short-term investments in the
consolidated balance sheets. As of December 31, 2024, our cash equivalents and short-term investments were as follows:
(in thousands)
Amortized Cost
Gross Unrealized
Gains
Gross Unrealized
Losses Less Than 12
Continuous Months
Estimated Fair
Value
Cash equivalents:
Money market funds
$
410,515
$
—
$
—
$
410,515
Total cash equivalents
410,515
—
—
410,515
Short-term investments:
Corporate debt securities
27,149
76
(20)
27,205
Municipal bonds
18,402
39
(59)
18,382
U.S. agency bonds
5,056
—
(51)
5,005
Other short-term investments
182
—
—
182
Total short-term investments
50,789
115
(130)
50,774
Total cash equivalents and short-term investments
$
461,304
$
115
$
(130)
$
461,289
See Note 9, "Fair Value Measurement" for further discussion on fair values.
Of the $27.2 million of corporate debt securities, $5.3 million are in a loss position at December 31, 2024. Of the $18.4 million of municipal bonds, $6.0
million are in a loss position at December 31, 2024. Of the $5.0 million of U.S. agency bonds, $5.0 million are in a loss position at December 31, 2024.
The unrealized losses presented above are primarily attributable to changes in interest rates. We believe that we have the ability to realize the full value of
these investments upon maturity.
The following table outlines maturities of our available-for-sale debt securities as of December 31, 2024:
(in thousands)
Amortized Cost
Fair Value
Less than 1 year
$
16,796
$
16,822
1-3 years
33,811
33,770
Total
$
50,607
$
50,592
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6. Other Receivables and Current Assets
Our other receivables and current assets comprise the following balances:
December 31,
(in thousands)
2024
2023
Receivables related to unrecognized revenue
$
244,605
$
253,646
Income taxes receivable, including overpayments and refunds
7,755
22,104
Prepaid expenses and other current assets
58,766
48,901
Total other receivables and current assets
$
311,126
$
324,651
Receivables related to unrecognized revenue represent the current portion of billings made for customer contracts that have not yet been recognized as
revenue.
7. Property and Equipment
Property and equipment consists of the following:
December 31,
(in thousands)
Estimated Useful Lives
2024
2023
Equipment
1-15 years
$
149,765
$
136,112
Computer software
1-5 years
34,461
29,210
Buildings and improvements
2-40 years
41,880
39,728
Leasehold improvements
1-17 years
29,862
29,587
Furniture
1-10 years
15,693
15,921
Land
2,696
2,696
Property and equipment, gross
274,357
253,254
Less: Accumulated depreciation
(184,711)
(175,474)
Property and equipment, net
$
89,646
$
77,780
Depreciation expense related to property and equipment was $30.9 million, $29.0 million and $29.5 million for the years ended December 31, 2024, 2023
and 2022, respectively.
8. Goodwill and Intangible Assets
Goodwill represents the excess of the fair value of consideration over the fair value of net identifiable assets acquired. Identifiable intangible assets
acquired in business combinations are recorded based on their fair values on the date of acquisition.
Intangible assets are classified as follows:
December 31, 2024
December 31, 2023
(in thousands)
Gross
Carrying
Amount
Accumulated
Amortization
Gross
Carrying
Amount
Accumulated
Amortization
Finite-lived intangible assets:
Developed software and core technologies
$
1,142,840
$
(635,450)
$
1,146,022
$
(557,359)
Customer lists
261,895
(91,769)
289,874
(89,800)
Trade names
189,017
(150,646)
190,203
(143,880)
Total
$
1,593,752
$
(877,865)
$
1,626,099
$
(791,039)
Indefinite-lived intangible asset:
Trade name
$
357
$
357
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Finite-lived intangible assets are amortized over their estimated useful lives of two years to seventeen years.
As of December 31, 2024, estimated future amortization expense for the intangible assets reflected above is as follows:
(in thousands)
2025
$
114,392
2026
115,188
2027
118,417
2028
112,188
2029
98,453
Thereafter
157,249
Total intangible assets subject to amortization, net
715,887
Indefinite-lived trade name
357
Other intangible assets, net
$
716,244
The changes in goodwill during the years ended December 31, 2024 and 2023 were as follows:
(in thousands)
2024
2023
Beginning balance - January 1
$
3,805,874
$
3,658,267
Acquisitions and adjustments
868
122,635
Currency translation
(28,614)
24,972
Ending balance - December 31
$
3,778,128
$
3,805,874
In addition to goodwill from acquisitions completed within the period, in accordance with the accounting for business combinations, we recorded
adjustments to goodwill for the effect of changes in the provisional fair values of the assets acquired and liabilities assumed during the measurement period
(up to one year from the acquisition date) as we obtained new information about facts and circumstances that existed as of the acquisition date that, if
known, would have affected the measurement of the amounts recognized as of that date. Such adjustments are not material to our consolidated financial
statements.
During the first quarter of 2024, we completed the annual impairment test for goodwill and the indefinite-lived intangible asset and determined that these
assets had not been impaired as of the test date, January 1, 2024. No other events or circumstances changed during the year ended December 31, 2024 that
would indicate that the fair values of our reporting unit and indefinite-lived intangible asset are below their carrying amounts.
9. Fair Value Measurement
The valuation hierarchy for disclosure of assets and liabilities reported at fair value prioritizes the inputs for such valuations into three broad levels:
•
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
•
Level 2: quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or
indirectly through market corroboration, for substantially the full term of the financial instrument; or
•
Level 3: unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value.
A financial asset's or liability's classification within the hierarchy is determined based on the lowest level input that is significant to the fair value
measurement.
Our debt is classified within Level 2 of the fair value hierarchy because these borrowings are not actively traded and have a variable interest rate structure
based upon market rates. The carrying amount of our debt approximates the estimated fair value. See Note 11, "Debt", for additional information on these
borrowings.
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The following tables provide the assets carried at fair value and measured on a recurring basis:
Fair Value Measurements at Reporting Date Using:
(in thousands)
December 31,
2024
Quoted Prices in
Active Markets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Assets
Cash equivalents:
Money market funds
$
410,515
$
410,515
$
—
$
—
Short-term investments:
Corporate debt securities
$
27,205
$
—
$
27,205
$
—
Municipal bonds
$
18,382
$
—
$
18,382
$
—
U.S. agency bonds
$
5,005
$
—
$
5,005
$
—
Other short-term investments
$
182
$
—
$
182
$
—
Deferred compensation plan investments
$
2,459
$
2,459
$
—
$
—
Equity securities
$
785
$
785
$
—
$
—
Fair Value Measurements at Reporting Date Using:
(in thousands)
December 31, 2023
Quoted Prices in
Active Markets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Assets (Liabilities)
Cash equivalents:
Money market funds
$
170,821
$
170,821
$
—
$
—
Short-term investments:
Other short-term investments
$
189
$
—
$
189
$
—
Deferred compensation plan investments
$
2,337
$
2,337
$
—
$
—
Equity securities
$
634
$
634
$
—
$
—
Forward contracts
$
(412)
$
—
$
(412)
$
—
The cash equivalents in the preceding tables represent money market funds, valued at net asset value, with carrying values which approximate their fair
values because of their short-term nature.
The short-term investments in the preceding tables represent available-for-sale securities and time deposits.
The deferred compensation plan investments in the preceding tables represent trading securities held in a rabbi trust for the benefit of non-employee
directors. These securities consist of mutual funds traded in an active market with quoted prices. As a result, the plan assets are classified as Level 1 in the
fair value hierarchy. The plan assets are recorded within other long-term assets on our consolidated balance sheets.
The equity securities represent our investment in a publicly traded company. These securities are traded in an active market with quoted prices. As a result,
the securities are classified as Level 1 in the fair value hierarchy. The securities are recorded within other long-term assets on our consolidated balance
sheets.
The forward contracts represent currency hedges to mitigate exchange rate exposure. These contracts are classified within Level 2 because these contracts
are not actively traded and the valuation inputs are based on quoted prices and market observable data of similar instruments. The liabilities associated with
the forward contracts are recorded at fair value in other accrued expenses and liabilities in the consolidated balance sheets.
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10. Leases
Our right-of-use (ROU) assets and lease liabilities primarily include operating leases for office space. Our executive offices and those related to certain
domestic product development, marketing, production and administration are located in a 186,000 square foot office facility in Canonsburg, Pennsylvania.
The term of the lease is 183 months, which began on October 1, 2014 and expires on December 31, 2029. The lease agreement includes an option to renew
the contract through August 2044. No options are included in the lease liability. Absent the exercise of options in the lease, our remaining base rent
(inclusive of property taxes and certain operating costs) is $4.7 million per annum for 2025 - 2029.
The components of our global lease cost reflected in the consolidated statements of income for the years ended December 31, 2024, 2023 and 2022 are as
follows:
(in thousands)
2024
2023
2022
Lease liability cost
$
28,385
$
28,481
$
27,543
Variable lease cost not included in the lease liability
5,524
5,749
4,436
Total lease cost
$
33,909
$
34,230
$
31,979
Variable lease cost includes common area maintenance, property taxes, utilities and fluctuations in rent due to a change in an index or rate.
Other information related to operating leases for the years ended December 31, 2024, 2023 and 2022 is as follows:
(in thousands)
2024
2023
2022
Cash paid for amounts included in the measurement of the lease liability:
Operating cash flows from operating leases
$
(28,598)
$
(28,281)
$
(26,767)
Right-of-use assets obtained in exchange for new operating lease liabilities
$
15,655
$
12,913
$
36,735
As of December 31,
2024
2023
Weighted-average remaining lease term of operating leases
5.8 years
6.4 years
Weighted-average discount rate of operating leases
3.3 %
3.4 %
The maturity schedule of the operating lease liabilities as of December 31, 2024 is as follows:
(in thousands)
2025
$
27,781
2026
23,395
2027
19,317
2028
17,644
2029
12,592
Thereafter
21,824
Total future lease payments
122,553
Less: Present value adjustment
(11,130)
Present value of future lease payments
$
111,423
Includes the current portion of operating lease liabilities of $24.5 million, which is reflected in other accrued expenses and liabilities in the consolidated
balance sheets.
There were no material leases that have been signed but not yet commenced as of December 31, 2024.
(1)
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(1)
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11. Debt
On June 30, 2022, we entered into a credit agreement (as amended, the 2022 Credit Agreement) with PNC Bank, National Association, as administrative
agent, swing line lender, and an L/C issuer, the lenders party thereto, and the other L/C issuers party thereto. The 2022 Credit Agreement refinanced our
previous credit agreements in their entirety. Terms used in this description of the 2022 Credit Agreement with initial capital letters that are not otherwise
defined herein are as defined in the 2022 Credit Agreement.
The 2022 Credit Agreement provides for a $755.0 million unsecured term loan facility and a $500.0 million unsecured revolving loan facility, which
includes a $50.0 million sublimit for the issuance of letters of credit. The revolving loan facility is available for working capital and general corporate
purposes. Each of the term loan facility and the revolving loan facility matures on June 30, 2027.
Borrowings under the term loan and revolving loan facilities accrue interest at a rate that is based on the Term SOFR plus an applicable margin or at the
base rate plus an applicable margin, at our election. The base rate is the highest of (i) the Overnight Bank Funding Rate, plus 0.500%, (ii) the PNC Bank,
National Association prime rate, and (iii) Daily Simple SOFR plus an adjustment for SOFR plus 1.00%. The applicable margin for the borrowings is a
percentage per annum based on the lower of (1) a pricing level determined by our then-current consolidated net leverage ratio and (2) a pricing level
determined by our public debt rating (if available).
On September 29, 2023, the 2022 Credit Agreement was amended to provide for an interest rate adjustment (Sustainability Rate Adjustment) based upon
the achievement of certain environmental, social and governance KPIs. The Sustainability Rate Adjustment range is +/- 0.05% and will be adjusted
annually based on the KPIs of the preceding year.
The 2022 Credit Agreement also provides for the option to add certain foreign subsidiaries as borrowers and to borrow in Euros, Sterling, Yen and Swiss
Francs under the revolving loan facility, up to a sublimit of $150.0 million. Borrowings under the revolving loan facility denominated in these currencies
will accrue interest at a rate that is based on (a) for Euros, €STR, (b) for Sterling, SONIA, (c) for Yen, TONAR and (d) for Swiss Francs, SARON, plus an
applicable margin calculated as described above.
Under the 2022 Credit Agreement, the weighted average interest rates in effect for the years ended December 31, 2024 and 2023 were 6.08% and 6.01%,
respectively. The rate in effect as of December 31, 2024 and for the first quarter of 2025 under the 2022 Credit Agreement is 5.25%.
The 2022 Credit Agreement contains customary representations and warranties, affirmative and negative covenants and events of default. The 2022 Credit
Agreement also contains a financial covenant requiring us and our subsidiaries to maintain a consolidated net leverage ratio not in excess of 3.50 to 1.00 as
of the end of any fiscal quarter (for the four-quarter period ending on such date) with an opportunity for a temporary increase in such consolidated net
leverage ratio to 4.00 to 1.00 upon the consummation of certain qualified acquisitions for which the aggregate consideration is at least $250.0 million.
As of December 31, 2024, we had $755.0 million of borrowings outstanding under the term loan, with a carrying value of $754.2 million, which is net of
$0.8 million of unamortized debt discounts and issuance costs. The total amount was included in long-term debt. As of December 31, 2024, no borrowings
were outstanding under the revolving loan facility.
As of December 31, 2023, we had $755.0 million of borrowings outstanding under the term loan, with a carrying value of $753.9 million, which is net of
$1.1 million of unamortized debt discounts and issuance costs. The total amount was included in long-term debt. As of December 31, 2023, no borrowings
were outstanding under the revolving loan facility.
We were in compliance with all covenants under the 2022 Credit Agreement as of December 31, 2024 and December 31, 2023, respectively.
As of December 31, 2024, all debt is scheduled to mature in 2027 with no principal payments required prior to the maturity date.
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12. Income Taxes
Income before income tax provision included the following components:
Year Ended December 31,
(in thousands)
2024
2023
2022
Domestic
$
544,979
$
458,581
$
504,797
Foreign
173,059
133,557
70,518
Total
$
718,038
$
592,138
$
575,315
The provision for income taxes was composed of the following:
Year Ended December 31,
(in thousands)
2024
2023
2022
Current:
Federal
$
144,537
$
115,942
$
103,007
State
20,265
11,759
11,286
Foreign
57,947
55,332
68,028
Deferred:
Federal
(78,139)
(79,251)
(94,398)
State
(6,318)
(8,145)
(9,647)
Foreign
4,054
(3,911)
(26,671)
Total
$
142,346
$
91,726
$
51,605
The reconciliation of the U.S. federal statutory tax rate to the consolidated effective tax rate was as follows:
Year Ended December 31,
2024
2023
2022
Federal statutory tax rate
21.0 %
21.0 %
21.0 %
Nondeductible expenses
3.5
2.1
2.3
State income taxes, net of federal benefit
1.5
0.6
0.9
Foreign rate differential
0.7
0.4
—
Stock-based compensation
0.3
—
(1.5)
U.S. federal tax (benefit) expense on foreign earnings
0.1
(1.2)
(2.4)
Benefit from tax planning and entity structuring activities
—
(0.3)
(2.5)
Research and development credits
(3.0)
(3.2)
(3.2)
Foreign-derived intangible income deduction
(4.2)
(4.1)
(5.7)
Other
(0.1)
0.2
0.1
19.8 %
15.5 %
9.0 %
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The components of deferred tax assets and liabilities are as follows:
December 31,
(in thousands)
2024
2023
Deferred tax assets:
Research and experimentation capitalization
$
211,192
$
148,355
Uncertain tax positions
55,583
52,685
Net operating loss carryforwards
31,304
34,907
Stock-based compensation
29,712
33,473
Operating lease liabilities
24,967
28,380
Debt obligation basis difference
20,289
30,289
Employee benefits
12,066
13,662
Other
13,459
9,752
Valuation allowance
(16,892)
(17,608)
Total deferred tax assets
381,680
333,895
Deferred tax liabilities:
Other intangible assets
(177,270)
(202,404)
Operating lease right-of-use assets
(23,407)
(26,878)
Deferred revenue
(11,367)
(12,080)
Property and equipment
(3,034)
(3,607)
Other
—
—
Total deferred tax liabilities
(215,078)
(244,969)
Net deferred tax assets
$
166,602
$
88,926
The net decrease in the valuation allowance was primarily due to $0.9 million of currency fluctuations on balances relating to foreign jurisdictions, partially
offset by a $0.2 million increase in unrealizable tax assets. As of each reporting date, management considers new evidence, both positive and negative, that
could affect the future realization of deferred tax assets. If management determines it is more likely than not that an asset, or a portion of an asset, will not
be realized, a valuation allowance is recorded.
As of December 31, 2024, we had federal net operating loss carryforwards of $0.7 million, which are subject to limitations of their utilization and expire
between 2036 - 2037. Deferred tax assets of $0.9 million have been recorded for state operating loss carryforwards. These losses expire between 2027 -
2042, and are subject to limitations on their utilization. We had total foreign net operating loss carryforwards of $122.3 million, of which $89.1 million are
not currently subject to expiration dates. The remainder, $33.2 million, expires between 2030 - 2039. We had tax credit carryforwards of $8.5 million, of
which $1.9 million are not currently subject to expiration dates and $6.6 million expire in various years between 2025 - 2044. Of these tax credit
carryforwards, $0.7 million are subject to limitations on their utilization.
In general, it is our intention to permanently reinvest all earnings in excess of previously taxed amounts. Substantially all of the pre-2018 earnings of our
non-U.S. subsidiaries were taxed through the transition tax and post-2018 current earnings are taxed as part of global intangible low-taxed income tax
expense. These taxes increase our previously taxed earnings and allow for the repatriation of the majority of our foreign earnings without any residual U.S.
federal tax. Unrecognized provisions for taxes on indefinitely reinvested undistributed earnings of foreign subsidiaries would not be significant.
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The following is a reconciliation of the total amounts of unrecognized tax benefits:
Year Ended December 31,
(in thousands)
2024
2023
2022
Unrecognized tax benefit as of January 1
$
54,884
$
45,772
$
39,641
Gross changes—acquisitions
—
—
—
Gross increases—tax positions in prior period
146
—
403
Gross decreases—tax positions in prior period
(267)
(1,782)
(2,780)
Gross increases—tax positions in current period
12,302
14,814
13,905
Reductions due to a lapse of the applicable statute of limitations
(2,998)
(3,236)
(3,743)
Changes due to currency fluctuation
(6,516)
(684)
(1,654)
Settlements
—
—
—
Unrecognized tax benefit as of December 31
$
57,551
$
54,884
$
45,772
We believe that it is reasonably possible that $32.2 million of uncertain tax positions included in the table above may be resolved within the next twelve
months as a result of settlement with a taxing authority or a lapse of the statute of limitations. If the unrecognized tax benefit as of December 31, 2024 were
to be recognized, a benefit of $13.0 million would impact the effective tax rate.
We recognize interest and penalties related to unrecognized tax benefits as income tax expense. We recorded penalty expense of $0.1 million, $0.7 million
and $0.7 million for the years ended December 31, 2024, 2023 and 2022, respectively. We recorded interest income of $0.2 million for the year ended
December 31, 2024, interest income of $0.3 million for the year ended December 31, 2023 and interest expense of $0.1 million for the year ended
December 31, 2022. As of December 31, 2024, we accrued a liability for penalties of $8.8 million and interest of $2.3 million. As of December 31, 2023,
we accrued a liability for penalties of $8.7 million and interest of $2.6 million.
The OECD has introduced a two-pillar approach to address the tax challenges arising from the digitalization of the economy. Pillar Two defines global
minimum tax rules and includes a 15 percent minimum tax rate. We have not recorded any income tax provision related to Pillar Two for the year ended
December 31, 2024 based on the laws currently enacted in the jurisdictions in which we operate.
We are subject to taxation in the United States and various states and foreign jurisdictions. In the United States, our only major tax jurisdiction, the 2017 -
2024 tax years are open to examination by the Internal Revenue Service.
13. Pension and Profit-Sharing Plans
We have a 401(k) plan for all qualifying domestic employees that permits participants to defer a portion of their pay pursuant to Section 401(k) of the
Internal Revenue Code. We make matching contributions on behalf of each eligible participant in an amount equal to 100% of the first 3% and an
additional 25% of the next 5%, for a maximum total of 4.25% of the employee's eligible compensation. We may make discretionary matching
contributions. We may also make discretionary nonelective contributions in an amount to be determined by the Board of Directors for each plan year,
provided the employee is employed at the end of the year and has worked at least 1,000 hours. Domestic employees of acquired businesses may participate
in the 401(k) plan when they become eligible. We also maintain and contribute to various defined contribution and defined benefit pension arrangements
for our international employees. We meet the minimum statutory funding requirements for our foreign plans. As of December 31, 2024 and 2023, the total
unfunded portions of the benefit obligations were $12.4 million and $11.8 million, respectively.
Expenses related to our retirement programs were $28.0 million in 2024, $25.9 million in 2023 and $21.9 million in 2022.
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14. Non-Compete and Employment Agreements
Our employees have signed agreements under which they have agreed not to disclose trade secrets or confidential information that, where legally
permitted, restrict engagement in or connection with any business that is competitive with us anywhere in the world while employed by us (and, in some
cases, for specified periods thereafter in relevant geographic areas), and that any products or technology created by them during their term of employment
are our property. In addition, we require all channel partners to enter into agreements not to disclose our trade secrets and other proprietary information.
We have an employment agreement with our Chief Executive Officer. Under the terms of the employment agreement, in the event that the Chief Executive
Officer's employment with us is terminated by us without "Cause" or as a result of his resignation with "Good Reason" (each as defined in the agreement)
the Chief Executive Officer will be entitled to (i) receive an amount equal to two times the sum of his then effective base salary plus his target bonus,
payable over 24 months in equal installments, (ii) receive payment of the prior year's earned annual cash incentive, to the extent unpaid, (iii) receive
payment of a pro-rated target annual cash incentive for the year of termination, (iv) in certain circumstances, receive a lump sum amount equal to 24
months of the COBRA premium applicable to the health, dental and vision plans in which the Chief Executive Officer was participating prior to
termination, (v) have any outstanding performance-based and time-based equity awards receive accelerated vesting treatment equal to an additional two
years after termination, and (vi) have the period of time during which the Chief Executive Officer may exercise his vested stock options be extended to the
longer of (x) six months after his date of termination or (y) seven days after the commencement of our first open trading window that occurs after the date
of termination, but in no event later than the 10-year expiration date of such options. During his employment with us and for two years thereafter, following
termination of employment under certain circumstances described in the contract, he will be subject to non-competition and non-solicitation obligations.
If a termination under the circumstances described above occurs during the period beginning 60 days prior to the effective date of a definitive agreement
that will result in a change in control and ending 18 months after the consummation (closing) of a change in control, then, in lieu of the benefits described
in the foregoing paragraph, the Chief Executive Officer will be entitled to the amounts described in the paragraph above, except that (a) the amount
described in clause (i) will be paid in a lump sum rather than over 24 months, and (b) instead of the two-year acceleration period described in clause (v), all
outstanding performance-based and time-based equity awards held by the Chief Executive Officer shall immediately become fully exercisable, vested
and/or non-forfeitable on an accelerated basis, subject to any performance or metric-based requirements set forth therein which shall be separately
determined as set forth in the applicable award agreement.
We also have employment agreements with several other employees, primarily in foreign jurisdictions. The terms of these employment agreements
generally include annual compensation and non-compete clauses.
15. Stock-Based Compensation
On May 14, 2021, our stockholders approved the ANSYS, Inc. 2021 Equity and Incentive Compensation Plan (the 2021 Plan). The 2021 Plan is a long-
term incentive plan pursuant to which awards may be granted to directors, officers, other employees and certain consultants of Ansys and its subsidiaries.
These awards may include stock option rights, stock appreciation rights, restricted stock, restricted stock units, cash incentives, performance shares,
performance units and other awards. The 2021 Plan authorizes 4.4 million shares of common stock for issuance, plus 1.6 million shares that remained
available for issuance under the Fifth Amended and Restated ANSYS, Inc. 1996 Stock Option and Grant Plan (the Predecessor Plan) as of the effective
date of the 2021 Plan plus any shares relating to the outstanding awards under the Predecessor Plan or the 2021 Plan that are subsequently forfeited. As of
the effective date of the 2021 Plan, grants were no longer made under the Predecessor Plan.
The 2021 Plan requires a minimum vesting period or performance period of one year for most award types and a maximum period for options to be
exercisable as ten years from the grant date. Upon the death or disability of a participant, performance awards are vested pro-rata, subject to any
performance target requirements, and all other awards become fully vested. The Compensation Committee of the Board of Directors may, at its sole
discretion, accelerate the date or dates on which an award granted under the 2021 Plan may vest in the event of a change in control or an employee's
termination of employment. A change in control will result in awards either being assumed by the acquirer or the pre-existing awards becoming
immediately vested and earned at target award levels. In the event an employee is terminated without cause within 18 months after the change in control,
any assumed awards will become immediately vested.
We currently issue shares related to exercised stock options or vested awards from our existing pool of treasury shares and have no specific policy to
repurchase treasury shares as stock options are exercised or as awards vest. If the treasury pool is depleted, we will issue new shares.
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Total stock-based compensation expense recognized for the years ended December 31, 2024, 2023 and 2022 is as follows:
Year Ended December 31,
(in thousands, except per share amounts)
2024
2023
2022
Cost of sales:
Maintenance and service
14,313
13,337
10,073
Operating expenses:
Selling, general and administrative
161,905
126,175
93,117
Research and development
94,682
82,379
64,938
Stock-based compensation expense before taxes
270,900
221,891
168,128
Related income tax benefits
(65,647)
(53,880)
(50,209)
Stock-based compensation expense, net of taxes
$
205,253
$
168,011
$
117,919
As of December 31, 2024, total unrecognized estimated compensation expense related to awards granted prior to that date was $352.8 million, which is
expected to be recognized over a weighted average period of 1.5 years. Forfeitures of awards are accounted for as they occur.
Stock Options
Prior to 2017, we granted stock option awards. The value of each stock option award was estimated on the date of grant, or date of acquisition for options
issued in a business combination, using the Black-Scholes option pricing model (Black-Scholes model). The determination of the fair value of stock-based
payment awards using an option pricing model was affected by our stock price as well as assumptions regarding a number of complex and subjective
variables. These variables included our stock volatility during the preceding six years, actual and projected employee stock option exercise behaviors,
interest rate assumptions using the five-year U.S. Treasury Note yield on the date of grant or acquisition date and expected dividends. The stock-based
compensation expense for options was recorded ratably over the requisite service period.
As of December 31, 2024, there is no unrecognized estimated compensation cost related to unvested stock options.
Information regarding stock option transactions is summarized below:
Year Ended December 31,
2024
2023
2022
(options in thousands)
Options
Weighted-
Average
Exercise
Price
Options
Weighted-
Average
Exercise
Price
Options
Weighted-
Average
Exercise
Price
Outstanding, beginning of year
103
$
94.23
226
$
94.24
375
$
83.67
Granted
—
$
—
—
$
—
—
$
—
Exercised
(1)
$
86.57
(123)
$
94.32
(148)
$
67.56
Forfeited
(2)
$
86.01
—
$
—
(1)
$
67.44
Outstanding, end of year
100
$
94.46
103
$
94.23
226
$
94.24
Vested and Exercisable, end of year
100
$
94.46
103
$
94.23
226
$
94.24
Nonvested
—
$
—
—
$
—
—
$
—
2024
2023
2022
Weighted Average Remaining Contractual Term (in years)
Outstanding
1.59
2.52
3.53
Vested and Exercisable
1.59
2.52
3.53
Aggregate Intrinsic Value (in thousands)
Exercised
$
83
$
28,231
$
30,358
Outstanding
$
24,370
$
27,717
$
33,361
Vested and Exercisable
$
24,370
$
27,717
$
33,361
Compensation Expense - Stock Options (in thousands)
$
—
$
—
$
—
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Information regarding stock options outstanding as of December 31, 2024 is summarized below:
(options in thousands)
Options Outstanding & Exercisable
Exercise Price
Options
Weighted-
Average
Remaining
Contractual
Life (years)
$86.57
7
0.67
$94.15
1
0.58
$95.09
92
1.67
There were no unvested stock options as of December 31, 2024.
Restricted Stock Units
Under the terms of the 2021 Plan, we have issued various restricted stock unit awards (RSUs). The following table summarizes the types of awards and
vesting conditions:
Award
Vesting Period
Vesting Condition
Restricted stock units with a service condition only
Three years
Prior to March 2023, one third of the awards vested annually. Commencing
in March 2023, one third vests in the first year and then one eighth quarterly
thereafter.
Restricted stock units with an operating
performance and service condition
Three years
Operating performance metrics as defined at the beginning of each sub-
performance period and subject to continued employment through the vesting
period.
Restricted stock units with a market and service
condition
Three years
Our performance measured by total stockholder return relative to the Nasdaq
Composite Index for the performance period and subject to continued
employment through the vesting period.
Board of Director restricted stock unit awards
The earlier of one year
or the next regular
meeting of stockholders
Continued service on the Board of Directors through the vesting period.
Directors that retire prior to the vest date receive a pro-rata portion of the
RSUs.
The fair value of RSUs with only a service condition is based on the fair market value of our stock on the date of the grant and is recognized straight-line
over the vesting period.
The fair value of RSUs with operating performance metrics is based on the fair market value of our stock on the date of the grant and is recognized from
the grant date through the vesting period based on management's estimates concerning the probability of operating performance metric achievement.
The fair values of RSUs with a market condition were estimated using a Monte Carlo simulation model and are recognized over the vesting period. The
determination of the fair values of the awards was affected by the grant date and several variables, each of which has been identified in the chart below.
Due to the pending merger with Synopsys, there were no RSUs with a market condition issued in 2024.
Year Ended December 31,
Assumptions used in Monte Carlo lattice pricing model
2023
2022
Risk-free interest rate
4.6%
1.8%
Expected dividend yield
—%
—%
Expected volatility—Ansys stock price
36%
37%
Expected volatility—Nasdaq Composite Index
25%
26%
Expected term
2.8 years
2.8 years
Correlation factor
0.83
0.84
Weighted average fair value per share
$452.14
$290.65
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Total compensation expense for RSU awards recorded for the years ended December 31, 2024, 2023 and 2022 was $270.5 million, $213.5 million and
$164.0 million, respectively.
Information regarding all employee and non-employee director RSU transactions is summarized below:
Year Ended December 31,
2024
2023
2022
(RSUs in thousands)
RSUs
Weighted-
Average
Grant Date Fair
Value
RSUs
Weighted-
Average
Grant Date Fair
Value
RSUs
Weighted-
Average
Grant Date Fair
Value
Nonvested, beginning of year
1,538
$
309.33
1,220
$
301.72
1,074
$
278.02
Granted
948
$
339.43
867
$
314.04
861
$
299.08
Performance adjustment - awards with
market condition
(20)
$
285.28
(11)
$
279.42
(8)
$
276.73
Performance adjustment - awards with
performance condition
59
$
339.62
79
$
310.37
73
$
300.28
Vested
(894)
$
310.84
(558)
$
300.30
(598)
$
257.51
Forfeited
(76)
$
322.38
(59)
$
313.58
(182)
$
295.13
Nonvested, end of year
1,555
$
327.62
1,538
$
309.33
1,220
$
301.72
Includes all RSUs granted during the year. RSUs with operating performance conditions have one performance cycle or three sub-performance cycles.
Performance conditions are assigned near the beginning of each performance cycle or sub-performance cycle, as applicable, and awards are reflected as
grants at the target number of units at that time.
RSUs with a market or performance condition are granted at target and vest based on achievement of the market or operating performance and service
conditions. The actual number of RSUs issued may be more or less than the target RSUs depending on the achievement of the market or operating
performance conditions.
Employee Stock Purchase Plan
On May 12, 2022, our stockholders approved the ANSYS, Inc. 2022 Employee Stock Purchase Plan (2022 ESPP) and the reservation by our Board of
Directors of 750,000 shares of common stock for issuance under the 2022 ESPP. On October 27, 2022, our Board of Directors approved the amendment
and restatement of the 2022 ESPP. The 2022 ESPP replaced the 1996 Employee Stock Purchase Plan (1996 Plan) in its entirety. Shares issued in 2024 were
issued under the 2022 ESPP. The 2022 ESPP and 1996 Plan (Purchase Plans) allow our employees and employees of our designated subsidiaries to
purchase shares of our common stock at a discount to fair market value. Due to the pending merger with Synopsys, there were no offering periods under the
Purchase Plans in 2024 after the conclusion of the offering period ending January 31, 2024. There were 634,167 shares available for future purchases as of
December 31, 2024.
The Purchase Plans are administered by the Compensation Committee. Offerings under the Purchase Plans commence on the first business day occurring
on or before each February 1 and August 1, and end on the last business day occurring on or before the following July 31 and January 31, respectively. An
employee who owns or is deemed to own shares of stock representing in excess of 5% of the combined voting power of all classes of our stock may not
participate in the Purchase Plans.
During each offering, an eligible employee may purchase shares by authorizing payroll deductions of up to 10% of his or her cash compensation during the
offering period. The maximum number of shares that may be purchased by any participating employee during any offering period is limited to 3,840
shares. Subject to limitations within the Purchase Plans, each employee's accumulated payroll deductions will be used to purchase common stock on the
last day of the applicable offering period at a price equal to 85% of the fair market value of the common stock on the first or last day of the applicable
offering period, whichever is less. Under applicable tax rules, an employee may not accrue at a rate that exceeds $25,000 of the fair market value of our
stock (determined on the option grant date or dates) for each calendar year in which the option to purchase shares is outstanding at any time. As of
December 31, 2024, 115,833 shares of common stock had been issued under the 2022 ESPP. The total compensation expense recorded under the Purchase
Plans during the years ended December 31, 2024, 2023 and 2022 was $0.3 million, $8.3 million and $4.2 million, respectively.
(1)
(2)
(2)
(1)
(2)
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16. Stock Repurchase Program
There were no share repurchases in 2024. For the year ended December 31, 2023, 650 thousand shares were repurchased at an average price of $302.34 per
share, with a total cost of $196.5 million. For the year ended December 31, 2022, 725 thousand shares were repurchased at an average price of $283.38 per
share, with a total cost of $205.6 million. As of December 31, 2024, 1.1 million shares remained available for repurchase under the program.
17. Royalty Agreements
We have entered into various renewable license agreements under which we have been granted access to the licensor's technology and the right to sell the
technology in our product line. Royalties are payable to developers of the software at various rates and amounts, which generally are based upon unit sales,
revenue or flat fees. Royalty fees are reported in cost of software licenses and were $44.1 million, $39.0 million and $32.0 million for the years ended
December 31, 2024, 2023 and 2022, respectively.
18. Geographic Information
Revenue to external customers is attributed to individual countries based upon the location of the customer. Revenue by geographic area was as follows:
Year Ended December 31,
(in thousands)
2024
2023
2022
United States
$
1,251,892
$
1,058,293
$
932,587
Germany
209,714
199,068
198,612
Japan
184,547
203,013
186,199
China and Hong Kong
126,628
111,467
105,101
South Korea
112,895
106,261
127,948
Other EMEA
445,791
406,719
349,159
Other international
213,342
185,128
165,947
Total revenue
$
2,544,809
$
2,269,949
$
2,065,553
Property and equipment by geographic area was as follows:
December 31,
(in thousands)
2024
2023
United States
$
65,731
$
56,421
India
6,280
5,057
France
4,975
4,771
Other EMEA
6,279
6,924
Other international
6,381
4,607
Total property and equipment, net
$
89,646
$
77,780
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19. Unconditional Purchase Obligations
We have entered into various unconditional purchase obligations which primarily include minimum royalty contracts and software licenses and support. We
expended $66.4 million, $54.8 million and $54.8 million related to unconditional purchase obligations that existed as of the beginning of each year for the
years ended December 31, 2024, 2023 and 2022, respectively. Future expenditures under unconditional purchase obligations in effect as of December 31,
2024 are as follows:
(in thousands)
2025
$
66,763
2026
16,115
2027
9,322
2028
3,896
2029
299
Total
$
96,395
20. Contingencies and Commitments
We are subject to various claims, investigations, and legal and regulatory proceedings that arise in the ordinary course of business, including, but not
limited to, commercial disputes, labor and employment matters, tax audits, alleged infringement of third parties' intellectual property rights and other
matters. In our opinion, the resolution of pending matters is not expected to have a material adverse effect on our consolidated results of operations, cash
flows or financial position. However, each of these matters is subject to various uncertainties and it is possible that an unfavorable resolution of one or
more of these proceedings could materially affect our consolidated results of operations, cash flows or financial position.
Our Indian subsidiary has several service tax audits pending that have resulted in formal inquiries being received on transactions through mid-2012. We
could incur tax charges and related liabilities of $7.2 million. As such charges are not probable at this time, a reserve has not been recorded on the
consolidated balance sheet as of December 31, 2024. The service tax issues raised in our notices and inquiries are very similar to the case, M/s Microsoft
Corporation (I) (P) Ltd. Vs. Commissioner of Service Tax, New Delhi, wherein the Delhi Customs, Excise and Service Tax Appellate Tribunal (CESTAT)
issued a favorable ruling to Microsoft. The Microsoft ruling was subsequently challenged in the Supreme Court of India by the Indian tax authority and a
decision is still pending. We can provide no assurances on the impact that the Microsoft case's decision will have on our cases, however, an unfavorable
ruling in the Microsoft case may impact our assessment of probability and result in the recording of a $7.2 million reserve. We are uncertain as to when
these service tax matters will be concluded.
We sell software licenses and services to our customers under contractual agreements. Such agreements generally include certain provisions indemnifying
the customer against claims, by third parties, of infringement or misappropriation of their intellectual property rights arising from such customer’s usage of
our products or services. To date, payments related to these indemnification provisions have been immaterial. For several reasons, including the lack of
prior material indemnification claims, we cannot determine the maximum amount of potential future payments, if any, related to such indemnification
provisions.
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21. Segment Disclosure
We develop and globally market engineering simulation software. As defined by the accounting guidance for segment reporting, we operate as one
segment. Our Chief Operating Decision Maker (CODM) is Ajei Gopal, President and Chief Executive Officer. The financial information provided to and
used by the CODM assists in making operational decisions and allocating resources, such as the allocation of personnel. The annual budgeting process is
the primary mechanism used to make these decisions. The financial information also helps in making performance assessments using budgeted versus
actual results. The profit and loss measure reviewed by the CODM is net income. Segment disclosures, including significant segment expenses, are detailed
below:
Year Ended December 31,
(in thousands)
2024
2023
2022
Revenue
$
2,544,809
$
2,269,949
$
2,065,553
Salaries
(620,815)
(581,027)
(511,776)
Stock-based compensation
(270,900)
(221,891)
(168,128)
Incentive compensation
(219,557)
(194,025)
(195,524)
Amortization
(112,308)
(103,502)
(85,094)
Depreciation
(30,929)
(29,002)
(29,468)
Interest income
51,131
19,588
5,717
Interest expense
(47,849)
(47,145)
(22,726)
Other segment expenses, net
(575,544)
(520,807)
(483,239)
Income tax provision
(142,346)
(91,726)
(51,605)
Net income
$
575,692
$
500,412
$
523,710
Incentive compensation includes bonuses and commissions.
Other segment expenses, net consists primarily of other headcount-related expenses, IT maintenance and software hosting costs, acquisition-related costs
and consulting and professional fees.
The measure of segment assets is reported on the consolidated balance sheet as total assets. The measure of expenditures for long-lived assets is reported on
the consolidated statements of cash flows as capital expenditures.
(1)
(2)
(1)
(2)
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EXHIBIT INDEX
Exhibit No.
Exhibit
2.1
Agreement and Plan of Merger, dated as of January 15, 2024, by and among Synopsys, Inc., ANSYS, Inc. and ALTA Acquisition Corp.
(filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed January 16, 2024, and incorporated herein by reference).
3.1
Restated Certificate of Incorporation of ANSYS, Inc., dated May 31, 2023 (filed as Exhibit 3.1 to the Company’s Quarterly Report on
Form 10-Q, filed August 2, 2023, and incorporated herein by reference).
3.2
Sixth Amended and Restated By-Laws of ANSYS, Inc., adopted and effective February 13, 2025.
4.1
Description of Securities.
10.1
Form of Indemnification Agreement between ANSYS, Inc. and Non-Employee Directors (filed as Exhibit 10.1 to the Company's Current
Report on Form 8-K, filed March 20, 2013, and incorporated herein by reference).*
10.2
Non-Employee Director Deferred Compensation Plan (filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q, filed
November 7, 2019, and incorporated herein by reference).*
10.3
Executive Severance Plan, as amended and restated, dated July 29, 2014 (filed as Exhibit 10.3 to the Company’s Annual Report on Form
10-K, filed February 27, 2020, and incorporated herein by reference).*
10.4
Fourth Amended and Restated ANSYS, Inc. 1996 Stock Option and Grant Plan (filed as Exhibit 10.1 to the Company's Current Report on
Form 8-K, filed May 17, 2011, and incorporated herein by reference).*
10.5
Form of Deferred Stock Unit Agreement under the Fourth Amended and Restated ANSYS, Inc. 1996 Stock Option and Grant Plan (filed
as Exhibit 10.5 to the Company's Annual Report on Form 10-K, filed February 27, 2020, and incorporated herein by reference).*
10.6
Form of Employee Non-Qualified Stock Option Agreement under the Fourth Amended and Restated ANSYS, Inc. 1996 Stock Option and
Grant Plan (filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q, filed May 2, 2013, and incorporated herein by
reference).*
10.7
Fifth Amended and Restated ANSYS, Inc. 1996 Stock Option and Grant Plan (filed as Appendix 1 to the Company's Definitive Proxy
Statement on Schedule 14A filed March 31, 2016 and incorporated herein by reference).*
10.8
Form of Employee Non-Qualified Stock Option Agreement under the Fifth Amended and Restated ANSYS, Inc. 1996 Stock Option and
Grant Plan (filed as Exhibit 10.36 to the Company's Annual Report on Form 10-K, filed February 23, 2017, and incorporated herein by
reference).*
10.9
Amended and Restated Employment Agreement between ANSYS, Inc. and Ajei S. Gopal, dated November 1, 2023 (filed as Exhibit
10.15 to the Company's Annual Report on From 10-K, filed February 21, 2024, and incorporated herein by reference).*
10.10
Form of Non-Qualified Stock Option Agreement with Ajei S. Gopal (filed as Exhibit 10.3 to the Company's Current Report on Form 8-K,
filed August 29, 2016, and incorporated herein by reference).*
10.11
Lease by and between ANSYS, Inc. and Quattro Investment Group, L.P., dated as of September 14, 2012 (filed as Exhibit 10.1 to the
Company's Current Report on Form 8-K, filed September 18, 2012, and incorporated herein by reference).
10.12
ANSYS, Inc. 2021 Equity and Incentive Compensation Plan (filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K, filed
May 18, 2021, and incorporated herein by reference).*
10.13
Form of Notice of Grant of Performance-Based Restricted Stock Units and Agreement (Total Shareholder Return) under the ANSYS, Inc.
2021 Equity and Incentive Compensation Plan (filed as Exhibit 10.28 to the Company’s Quarterly Report on Form 10-Q, filed August 4,
2021, and incorporated herein by reference).*
10.14
Form of Notice of Grant of Performance-Based Restricted Stock Units and Agreement (Operating Metrics) under the ANSYS, Inc. 2021
Equity and Incentive Compensation Plan (filed as Exhibit 10.29 to the Company’s Quarterly Report on Form 10-Q, filed August 4, 2021,
and incorporated herein by reference).*
10.15
Form of Notice of Grant of Restricted Stock Units and Agreement (Non-Employee Director) under the ANSYS, Inc. 2021 Equity and
Incentive Compensation Plan (filed as Exhibit 10.30 to the Company’s Quarterly Report on Form 10-Q, filed August 4, 2021, and
incorporated herein by reference).*
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Table of Contents
10.16
Form of Notice of Grant of Restricted Stock Units and Award Notice and Agreement (Employee) under the ANSYS, Inc. 2021 Equity and
Incentive Compensation Plan (filed as Exhibit 10.31 to the Company’s Quarterly Report on Form 10-Q, filed August 4, 2021, and
incorporated herein by reference).*
10.17
ANSYS, Inc. 2022 Employee Stock Purchase Plan (as amended and restated effective February 1, 2023 and filed as Exhibit 10.23 to the
Company's Annual Report on Form 10-K, filed February 23, 2023, and incorporated herein by reference).*
10.18
Credit Agreement, dated as of June 30, 2022, among ANSYS, Inc., as Borrower, PNC Bank, National Association, as Administrative
Agent, Swing Line Lender and an L/C Issuer, the lenders party thereto, and the other L/C Issuers party thereto (filed as Exhibit 10.1 to the
Company’s Current Report on Form 8-K, filed July 6, 2022, and incorporated herein by reference).
10.19
Amendment No. 1 to Credit Agreement, dated as of September 29, 2023, among ANSYS, Inc., as Borrower, PNC Bank, National
Association, as Administrative Agent, and the lenders party thereto (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-
Q, filed November 1, 2023, and incorporated herein by reference).†
10.20
ANSYS, Inc. Tier Two Executive Severance Plan, dated January 1, 2024 (filed as Exhibit 10.26 to the Company's Annual Report on From
10-K, filed February 21, 2024, and incorporated herein by reference).*
10.21
Transition Agreement between ANSYS, Inc. and Nicole Anasenes, dated February 15, 2024 (filed as Exhibit 10.27 to the Company's
Annual Report on Form 10-K, filed February 21, 2024, and incorporated herein by reference).*
19.1
Insider Trading Policy.
21.1
Subsidiaries of the Registrant.
23.1
Consent of Deloitte & Touche LLP, independent registered public accounting firm.
24.1
Powers of Attorney. Contained on the Signatures page of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2024 and incorporated herein by reference.
31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
32.2
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
97.1
Policy Relating to Recovery of Erroneously Awarded Compensation, dated November 30, 2023 (filed as Exhibit 97.1 to the Company's
Annual Report on Form 10-K, filed February 21, 2024, and incorporated herein by reference).
101.INS
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are
embedded within the Inline XBRL document)
101.SCH
Inline XBRL Taxonomy Extension Schema
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
*
Indicates management contract or compensatory plan, contract or arrangement.
†
Certain schedules, exhibits, and appendices have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company hereby undertakes to
furnish copies of any omitted schedule, exhibit, or appendix to the SEC upon request.
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ITEM 16.
FORM 10-K SUMMARY
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ANSYS, Inc.
Date:
February 19, 2025
By:
/s/ Ajei S. Gopal
Ajei S. Gopal
President and Chief Executive Officer
(Principal Executive Officer)
Date:
February 19, 2025
By:
/s/ Rachel Pyles
Rachel Pyles
Chief Financial Officer and Senior Vice President of Finance
(Principal Financial Officer)
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POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Ajei S. Gopal, his or her
attorney-in-fact, with the power of substitution, for such person in any and all capacities, to sign any amendments to this Report on Form 10-K, and to file
the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact, or substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated below.
Signature
Title
Date
/s/ AJEI S. GOPAL
President, Chief Executive Officer and Director
(Principal Executive Officer)
February 19, 2025
Ajei S. Gopal
/s/ RACHEL PYLES
Chief Financial Officer and Senior Vice President of Finance
(Principal Financial Officer)
February 19, 2025
Rachel Pyles
/s/ JENNIFER GERCHOW
Chief Accounting Officer
(Principal Accounting Officer)
February 19, 2025
Jennifer Gerchow
/s/ GLENDA M. DORCHAK
Director
February 19, 2025
Glenda M. Dorchak
/s/ DR. ANIL CHAKRAVARTHY
Director
February 19, 2025
Dr. Anil Chakravarthy
/s/ DR. ALEC D. GALLIMORE
Director
February 19, 2025
Dr. Alec D. Gallimore
/s/ RONALD W. HOVSEPIAN
Chairman of the Board of Directors
February 19, 2025
Ronald W. Hovsepian
/s/ BARBARA V. SCHERER
Director
February 19, 2025
Barbara V. Scherer
/s/ ROBERT M. CALDERONI
Director
February 19, 2025
Robert M. Calderoni
/s/ RAVI K. VIJAYARAGHAVAN
Director
February 19, 2025
Ravi K. Vijayaraghavan
/s/ JIM FRANKOLA
Director
February 19, 2025
Jim Frankola
/s/ CLAIRE BRAMLEY
Director
February 19, 2025
Claire Bramley
98
EXHIBIT 3.2
SIXTH AMENDED AND RESTATED
BY-LAWS
OF
ANSYS, INC.
ARTICLE I
Stockholders
SECTION 1. Annual Meeting. The annual meeting of stockholders shall be held at the hour, date and place within or without the United
States which is fixed by the majority of the Board of Directors, the Chairman of the Board, if one is elected, or the President, which time,
date and place may subsequently be changed at any time by vote of the Board of Directors. If no annual meeting has been held for a period of
thirteen months after the Corporation’s last annual meeting of stockholders, a special meeting in lieu thereof may be held, and such special
meeting shall have, for the purposes of these By-Laws or otherwise, all the force and effect of an annual meeting. Any and all references
hereafter in these By-Laws to an annual meeting or annual meetings also shall be deemed to refer to any special meeting(s) in lieu thereof.
SECTION 2. Matters to be Considered at Annual Meetings. At any annual meeting of stockholders or any special meeting in lieu of
annual meeting of stockholders (the “Annual Meeting”), only such business shall be conducted, and only such proposals shall be acted upon,
as shall have been properly brought before such Annual Meeting. To be considered as properly brought before an Annual Meeting, business
must be: (a) brought before the meeting by, or at the direction of, the Board of Directors, or (b) otherwise properly brought before the
meeting by any holder of record (both as of the time notice of such proposal is given by the stockholder as set forth below and as of the
record date for the Annual Meeting in question) of any shares of capital stock of the Corporation entitled to vote at such Annual Meeting who
complies with the requirements set forth in this Section 2 and, with respect to nominations, Article II, Section 3 or Article II, Section 4 of
these By-Laws. For the avoidance of doubt, for a stockholder to bring business or nominations before an Annual Meeting (other than matters
properly brought under Rule 14a-8 (or any successor rule) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)),
such stockholder must comply with the procedures set forth in this Article I, Section 2 of this By-Law with respect to business other than
nominations and with the procedures set forth in Article II, Section 3 or Article II, Section 4 with respect to nominations, and these
procedures shall be the exclusive means for a stockholder to bring such business or nominations properly before an Annual Meeting. In
addition to the other requirements set forth in this By-Law, for any proposal of business to be considered at an Annual Meeting, it must be a
proper subject for action by stockholders of the Corporation under Delaware law.
In addition to any other applicable requirements, for business (other than nominations, which are governed by Article II, Section 3 and
Article II, Section 4) to be properly brought before an Annual Meeting by a stockholder of record of any shares of capital stock entitled to
vote at such Annual Meeting, such stockholder shall: (i) give Timely Notice (as defined below) in writing as required by this Section 2 to the
Secretary of the Corporation, (ii) provide any updates or supplements to such notice at the times and in the forms required by this Section 2
and (iii) be present at such meeting, either in person or by a representative. A stockholder’s notice shall be timely if delivered to, or mailed to
and received by, the Corporation at its principal executive office not less than 75 days nor more than 120 days prior to the anniversary date of
the immediately preceding Annual Meeting (the “Anniversary Date”); provided, however, that in the event the Annual Meeting is scheduled
to be held on a date more than 30 days before the Anniversary Date or more than 60 days after the Anniversary Date, a stockholder’s notice
shall be timely if delivered to, or mailed to and received by, the Corporation at its principal executive office not later than the close of
business on the later of (A) the 75th day prior to the scheduled date of such Annual Meeting or (B) the 15th day following the day on which
public announcement of the date of such Annual Meeting is first made by the Corporation (such notice delivered within the time periods set
forth in this sentence or the immediately preceding sentence shall be referred to as “Timely Notice”).
For purposes of these By-Laws, “public announcement” shall mean: (i) disclosure in a press release reported by the Dow Jones News
Service, Associated Press or comparable national news service, (ii) a report or other document filed publicly with the Securities and
Exchange Commission (including, without limitation, a Form 8-K), or (iii) a letter or report sent to stockholders of record of the Corporation
at the time of the mailing of such letter or report.
A stockholder’s Timely Notice to the Secretary shall set forth as to each matter proposed to be brought before an Annual Meeting: (a) (i) a
brief description of (A) the business the stockholder desires to bring before such Annual Meeting, the reasons for conducting such business at
such Annual Meeting and why such stockholder believes that the taking of the action or actions proposed to be taken would be in the best
interests of the Corporation and its stockholders and (B) any material interest of such stockholder and any such beneficial owner(s) in such
business and a description in reasonable detail of all agreements, arrangements and understandings among such stockholder and any such
beneficial owner(s) or between any such stockholder and any such beneficial owner(s) and any other person or entity (including their names)
in connection with the proposal and (ii) the text of the proposal or business (including the text of any resolutions proposed for consideration);
(b) as to the stockholder giving the notice and the beneficial owner(s), if any, on whose behalf the proposal is made: (i) the name and address
of such stockholder, as they appear on the Corporation’s books, and of such beneficial owner(s); and (ii) (A) the class or series and number of
shares of the Corporation which are, directly or indirectly, owned beneficially and of record by such stockholder and any such beneficial
owner(s), (B) any derivative, swap or other transaction or series of transactions engaged in, directly or indirectly, by such stockholder and/or
any such beneficial owner(s) the purpose or effect of which is to give such stockholder and/or any such beneficial owner(s) economic benefit
and/or risk similar to ownership of shares of any class or series of the Corporation, in whole or in part, including due to the fact that such
derivative, swap or other transaction provides, directly or indirectly, the opportunity to profit or avoid a loss from any increase or decrease in
the value of shares of any class or series of the Corporation (“Synthetic Equity Interests”) and such disclosure shall identify the counterparty
to each such Synthetic Equity Interest and shall include, for each such Synthetic Equity Interest, whether or not (x) such Synthetic Equity
Interest conveys any voting rights, directly or indirectly, in such shares to such stockholder and/or any such beneficial owner(s), (y) such
Synthetic Equity Interest is required to be, or is capable of being, settled through delivery of such shares and (z) such stockholder, any such
beneficial owner(s) and/or, to their knowledge, the counterparty
2
to such Synthetic Equity Interest has entered into other transactions that hedge or mitigate the economic effect of such Synthetic Equity
Interest, (C) any proxy (other than a revocable proxy given in response to a public proxy solicitation made pursuant to, and in accordance
with, the Exchange Act), agreement, arrangement, understanding or relationship pursuant to which such stockholder and/or any such
beneficial owner(s) has or shares a right to vote any shares of any class or series of the Corporation, (D) any agreement, arrangement,
understanding or relationship (which disclosure shall identify the counterparty thereto), including any hedge, repurchase or similar so-called
“stock borrowing” agreement or arrangement, engaged in, directly or indirectly, by such stockholder and/or any such beneficial owner(s), the
purpose or effect of which is to mitigate loss to, reduce the economic risk of shares of any class or series of the Corporation by, manage the
risk of share price changes for, or increase or decrease the voting power of, such stockholder and/or any such beneficial owner(s) with respect
to the shares of any class or series of the Corporation, or which provides, directly or indirectly, the opportunity to profit from any decrease in
the value of the shares of any class or series of the Corporation (“Short Interests”), (E) any rights to dividends or other distributions on the
shares of any class or series of the Corporation owned beneficially by such stockholder and/or any such beneficial owner(s) that are separated
or separable from the underlying shares of the Corporation, (F) any performance-related fees (other than an asset based fee) that such
stockholder and/or any such beneficial owner(s) is entitled to based on any increase or decrease in the value of shares of any class or series of
the Corporation, any Synthetic Equity Interests or Short Interests, if any (the disclosures to be made pursuant to the foregoing clauses (A)
through (F) are referred to as “Material Ownership Interests”); (c) the names and addresses of other stockholders known by the stockholder
and/or any such beneficial owner(s) proposing such business to support such proposal, and the class and number of shares of the
Corporation’s capital stock beneficially owned by such other stockholders; (d) any material pending or threatened legal proceeding involving
the Corporation, any affiliate of the Corporation or any of their respective directors or officers, to which such stockholder and any such
beneficial owner(s) or their respective affiliates is a party; (e) any equity interests, including any convertible, derivative or short interests, in
any principal competitor of the Corporation; and (f) any material interest of the stockholder and/or any such beneficial owner(s) proposing to
bring such business before such meeting (or any other stockholders known to be supporting such proposal) in such proposal, including any
other information relating to such stockholder and any such beneficial owner(s) that would be required to be disclosed in a proxy statement or
other filing required pursuant to Section 14(a) of the Exchange Act to be made in connection with a general solicitation of proxies or
consents by such stockholder and any such beneficial owner(s) in support of the business proposed to be brought before the Annual Meeting.
A stockholder providing Timely Notice of business proposed to be brought before an Annual Meeting shall further update and supplement
such notice, if necessary, so that the information (including, without limitation, the Material Ownership Interests information) provided or
required to be provided in such notice pursuant to this By-Law shall be true and correct as of the record date for the meeting and as of the
date that is ten (10) business days prior to such Annual Meeting, and such update and supplement shall be delivered in writing to the
Secretary at the principal executive offices of the Corporation not later than the close of business on the fifth (5th) business day after the
record date for the meeting (in the case of the update and supplement required to be made as of the record date), and not later than the close
of business on the eighth (8th) business day prior to the date for the meeting (in the case of the update and supplement required to be made as
of ten (10) business days prior to the meeting).
3
If the Board of Directors or a designated committee thereof determines that any stockholder proposal was not made in a timely fashion in
accordance with the provisions of this Section 2 or that the information provided in a stockholder’s notice does not satisfy the information
requirements of this Section 2 in any material respect, such proposal shall not be presented for action at the Annual Meeting in question. If
neither the Board of Directors nor such committee makes a determination as to the validity of any stockholder proposal in the manner set
forth above, the presiding officer of the Annual Meeting shall determine whether the stockholder proposal was made in accordance with the
terms of this Section 2. If the presiding officer determines that any stockholder proposal was not made in a timely fashion in accordance with
the provisions of this Section 2 or that the information provided in a stockholder’s notice does not satisfy the information requirements of this
Section 2 in any material respect, such proposal shall not be presented for action at the Annual Meeting in question. If the Board of Directors,
a designated committee thereof or the presiding officer determines that a stockholder proposal was made in accordance with the requirements
of this Section 2, the presiding officer shall so declare at the Annual Meeting and ballots shall be provided for use at the meeting with respect
to such proposal.
Notwithstanding the foregoing provisions of this By-Law, a stockholder shall also comply with all applicable requirements of the Exchange
Act, and the rules and regulations thereunder with respect to the matters set forth in this By-Law. Nothing in this By-Law shall be deemed to
affect any rights of stockholders to have proposals included in the Corporation’s proxy statement pursuant to Rule 14a-8 (or any successor
rule) under the Exchange Act and, to the extent required by such rule, have such proposals considered and voted on at an Annual Meeting.
SECTION 3. Special Meetings. Except as otherwise required by law and subject to the rights, if any, of the holders of any series of
Preferred Stock, special meetings of the stockholders of the Corporation may be called only by the Board of Directors pursuant to a
resolution approved by the affirmative vote of a majority of the Directors then in office. A special meeting of stockholders (a “Stockholder
Requested Special Meeting”) shall be called by the Board of Directors upon the written request (a “Stockholder Special Meeting Request”) of
the holders of record (each such record holder, a “Requesting Stockholder”) of shares of voting stock representing in the aggregate at least
20% of the outstanding voting stock held continuously for a period of at least one year prior to the date such request is delivered (the
“Requisite Percentage”).
4
In order for a Stockholder Requested Special Meeting to be called, the Stockholder Special Meeting Request (i) must be signed by the
holders of record of the Requisite Percentage (or their duly authorized agents), who shall not revoke such request and who shall continue to
own in the aggregate not less than the Requisite Percentage through the date of the Stockholder Requested Special Meeting, addressed to the
Secretary and delivered to or mailed and received at the principal executive office of the Corporation; (ii) must describe the business to be
brought before the Stockholder Requested Special Meeting; (iii) must contain such information and representations then required by Section
2 of this Article I or Article II, Section 3 and any other applicable sections of these By-Laws as though such stockholder was intending to
submit business or make a nomination before an annual meeting of stockholders; (iv) must include a commitment to promptly notify the
Corporation upon any decrease occurring between the date on which the Stockholder Special Meeting Request is delivered to the Secretary
and the date of the Stockholder Requested Special Meeting in the number of shares of voting stock held of record by Requesting
Stockholders; (v) must include an acknowledgement by each Requesting Stockholder that any decrease after the date on which the
Stockholder Special Meeting Request is delivered to the Secretary in the number of shares of voting stock held of record by each Requesting
Stockholder shall be deemed a revocation of the Stockholder Special Meeting Request with respect to such shares and that such shares will
no longer be included in determining whether the Requisite Percentage has been satisfied; (vi) must include a representation that at least one
Requesting Stockholder, or a qualified representative of at least one Requesting Stockholder, intends to attend the Stockholder Requested
Special Meeting to present the business to be brought before such meeting; and (vii) must describe all agreements, arrangements or
understandings between each Requesting Stockholder and any other persons, including their names, in connection with the proposed business
of the Stockholder Requested Special Meeting and any material interest of each Requesting Stockholder in such business.
If the Board of Directors determines that the Stockholder Special Meeting Request complies with the provisions of these By-Laws and that
the business to be conducted is a proper subject for stockholder action, the Board of Directors shall call and send notice of a Stockholder
Requested Special Meeting for the purpose set forth in the Stockholder Special Meeting Request in accordance with Section 5 of this Article
I. The Board of Directors shall determine the date for such Stockholder Requested Special Meeting, which date shall be not later than 45 days
following the Secretary’s receipt of the Stockholder Special Meeting Request, and the record date(s) for stockholders entitled to notice of and
to vote at such Stockholder Requested Special Meeting.
5
Notwithstanding the foregoing provisions of this Section 3, a Stockholder Requested Special Meeting shall not be held if: (i) the Stockholder
Special Meeting Request does not comply with these By-Laws; (ii) the business specified in the Stockholder Special Meeting Request is not
a proper subject for stockholder action; (iii) the Stockholder Special Meeting Request is received by the Secretary during the period
commencing 90 days prior to the first anniversary of the date of the immediately preceding annual meeting and ending on the date of the next
annual meeting; (iv) an identical or substantially similar item (as determined in good faith by the Board of Directors, a “Similar Item”), was
presented at a meeting of stockholders held within 90 days before the Stockholder Special Meeting Request is received by the Secretary (and,
for purposes of this clause (iv), the nomination, election or removal of directors shall be deemed to be a “Similar Item” with respect to all
items of business involving the nomination, election or removal of directors, changing the size of the Board of Directors or filling vacancies
and/or newly created directorships resulting from any increase in the authorized number of directors); (v) a Similar Item is included in the
Corporation’s notice as an item of business to be brought before an annual or special meeting of stockholders that has been called but not yet
held or that is called to be held within 60 days after the date the Stockholder Special Meeting Request is received by the Secretary; or (vi) the
Stockholder Special Meeting Request was made in a manner that violates Regulation 14A under Exchange Act or other applicable law.
If none of the Requesting Stockholders who submitted a Stockholder Special Meeting Request attends the Stockholder Requested Special
Meeting or sends a qualified representative to present the business submitted by the Requesting Stockholder(s) for consideration at the
Stockholder Requested Special Meeting, such item of business shall not be considered at such Stockholder Requested Special Meeting.
Whether the Requesting Stockholders have complied with the requirements of this Section 3 and any other applicable sections of these By-
Laws shall be determined in good faith by the Board of Directors.
SECTION 4. Matters to be Considered at Special Meetings. Only those matters set forth in the notice of the special meeting may be
considered or acted upon at a special meeting of stockholders of the Corporation, unless otherwise provided by law.
SECTION 5. Notice of Meetings; Adjournments. A written notice of all Annual Meetings stating the hour, date and place of such Annual
Meetings shall be given by the Secretary or an Assistant Secretary (or other person authorized by these By-Laws or by law) not less than 10
days nor more than 60 days before the Annual Meeting, to each stockholder entitled to vote thereat and to each stockholder who, by law or
under the Amended and Restated Certificate of Incorporation of the Corporation (as the same may hereafter be amended and/or restated, the
“Certificate”) or under these By-Laws, is entitled to such notice, by delivering such notice to him or by mailing it, postage prepaid, addressed
to such stockholder at the address of such stockholder as it appears on the Corporation’s stock transfer books. Such notice shall be deemed to
be delivered when hand delivered to such address or deposited in the mail so addressed, with postage prepaid.
Notice of all special meetings of stockholders shall be given in the same manner as provided for Annual Meetings, except that the written
notice of all special meetings shall state the purpose or purposes for which the meeting has been called.
6
Notice of an Annual Meeting or special meeting of stockholders need not be given to a stockholder if a written waiver of notice is signed
before or after such meeting by such stockholder or if such stockholder attends such meeting, unless such attendance was for the express
purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting was not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any Annual Meeting or special meeting of stockholders need be
specified in any written waiver of notice.
The Board of Directors may postpone and reschedule any previously scheduled Annual Meeting or special meeting of stockholders and any
record date with respect thereto, regardless of whether any notice or public disclosure with respect to any such meeting has been sent or made
pursuant to Section 2 of this Article I, Section 3 of Article II or Section 4 of Article II hereof or otherwise. In no event shall the public
announcement of an adjournment, postponement or rescheduling of any previously scheduled meeting of stockholders commence a new time
period for the giving of a stockholder’s notice under Section 2 of Article I, Section 3 of Article II and Section 4 of Article II of these By-
Laws.
When any meeting is convened, the presiding officer may adjourn the meeting if (a) no quorum is present for the transaction of business, (b)
the Board of Directors determines that adjournment is necessary or appropriate to enable the stockholders to consider fully information which
the Board of Directors determines has not been made sufficiently or timely available to stockholders, or (c) the Board of Directors determines
that adjournment is otherwise in the best interests of the Corporation. When any Annual Meeting or special meeting of stockholders is
adjourned to another hour, date or place, notice need not be given of the adjourned meeting other than an announcement at the meeting at
which the adjournment is taken of the hour, date and place to which the meeting is adjourned; provided, however, that if the adjournment is
for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting shall
be given to each stockholder of record entitled to vote thereat and each stockholder who, by law or under the Certificate or these By-Laws,is
entitled to such notice.
SECTION 6. Quorum. The holders of shares of voting stock representing a majority of the voting power of the outstanding shares of
voting stock issued, outstanding and entitled to vote at a meeting of stockholders, represented in person or by proxy at such meeting, shall
constitute a quorum; but if less than a quorum is present at a meeting, the holders of voting stock representing a majority of the voting power
present at the meeting or the presiding officer may adjourn the meeting from time to time, and the meeting may be held as adjourned without
further notice, except as provided in Section 5 of this Article I. At such adjourned meeting at which a quorum is present, any business may be
transacted which might have been transacted at the meeting as originally noticed. The stockholders present at a duly constituted meeting may
continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.
7
SECTION 7. Voting and Proxies. Stockholders shall have one vote for each share of stock entitled to vote owned by them of record
according to the books of the Corporation, unless otherwise provided by law or by the Certificate. Stockholders may vote either in person or
by written proxy, but no proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period.
Proxies shall be filed with the Secretary of the meeting before being voted. Except as otherwise limited therein or as otherwise provided by
law, proxies shall entitle the persons authorized thereby to vote at any adjournment of such meeting, but they shall not be valid after final
adjournment of such meeting. A proxy with respect to stock held in the name of two or more persons shall be valid if executed by or on
behalf of any one of them unless at or prior to the exercise of the proxy the Corporation receives a specific written notice to the contrary from
any one of them. A proxy purporting to be executed by or on behalf of a stockholder shall be deemed valid, and the burden of proving
invalidity shall rest on the challenger. Any stockholder directly or indirectly soliciting proxies from other stockholders must use a proxy card
color other than white, which shall be reserved for the exclusive use by the Board of Directors. All proxy cards and ballots for any election of
directors in a contested election shall list the Corporation’s nominees for directors prior to listing the nominee(s) of any stockholder.
SECTION 8. Action at Meeting; Election of Directors. When a quorum is present, any matter before any meeting of stockholders shall be
decided by a majority of the votes properly cast for and against such matter, except where a larger vote is required by law, by the Certificate
or by these By-Laws; provided, however, that directors shall be elected by a plurality of votes cast at any meeting of stockholders at which
there is a contested election of directors. A nominee for director shall be elected to the Board of Directors if the votes cast for such nominee’s
election exceed the votes cast against such nominee’s election. An election shall be considered contested if as of the record date of any
meeting of stockholders there are more nominees for election than positions on the Board of Directors to be filled by election at that meeting.
The Corporation shall not directly or indirectly vote any shares of its own stock; provided, however, that the Corporation may vote shares
which it holds in a fiduciary capacity to the extent permitted by law.
SECTION 9. Stockholder Lists. The Secretary or an Assistant Secretary (or the Corporation’s transfer agent or other person authorized by
these By-Laws or by law) shall prepare and make, at least 10 days before every Annual Meeting or special meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder
and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any
purpose germane to the meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting, either at a place within
the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where
the meeting is to be held.
SECTION 10. Presiding Officer. The Board shall appoint an individual, who may be a Director or an officer of the Corporation, to preside
at each Annual Meeting or special meetings of stockholders and such person shall have the power, among other things, to adjourn such
meeting at any time and from time to time, subject to Sections 5 and 6 of this Article I. The order of business and all other matters of
procedure at any meeting of the stockholders shall be determined by the presiding officer.
8
SECTION 11. Voting Procedures and Inspectors of Elections. The Corporation shall, in advance of any meeting of stockholders, appoint
one or more inspectors to act at the meeting and make a written report thereof. The Corporation may designate one or more persons as
alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the
presiding officer shall appoint one or more inspectors to act at the meeting. Any inspector may, but need not, be an officer, employee or agent
of the Corporation. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the
duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall perform such duties as are
required by the General Corporation Law of the State of Delaware, as amended from time to time (the “DGCL”), including the counting of
all votes and ballots. The inspectors may appoint or retain other persons or entities to assist the inspectors in the performance of the duties of
the inspectors. The presiding officer may review all determinations made by the inspector(s), and in so doing the presiding officer shall be
entitled to exercise his or her sole judgment and discretion and he or she shall not be bound by any determinations made by the inspector(s).
All determinations by the inspector(s) and, if applicable, the presiding officer shall be subject to further review by any court of competent
jurisdiction.
ARTICLE II
Directors
SECTION 1. Powers. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors
except as otherwise provided by the Certificate or required by law.
SECTION 2. Number and Terms. The number of Directors of the Corporation shall be fixed by resolution duly adopted from time to time
by the Board of Directors. The Directors shall hold office in the manner provided in the Certificate.
SECTION 3. Director Nominations. Nominations of candidates for election as directors of the Corporation at any Annual Meeting may be
made only (a) by, or at the direction of, a majority of the Board of Directors or (b) by any holder of record (both as of the time notice of such
nomination is given by the stockholder as set forth below and as of the record date for the Annual Meeting in question) of any shares of the
capital stock of the Corporation entitled to vote at such Annual Meeting who complies with the timing, informational and other requirements
set forth in this Section 3 or Section 4 of this Article II. Any stockholder who has complied with the timing, informational and other
requirements set forth in this Section 3 or Section 4 of this Article II, as applicable, and who seeks to make such a nomination, or his, her or
its representative, must be present in person at the Annual Meeting. Only persons nominated in accordance with the procedures set forth in
this Section 3 or Section 4 of this Article II shall be eligible for election as directors at an Annual Meeting.
Nominations, other than those made by, or at the direction of, the Board of Directors, shall be made pursuant to timely notice in writing to the
Secretary of the Corporation as set forth in this Section 3 or Section 4 of Article II. A stockholder’s notice shall be timely if delivered to, or
mailed to and received by, the Corporation at its principal executive office not less than 75 days nor more than 120 days prior to the
Anniversary Date; provided, however, that in the event the Annual Meeting is scheduled to be held on a date more than 30 days before the
Anniversary Date or more than 60 days after the Anniversary Date, a stockholder’s notice shall be timely if delivered to, or mailed and
received by, the Corporation at its principal executive office not later than the close of business on the later of (i) the 75th day prior to the
scheduled date of such Annual Meeting or (ii) the 15th day following the day on which public announcement of the date of such Annual
Meeting is first made by the Corporation.
9
A stockholder’s notice to the Secretary shall set forth in writing, substantially in the form provided to the stockholder upon written request to
the Secretary, which form shall be provided only upon the receipt of evidence reasonably satisfactory to the Secretary verifying that the
requesting party is a stockholder or is acting on behalf of a stockholder, as to each person whom the stockholder proposes to nominate for
election or re-election as a director: (i) the name, age, business address and residence address of such person, (ii) the principal occupation or
employment of such person, (iii) any Material Ownership Interests which are beneficially owned by such person on the date of such
stockholder notice, (iv) any material pending or threatened legal proceeding involving the Corporation, any affiliate of the Corporation or any
of their respective directors or officers, to which such person or its respective affiliates is a party; (v) any equity interests, including any
convertible, derivative or short interests, in any principal competitor of the Corporation; (vi) all information relating to such person that
would be required to be disclosed in a proxy statement or other filing required pursuant to Section 14(a) of the Exchange Act to be made in
connection with a general solicitation of proxies for an election of directors in a contested election (including the consent of each nominee to
serve as a director if elected), (vii) a reasonably detailed description of all direct and indirect compensation and other material monetary
agreements, arrangements or understandings during the past three years, any other material relationships, between or among the stockholder
giving such notice and its affiliates and associates, or others acting in concert therewith, on the one hand, and each proposed nominee and his
or her affiliates, associates or others acting in concert therewith, on the other hand, including all information that would be required to be
disclosed pursuant to Items 403 and 404 under Regulation S-K if the stockholder giving such notice were the “registrant” for purposes of
such rule and the proposed nominee were a director or executive officer of such registrant, (viii) a completed questionnaire (in the form
provided by the Secretary upon written request) with respect to the identity, background and qualification of the proposed nominee and the
background of any other person or entity on whose behalf the nomination is being made, and (ix) a written representation and agreement (in
the form provided by the Secretary upon written request) that the proposed nominee (A) is qualified and if elected intends to serve as a
director of the Corporation for the entire term for which such proposed nominee is standing for election, (B) is not and will not become a
party to (x) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to
how the proposed nominee, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that
has not been disclosed to the Corporation or (y) any Voting Commitment that could limit or interfere with the proposed nominee’s ability to
comply, if elected as a director of the Corporation, with the proposed nominee’s fiduciary duties under applicable law, (C) is not and will not
become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any
direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been
disclosed therein, and (D) if elected as a director of the Corporation, the proposed nominee would be in compliance and will comply, with all
applicable publicly disclosed corporate governance, ethics, conflict of interest, confidentiality and stock ownership and trading policies and
guidelines of the Corporation. The Corporation may also (either directly or through a third party) run a background check on any proposed
nominee and may require any proposed nominee to furnish such other information as may be reasonably required by the Corporation to
determine the qualifications and eligibility of such proposed nominee to serve as a director.
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Such stockholder’s notice to the Secretary shall further set forth as to the stockholder giving such notice: (a) as to the stockholder giving the
notice and the beneficial owner(s), if any, on whose behalf the proposal is made: (i) the name and address of such stockholder, as they appear
on the Corporation’s books, and of such beneficial owner(s); and (ii) any Material Ownership Interest which are, directly or indirectly, owned
beneficially and of record by such stockholder and any such beneficial owner(s); (b) the names and addresses of other stockholders known by
the stockholder and/or any such beneficial owner(s) proposing such nomination(s) to support such nominee(s), and the class and number of
shares of the Corporation’s capital stock beneficially owned by such other stockholders; (c) any material pending or threatened legal
proceeding involving the Corporation, any affiliate of the Corporation or any of their respective directors or officers, to which such
stockholder and any such beneficial owner(s) or their respective affiliates is a party; (d) any equity interests, including any convertible,
derivative or short interests, in any principal competitor of the Corporation; (e) a description of all arrangements or understandings among
such stockholder and/or any such beneficial owner(s) and each proposed nominee and any other person or persons (naming such person or
persons) pursuant to which the nomination or nominations are to be made by such stockholder, including any other information relating to
such stockholder and any such beneficial owner(s) that would be required to be disclosed in a proxy statement or other filing required
pursuant to Section 14(a) of the Exchange Act to be made in connection with a general solicitation of proxies or consents by such stockholder
and any such beneficial owner(s) in support of the proposed nominee, and (f) a representation regarding whether such stockholder intends to
solicit proxies in support of director nominees other than the Corporation’s nominees in accordance with Rule 14a-19 promulgated under the
Exchange Act, and, in the event that such stockholder so intends, such stockholder’s notice shall also include a statement that such
stockholder intends to solicit the holders of shares representing at least 67% of the voting power of the Corporation’s shares entitled to vote
on the election of directors in support of such director nominees other than the Corporation’s nominees. Such notice shall be accompanied by
a written consent of each such director nominee to being named in the Corporation’s proxy materials as a nominee.
A stockholder providing timely notice under this Section 3 of proposed nominations to be brought before an Annual Meeting shall further
update and supplement such notice, if necessary, so that the information (including, without limitation, the Material Ownership Interests
information) provided or required to be provided in such notice pursuant to this Section 3 shall be true and correct as of the record date for
the meeting and as of the date that is ten (10) business days prior to such Annual Meeting, and such update and supplement shall be delivered
in writing to the Secretary at the principal executive offices of the Corporation not later than the close of business on the fifth (5th) business
day after the record date for the meeting (in the case of the update and supplement required to be made as of the record date), and not later
than the close of business on the eighth (8th) business day prior to the date for the meeting (in the case of the update and supplement required
to be made as of ten (10) business days prior to the meeting).
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If the Board of Directors or a designated committee thereof determines that any stockholder nomination was not made in accordance with the
terms of this Section 3 or that the information provided in a stockholder’s notice does not satisfy the informational requirements of this
Section 3 in any material respect, then such nomination shall not be considered at the Annual Meeting in question. If neither the Board of
Directors nor such committee makes a determination as to whether a nomination was made in accordance with the provisions of this Section
3, the presiding officer of the Annual Meeting shall determine whether a nomination was made in accordance with such provisions. If the
presiding officer determines that any stockholder nomination was not made in accordance with the terms of this Section 3 or that the
information provided in a stockholder’s notice does not satisfy the informational requirements of this Section 3 in any material respect, then
such nomination shall not be considered at the Annual Meeting in question. If the Board of Directors, a designated committee thereof or the
presiding officer determines that a nomination was made in accordance with the terms of this Section 3, the presiding officer shall so declare
at the Annual Meeting and ballots shall be provided for use at the meeting with respect to such nominee.
Notwithstanding anything to the contrary in the second sentence of the second paragraph of this Section 3, in the event that the number of
directors to be elected to the Board of Directors of the Corporation is increased and there is no public announcement by the Corporation
naming all of the nominees for director or specifying the size of the increased Board of Directors at least 75 days prior to the Anniversary
Date, a stockholder’s notice required by this Section 3 shall also be considered timely, but only with respect to nominees for any new
positions created by such increase, if such notice shall be delivered to, or mailed to and received by, the Corporation at its principal executive
office not later than the close of business on the 15th day following the day on which such public announcement is first made by the
Corporation.
No person shall be elected by the stockholders as a Director of the Corporation unless nominated in accordance with the procedures set forth
in this Section. Election of Directors at the annual meeting need not be by written ballot, unless otherwise provided by the Board of Directors
or presiding officer at such annual meeting. If written ballots are to be used, ballots bearing the names of all the persons who have been
nominated for election as Directors at the annual meeting in accordance with the procedures set forth in this Section shall be provided for use
at the annual meeting.
Without limiting the other provisions and requirements of this Section 3, unless otherwise required by law, if any stockholder (i) provides
notice pursuant to Rule 14a-19(a)(1) promulgated under the Exchange Act and (ii) subsequently fails to comply with the requirements of
Rule 14a-19(a)(2) and Rule 14a-19(a)(3) promulgated under the Exchange Act, then the Corporation shall disregard any proxies or votes
solicited for such stockholder’s nominees. Upon request by the Corporation, if any stockholder provides notice pursuant to Rule 14a-19(a)(1)
promulgated under the Exchange Act, such stockholder shall deliver to the Corporation, no later than five (5) business days prior to the
applicable Annual Meeting, reasonable evidence that it has met the requirements of Rule 14a-19(a)(3) promulgated under the Exchange Act.
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SECTION 4. Proxy Access Rights.
(a) Proxy Access Nomination.
(i) Whenever the Board of Directors solicits proxies with respect to the election of Directors at an Annual Meeting of stockholders,
nominations of individuals for election to the Board of Directors at such Annual Meeting may be made by a stockholder or group of no more
than twenty (20) stockholders that satisfies the requirements of this Section 4 (any such individual or group, including as the context requires
each member thereof, being hereinafter referred to as an “Eligible Stockholder”). The nomination provisions set forth in this Section 4 are
separate from, and in addition to, the nomination provisions set forth in Section 3 of this Article II. Subject to the provisions of this Section 4
and to the extent permitted by applicable law, the Corporation shall include in its proxy materials for such Annual Meeting, in addition to any
persons nominated for election by, or at the direction of, a majority of the Board of Directors, the name, together with the Required
Information (as defined below), of any person nominated for election (each such person being hereinafter referred to as a “Stockholder
Nominee”) to the Board of Directors by an Eligible Stockholder pursuant to this Section 4.
(ii) For purposes of this Section 4, the “Required Information” that the Corporation will include in its proxy materials is (A) the
information concerning the Stockholder Nominee and the Eligible Stockholder that is required to be disclosed in the Corporation’s proxy
statement by the rules and regulations promulgated under the Exchange Act, by these By-Laws, by the Certificate and/or by the listing
standards of each principal U.S. exchange upon which the common stock of the Corporation is listed, (B) the written statement, if any,
consisting of 500 words or less delivered by the Eligible Stockholder pursuant to Section 4(d)(iii) in support of the Stockholder Nominee’s
candidacy that is clearly and specifically identified as the written statement that the Eligible Stockholder requests the Corporation to include
in its proxy materials (the “Statement”), (C) a statement from the Stockholder Nominee as to whether such Stockholder Nominee is or has
agreed to become a party to any agreement, arrangement, or understanding with, or commitment or assurance to, any person or entity as to
how such Stockholder Nominee, if elected as a director, will act or vote on any issue or question, which such agreement, arrangement, or
understanding has not been disclosed to the corporation, and the substance of such agreement, arrangement, understanding, commitment or
assurance, and (D) a statement from the Stockholder Nominee disclosing the existence and substance of any agreement, arrangement, or
understanding with any person with respect to any direct or indirect compensation, reimbursement, or indemnification in connection with
service or action as a Stockholder Nominee or as a director, in each case. If the Eligible Stockholder has not provided to the Secretary a
written statement that conforms to the requirements set forth above within the time period specified in this Section 4 for delivering the Notice
of Proxy Access Nomination, the Eligible Stockholder will be deemed to have not provided the Statement and no information concerning the
Stockholder Nominee will be included in the Corporation’s proxy materials. Notwithstanding anything to the contrary contained in this
Section 4, the Corporation may omit from its proxy materials any information or Statement (or portion thereof) that the Board of Directors
has reasonably determined is materially false or misleading, omits to state any material fact necessary in order to make the statements made,
in light of the circumstances under which they were made, not misleading, or would violate any applicable law or regulation. Nothing in this
Section 4 shall limit the Corporation’s ability to solicit against and include in its proxy materials its own statements relating to any Eligible
Stockholder or Stockholder Nominees.
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(b) Notice Requirements.
(i) In order to nominate a Stockholder Nominee pursuant to this Section 4, an Eligible Stockholder must, in addition to satisfying
the other requirements of Section 4, provide to the Secretary a written notice expressly nominating its Stockholder Nominee(s) and electing
to have its Stockholder Nominee(s) included in the Corporation’s proxy materials pursuant to this Section 4 that complies with the
requirements set forth in this Section 4 (a “Notice of Proxy Access Nomination”) within the time period set forth below. In order for an
Eligible Stockholder to nominate a Stockholder Nominee pursuant to this Section 4, the Eligible Stockholder’s Notice of Proxy Access
Nomination must be received by the Secretary at the principal executive office of the Corporation not later than the close of business on the
120th day nor earlier than the close of business on the 150th day prior to the Anniversary Date; provided, however, that in the event that the
date of the Annual Meeting is advanced by more than 30 days or delayed by more than 60 days after such anniversary date, the Notice of
Proxy Access Nomination to be timely must be delivered not later than the close of business on the later of the 120th day prior to such
Annual Meeting or the 10th day following the day on which public announcement of the date of such meeting is first made. In no event shall
an adjournment, postponement or rescheduling of any previously scheduled meeting of stockholders, or the public announcement thereof,
commence a new time period for the giving of a Notice of Proxy Access Nomination under this Section 4.
(ii) In order to nominate a Stockholder Nominee pursuant to this Section 4, an Eligible Stockholder providing the information
required to be provided pursuant to Section 4(a)(ii) within the time period specified in Section 4(b)(i) for delivering the Notice of Proxy
Access Nomination must further update and supplement such information, if necessary, so that all such information provided or required to
be provided shall be true and correct as of the close of business on the record date for purposes of determining the stockholders entitled to
vote at such Annual Meeting and as of the date that is ten (10) business days prior to such Annual Meeting, and such update and supplement
(or a written notice stating that there is no such update or supplement) must be delivered in writing to the Secretary at the principal executive
office of the Corporation not later than the close of business on the fifth (5th) business day after the record date for purposes of determining
the stockholders entitled to vote at the meeting (in the case of the update and supplement required to be made as of the record date), and not
later than the close of business on the fifth (5th) business day prior to the date for the meeting (in the case of the update and supplement
required to be made as of ten (10) business days prior to the meeting).
(iii) In the event that any of the information or communications provided by the Eligible Stockholder or the Stockholder Nominee
to the Corporation or its stockholders ceases to be true and correct in all material respects or omits a material fact necessary in order to make
the statements made, in light of the circumstances under which they were made, not misleading, each Eligible Stockholder or Stockholder
Nominee, as the case may be, shall promptly notify the Secretary of any defect in such previously provided information or communications
and of the information that is required to correct any such defect.
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(c) Maximum Number of Stockholder Nominees.
(i) The maximum number of Stockholder Nominees nominated by all Eligible Stockholders that will be included in the
Corporation’s proxy materials with respect to an Annual Meeting shall not exceed the greater of (A) two (2) or (B) twenty percent (20%) of
the number of Directors in office as of the last day on which a Notice of Proxy Access Nomination may be timely delivered pursuant to and
in accordance with this Section 4 (the “Final Proxy Access Nomination Date”), rounded down to the nearest whole number; provided that the
maximum number of Stockholder Nominees that will be included in the Corporation’s proxy materials with respect to an Annual Meeting
will be reduced by (1) the number of Stockholder Nominees whose names were submitted for inclusion in the Corporation’s proxy materials
pursuant to this Section 4 but who the Board of Directors has nominated as a Board nominee and (2) any then-sitting members of the Board
of Directors who were initially elected as Stockholder Nominees at either of the two (2) immediately prior Annual Meetings and who has
been subsequently nominated by the Board to the extent such Stockholder Nominee’s term has ended or is ending at the upcoming Annual
Meeting.
(ii) Any Eligible Stockholder submitting more than one Stockholder Nominee for inclusion in the Corporation’s proxy materials
pursuant to this Section 4 shall rank such Stockholder Nominees based on the order that the Eligible Stockholder desires such Stockholder
Nominees to be selected for inclusion in the Corporation’s proxy statement in the event that the total number of Stockholder Nominees
submitted by Eligible Stockholders pursuant to this Section 4 exceeds the maximum number of Stockholder Nominees provided for in
Section 4(c)(i) (including by operation of Section 4(c)(iii)). In the event that the number of Stockholder Nominees submitted by Eligible
Stockholders pursuant to this Section 4 for an Annual Meeting exceeds the maximum number of Stockholder Nominees provided for in
Section 4(c)(i) (including by operation of Section 4(c)(iii)), the highest ranking Stockholder Nominee who meets the requirements of this
Section 4 from each Eligible Stockholder (with such determination and the determination of whether a stockholder or group of stockholders
constitutes an Eligible Stockholder to be based on compliance with the provisions of this Section 4 as of the Final Proxy Access Nomination
Date) will be selected for inclusion in the Corporation’s proxy materials until the maximum number is reached, going in order from the
largest to the smallest of such Eligible Stockholders based on the number of shares of common stock of the Corporation each Eligible
Stockholder disclosed as owned by such Eligible Stockholder in the Notice of Proxy Access Nomination submitted to the Corporation
hereunder. If the maximum number of Stockholder Nominees provided for in this Section 4 is not reached after the highest ranking
Stockholder Nominee who meets the requirements of this Section 4 from each Eligible Stockholder determined in the manner set forth above
has been selected, this selection process will continue as many times as necessary, following the same order each time, until the maximum
number of Stockholder Nominees provided for in this Section 4 is reached. The Stockholder Nominees initially selected in accordance with
this Section 4(c)(ii) will be the only Stockholder Nominees eligible to be nominated or included in the Corporation’s proxy materials
pursuant to this Section 4. The Notices of Proxy Access Nomination and nominations of all of the remaining Stockholder Nominees not
initially selected pursuant to this Section 4(c)(ii) will be deemed to have been withdrawn by each of the applicable stockholders as of the
Final Proxy Access Nomination Date, and, following such initial selection, if any one or more of the Stockholder Nominees so selected are
(A) nominated by the Board of Directors or (B) not included in the Corporation’s proxy materials or are not submitted for election for any
reason, including, without limitation, a subsequent failure to comply with this Section 4 by the Eligible Stockholder or the Eligible
Stockholder’s withdraw of the nomination, then, in each case, no additional Stockholder Nominees will be included in the Corporation’s
proxy materials or otherwise submitted for stockholder election pursuant to this Section 4.
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(iii) If for any reason after the Final Proxy Access Nomination Date but before the date of the applicable Annual Meeting the Board
of Directors reduces the size of the Board of Directors, the maximum number of Stockholder Nominees eligible to be nominated or included
in the Corporation’s proxy materials pursuant to this Section 4 shall be calculated based on the number of Directors in office as so reduced.
The Notices of Proxy Access Nomination and nominations of any Stockholder Nominees who cease to be eligible to be nominated or
included in the Corporation’s proxy materials pursuant to this Section 11 as a result of the operation of this Section 4(c)(iii) will be deemed to
have been withdrawn by each of the applicable Eligible Stockholders as of the Final Proxy Access Nomination Date.
(d) Stockholder Eligibility.
(i) For purposes of this Section 11, an Eligible Stockholder shall be deemed to “own” only those outstanding shares of common
stock of the Corporation as to which the Eligible Stockholder possesses both (A) the entire voting and investment rights pertaining to the
shares and (B) the entire economic interest in (including the opportunity for profit from and risk of loss on) such shares; provided that the
number of shares calculated in accordance with clauses (A) and (B) (x) shall not include any shares (I) borrowed by such Eligible
Stockholder for any purposes or purchased by such Eligible Stockholder pursuant to an agreement to resell, (II) sold by such Eligible
Stockholder or any of its affiliates in any transaction that has not been settled or closed or (III) subject to any option, warrant, forward
contract, swap, contract of sale, other derivative or similar agreement entered into by such Eligible Stockholder or any of its affiliates,
whether any such instrument or agreement is to be settled with shares or with cash based on the notional amount or value of shares of
outstanding common stock of the Corporation, in any such case which instrument or agreement has, or is intended to have, the purpose or
effect of (1) reducing in any manner, to any extent or at any time in the future, such Eligible Stockholder’s or its affiliates’ full right to vote or
direct the voting of any such shares by such Eligible Stockholder or any of its affiliates and/or (2) hedging, offsetting or altering to any
degree any gain or loss realized or realizable from maintaining the entire economic ownership of such shares by such Eligible Stockholder or
affiliate, and (y) shall be reduced by the notional amount of shares of common stock of the Corporation subject to any option, warrant,
forward contract, swap, contract of sale, other derivative or similar agreement entered into by such Eligible Stockholder or any of its
affiliates, whether or not any such instrument is to be settled with shares or with cash, to the extent the number of shares owned by the
Eligible Stockholder was not already reduced by such amount pursuant to clause (x)(III) above, and a number of shares of common stock of
the Corporation equal to the net “short” position in the common stock of the Corporation held by such Eligible Stockholder’s affiliates,
whether through short sales, options, warrants, forward contracts, swaps, contracts of sale, other derivatives or similar agreements or any
other agreement or arrangement. An Eligible Stockholder shall “own” shares held in the name of a nominee or other intermediary so long as
the Eligible Stockholder retains the right to instruct how the shares are voted with respect to the election of directors and possesses the entire
economic interest in the shares. An Eligible Stockholder’s ownership of shares shall be deemed to continue during any period in which the
Eligible Stockholder (a) has delegated any voting power by means of a proxy, power of attorney or other instrument or arrangement which is
unconditionally revocable at any time by the Eligible Stockholder and (b) has loaned the shares if the Eligible Stockholder has the power to
recall such loaned shares on five (5) business days’ notice and has in fact recalled such loaned shares as of the time the Corporation confirms
that the applicable Stockholder Nominee will be included in the Corporation’s proxy statement and through and including the date of the
Annual Meeting of Eligible Stockholders. The terms “owned,” “owning” and other variations of the word “own” shall have correlative
meanings. Whether outstanding shares of common stock of the Corporation are “owned” for these purposes shall be determined by the Board
of Directors or any committee thereof. For purposes of this Section 4, the term
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“affiliate” or “affiliates” shall have the meaning ascribed thereto under the General Rules and Regulations of the Exchange Act.
(ii) In order to make a nomination pursuant to this Section 11, an Eligible Stockholder must have owned the Required Ownership
Percentage (as defined below) of the Corporation’s outstanding common stock (the “Required Shares”) continuously for the Minimum
Holding Period (as defined below) or longer as of the Final Proxy Access Nomination Date, and must continue to own the Required Shares
through the applicable Annual Meeting date (and any postponement or adjournment thereof); provided, that a group of up to twenty
(20) individual stockholders who otherwise meet all of the requirements to be an Eligible Stockholder may aggregate their stockholdings in
order to meet the Required Ownership Percentage of the Required Shares; provided, however, that each member of such group must have
owned such Required Shares continuously for the Minimum Holding Period or longer as of the Final Proxy Access Nomination Date, and
must continue to own its portion of the Required Shares through the applicable Annual Meeting date (and any postponement or adjournment
thereof). For purposes of this Section 4, the “Required Ownership Percentage” is three percent (3%) or more of the Corporation’s issued and
outstanding common stock, based upon the most recently publicly disclosed share count, and the “Minimum Holding Period” is three
(3) years.
(iii) In addition to providing the Notice of Proxy Access Nomination in accordance with Section 4(b)(i) above, in order to nominate
a Stockholder Nominee pursuant to this Section 4, an Eligible Stockholder or the Stockholder Nominee, as applicable, must provide the
following information in writing to the Secretary within the time period specified in this Section 4 for delivering the Notice of Proxy Access
Nomination:
(A) one or more written statements from the record holders of the Required Shares or from the intermediaries through
which the shares are or have been held during the Minimum Holding Period verifying that, as of a date within seven (7) business
days prior to the date the Notice of Proxy Access Nomination is received by the Secretary, the Eligible Stockholder owns, and has
owned continuously for the Minimum Holding Period, the Required Shares, and the Eligible Stockholder’s agreement to provide the
updates and supplements (or written notices stating that there are no such updates or supplements) described in Section 4(b)(ii)
within the time periods set forth therein;
(B) a copy of the Schedule 14N filed or to be filed with the Securities and Exchange Commission in accordance with
Rule 14a-18 of the Exchange Act;
(C) the Required Information (with the Statement, if any, clearly and specifically identified as such) and all other
information, representations and agreements that are required to be set forth in a stockholder’s notice of nomination, or provided to
the Corporation in order to nominate a Proposed Nominee, pursuant to Section 4(a) of this Article I;
(D) the written consent of each Stockholder Nominee to being named in the proxy statement as a nominee and to serving as
a director if elected;
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(E) in the case of a Notice of Proxy Access Nomination that is submitted by an Eligible Stockholder that is comprised of a
group of stockholders, the designation by all of such stockholders of one of such stockholders that is authorized to act on behalf of all
of such stockholders with respect to all matters relating to the nomination or inclusion in the Corporation’s proxy materials of the
Stockholder Nominee(s) nominated by such Eligible Stockholder (the “Eligible Stockholder Designee”), including, without
limitation, the withdrawal of such nomination;
(F) an agreement by each Stockholder Nominee, upon such Stockholder Nominee’s election, to make such
acknowledgements, enter into such agreements and provide such information as the Board of Directors requires of all directors at
such time, including without limitation, agreeing to be bound by the Corporation’s code of ethics, insider trading policies and
procedures and other similar policies and procedures;
(G) an irrevocable resignation of the Stockholder Nominee, which shall become effective upon a determination in good
faith by the Board of Directors or any committee thereof that the information provided to the Corporation by such individual
pursuant to this Section 4 was untrue in any material respect or omitted to state a material fact necessary in order to make the
statements made, in light of the circumstances under which they were made, not misleading;
(H) a representation (in the form provided by the Secretary upon written request) that the Eligible Stockholder (I) acquired
the Required Shares in the ordinary course of business and not with the intent to change or influence control at the Corporation, and
that the Eligible Stockholder does not presently have such intent, (II) has not nominated and will not nominate for election to the
Board of Directors at the Annual Meeting (or any postponement or adjournment thereof) any person other than the Stockholder
Nominee(s) being nominated pursuant to this Section 4, (III) has not engaged and will not engage in, and has not and will not be a
“participant” in, another person’s “solicitation” within the meaning of Rule 14a-1(l) under the Exchange Act in support of the
election of any individual as a director at the Annual Meeting other than its Stockholder Nominee(s) or a nominee of the Board of
Directors, (IV) will not distribute to any stockholder any form of proxy for the Annual Meeting other than the form of proxy
distributed by the Corporation, (V) agrees to comply with all other laws and regulations applicable to any solicitation in connection
with the Annual Meeting, including, without limitation, Rule 14a-9 promulgated under the Exchange Act, (VI) agrees to file with the
Securities and Exchange Commission any solicitation materials by or on behalf of the Eligible Stockholder relating to the
Corporation’s Annual Meeting, one or more of the Corporation’s directors or director nominees or any Stockholder Nominee,
regardless of whether any such filing is required under Regulation 14A of the Exchange Act or whether any exemption from filing is
available for such solicitation materials under Regulation 14A of the Exchange Act, (VII) meets the requirements set forth in this
Section 4, and (VIII) has provided and will continue to provide facts, statements and other information in all communications with
the Corporation and its stockholders in connection with the nomination hereunder that is or will be true and correct in all material
respects and does not and will not omit to state a material fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading; and
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(I) a written undertaking (in the form provided by the Secretary upon written request) that the Eligible Stockholder agrees
to (I) assume all liability stemming from any legal or regulatory violation arising out of the communications with stockholders of the
Corporation by the Eligible Stockholder, its affiliates and associates, or their respective agents or representatives, either before or
after the furnishing of the Notice of Proxy Access Nomination, or out of the facts, statements or information that the Eligible
Stockholder or its Stockholder Nominee(s) has provided or will provide to the Corporation or filed with the Securities and Exchange
Commission, (II) indemnify and hold harmless the Corporation and each of its directors, officers, agents, employees, affiliates,
control persons or other persons acting on behalf of the Corporation individually against any liability, loss or damages in connection
with any threatened or pending action, suit or proceeding, whether legal, administrative or investigative, against the Corporation or
any of its directors, officers, agents, employees, affiliates, control persons or other persons acting on behalf of the Corporation arising
out of any nomination of a Stockholder Nominee submitted by the Eligible Stockholder pursuant to this Section 4, and (III) promptly
provide to the Corporation such additional information as requested pursuant to this Section 4.
In connection with clause (A) of the preceding sentence, if any intermediary which verifies the Eligible Stockholder’s ownership of
the Required Shares for the Minimum Holding Period is not the record holder of such shares, a Depository Trust Company (“DTC”)
participant or an affiliate of a DTC participant, then the Eligible Stockholder will also need to provide a written statement as required by
clause (A) of the preceding sentence from the record holder of such shares, a DTC participant or an affiliate of a DTC participant that can
verify the holdings of such intermediary.
(iv) Whenever the Eligible Stockholder consists of a group of more than one stockholder, each provision in this Section 4 that
requires the Eligible Stockholder to provide any written statements, representations, undertakings, agreements or other instruments or to meet
any other conditions shall be deemed to require each stockholder that is a member of such group to provide such statements, representations,
undertakings, agreements or other instruments and to meet such other conditions. In determining the aggregate number of stockholders in a
group, two or more funds that are (A) under common management and investment control, (B) under common management and funded
primarily by the same employer, or (C) a “group of investment companies,” as such term is defined in Section 12(d)(1)(G)(ii) of the
Investment Corporation Act of 1940, as amended, (a “Qualifying Fund Family”) shall be treated as one stockholder. Not later than the
deadline for delivery of the Notice of Proxy Access Nomination pursuant to this Section 4, a Qualifying Fund Family whose stock ownership
is counted for purposes of determining whether a stockholder or group of stockholders qualifies as an Eligible Stockholder shall provide to
the Secretary such documentation as is reasonably satisfactory to the Board of Directors, in its sole discretion, that demonstrates that the
funds comprising the Qualifying Fund Family satisfy the definition hereof. When an Eligible Stockholder is comprised of a group, a violation
of any provision of these By-Laws by any member of the group shall be deemed a violation by the entire Eligible Stockholder group. No
stockholder may be a member of more than one group of persons constituting an Eligible Stockholder with respect to any Annual Meeting.
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(e) Stockholder Nominee Requirements.
(i) Notwithstanding anything in these By-Laws to the contrary, the Corporation shall not be required to include, pursuant to this
Section 4, any Stockholder Nominee in its proxy materials (and no such Stockholder Nominee may be nominated pursuant to this Section 4)
for any Stockholder Requested Special Meeting or for any Annual Meeting of stockholders (A) for which the Secretary receives a notice that
the Eligible Stockholder or any other stockholder of the Corporation has nominated one or more persons for election to the Board of
Directors pursuant to the advance notice requirements for stockholder nominees for director set forth in Section 3 of this Article II, (B) if the
Eligible Stockholder who has nominated such Stockholder Nominee has engaged in or is currently engaged in, or has been or is a
“participant” in another person’s “solicitation” within the meaning of Rule 14a-1(l) under the Exchange Act, in support of the election of any
individual as a director at the Annual Meeting other than its Stockholder Nominee(s) or a nominee of the Board of Directors, (C) who is not
independent under the listing standards of each principal U.S. exchange upon which the common stock of the Corporation is listed, any
applicable rules of the Securities and Exchange Commission and any publicly disclosed standards used by the Board of Directors in
determining and disclosing independence of the Corporation’s directors, in each case, as determined by the Board of Directors or any
committee thereof, (D) who provides any information to the Corporation or its stockholders required or requested pursuant to any provision
of these By-Laws that is not accurate, truthful and complete in all material respects, or that otherwise contravenes any of the agreements,
representations or undertakings made by the Stockholder Nominee in connection with the nomination, (E) who is a defendant in or named
subject of a pending criminal proceeding (excluding traffic violations or other misdemeanors for which a monetary fine is the only penalty)
or has been convicted or has pleaded nolo contendre in such a criminal proceeding within the past ten (10) years, (F) is subject to any order
of the type specified in Rule 506(d) of Regulation D promulgated under the Securities Act of 1933, as amended, (G) whose election as a
member of the Board of Directors would cause the Corporation to be in violation of these By-Laws, the Certificate, the rules and listing
standards of the principal U.S. exchanges upon which the common stock of the Corporation is listed or over-the-counter market on which any
securities of the Corporation are traded, or any applicable state or federal law, rule or regulation, (H) who is or has been, within the past three
years, an officer or director of a competitor, as defined in Section 8 of the Clayton Antitrust Act of 1914, (I) if such Stockholder Nominee or
the applicable Eligible Stockholder shall have provided information to the Corporation in respect of such nomination that was untrue in any
material respect or omitted to state a material fact necessary in order to make the statement made, in light of the circumstances under which
they were made, not misleading, as determined by the Board of Directors or any committee therefor, or (J) the Eligible Stockholder or
applicable Stockholder Nominee fails to comply with its obligations pursuant to this Section 4.
(ii) Any Stockholder Nominee who is included in the Corporation’s proxy materials for a particular Annual Meeting of
stockholders but either (a) withdraws from or becomes ineligible or unavailable for election to the Board of Directors at such Annual
Meeting, or (b) does not receive a number of “for” votes equal to at least twenty-five percent (25%) of the number of shares present and
entitled to vote for the election of Directors (which for the avoidance of doubt excludes any broker non-votes), will be ineligible for
nomination or inclusion in the Corporation’s proxy materials as a Stockholder Nominee pursuant to this Section 4 for the next two Annual
Meetings of stockholders.
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(iii) Notwithstanding anything to the contrary set forth herein, if the Board of Directors or a designated committee thereof
determines that any stockholder nomination was not made in accordance with the terms of this Section 4 or that the information provided in a
Notice of Proxy Access Nomination does not satisfy the informational requirements of this Section 4 in any material respect, then such
nomination shall not be considered at the applicable Annual Meeting. Additionally, such nomination will not be considered at the Annual
Meeting in question if the Eligible Stockholder (or a qualified representative thereof) or, in the case of an Eligible Stockholder that is
comprised of a group of stockholders, the Eligible Stockholder Designee (or a qualified representative thereof) does not appear at the
applicable Annual Meeting to present any nomination of the Stockholder Nominee(s) included in the Corporation’s proxy materials pursuant
to this Section 4. For purposes of this Section 4, to be considered a qualified representative of a stockholder, a person must be duly authorized
officer, manager or partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission
delivered by such stockholder to act for such stockholder as its proxy at the Annual Meeting and such person must produce such writing or
electronic transmission, or a reliable reproduction thereof, at such Annual Meeting. If the Board of Directors or a designated committee
thereof determines that a nomination was made in accordance with the terms of this Section 4, the Board of Directors or such designated
committee thereof shall so declare at the applicable Annual Meeting and ballots shall be provided for use at such meeting with respect to
such Stockholder Nominee.
(f) This Section 4 provides the exclusive method for stockholders to include nominees for Director in the Corporation’s proxy
materials (other than with respect to Rule 14a-19 to the extent applicable with respect to forms of proxies). A stockholder’s compliance with
the procedures set forth in this Section 4 will not also be deemed to constitute compliance with the procedures set forth in, or notice of
nomination pursuant to, Section 3 of this Article II.
SECTION 5. Qualification. No Director need be a stockholder of the Corporation.
SECTION 6. Vacancies. Subject to the rights, if any, of the holders of any series of Preferred Stock to elect Directors and to fill vacancies
in the Board of Directors relating thereto, any and all vacancies in the Board of Directors, however occurring, including, without limitation,
by reason of an increase in size of the Board of Directors, or the death, resignation, disqualification or removal of a Director, shall be filled
solely by the affirmative vote of a majority of the remaining Directors then in office, even if less than a quorum of the Board of Directors.
Prior to the election of Directors at the 2026 Annual Meeting of stockholders, any Director appointed in accordance with the preceding
sentence shall hold office for the remainder of the full term of the class of Directors in which the new directorship was created or the vacancy
occurred and until such Director’s successor shall have been duly elected and qualified or until his or her earlier death, resignation,
disqualification, or removal. From and after the election of Directors at the 2026 Annual Meeting of stockholders, any Director appointed in
accordance with the first sentence of this Section 6 of Article II shall hold office until the next Annual Meeting of stockholders and until such
Director’s successor shall have been duly elected and qualified or until his or her earlier death, resignation, disqualification or removal.
Subject to the rights, if any, of the holders of any series of Preferred Stock to elect Directors, when the number of Directors is increased or
decreased, for as long as the Board of Directors continues to be classified, the Board of Directors shall determine the class or classes to which
the increased or decreased number of Directors shall be apportioned; provided, however, that no decrease in the number of Directors shall
shorten the term of any incumbent Director. In the event of a vacancy in the Board of Directors, the remaining Directors, except as otherwise
provided by law, may exercise the powers of the full Board of Directors until the vacancy is filled.
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SECTION 7. Removal. Directors may be removed from office in the manner provided in the Certificate.
SECTION 8. Resignation. A Director may resign at any time by giving written notice to the Chairman of the Board, if one is elected, the
President or the Secretary. A resignation shall be effective upon receipt, unless the resignation otherwise provides.
SECTION 9. Regular Meetings. The regular annual meeting of the Board of Directors shall be held, without notice other than this By-
Law, on the same date and at the same place as the Annual Meeting following the close of such meeting of stockholders. Other regular
meetings of the Board of Directors may be held at such hour, date and place as the Board of Directors may by resolution from time to time
determine without notice other than such resolution.
SECTION 10. Special Meetings. Special meetings of the Board of Directors may be called, orally or in writing, by or at the request of a
majority of the Directors, the Chairman of the Board, if one is elected, or the President. The person calling any such special meeting of the
Board of Directors may fix the hour, date and place thereof.
SECTION 11. Notice of Meetings. Notice of the hour, date and place of all special meetings of the Board of Directors shall be given to
each Director by the Secretary or an Assistant Secretary, or in case of the death, absence, incapacity or refusal of such persons, by the
Chairman of the Board, if one is elected, or the President or such other officer designated by the Chairman of the Board, if one is elected, or
the President. Notice of any special meeting of the Board of Directors shall be given to each Director in person, by telephone, or by telex,
telecopy, telegram, or other written form of electronic communication, sent to his or her business or home address, at least 24 hours in
advance of the meeting, or by written notice mailed to his or her business or home address, at least 48 hours in advance of the meeting. Such
notice shall be deemed to be delivered when hand delivered to such address, read to such Director by telephone, deposited in the mail so
addressed, with postage thereon prepaid if mailed, dispatched or transmitted if telexed or telecopied, or when delivered to the telegraph
company if sent by telegram.
When any Board of Directors meeting, either regular or special, is adjourned for 30 days or more, notice of the adjourned meeting shall be
given as in the case of an original meeting. It shall not be necessary to give any notice of the hour, date or place of any meeting adjourned for
less than 30 days or of the business to be transacted thereat, other than an announcement at the meeting at which such adjournment is taken of
the hour, date and place to which the meeting is adjourned.
A written waiver of notice signed before or after a meeting by a Director and filed with the records of the meeting shall be deemed to be
equivalent to notice of the meeting. The attendance of a Director at a meeting shall constitute a waiver of notice of such meeting, except
where a Director attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business
because such meeting is not lawfully called or convened. Except as otherwise required by law, by the Certificate or by these By-
Laws, neither the business to be transacted at, nor the purpose of, any meeting of the Board of Directors need be specified in the notice or
waiver of notice of such meeting.
SECTION 12. Quorum. At any meeting of the Board of Directors, a majority of the Directors then in office shall constitute a quorum for
the transaction of business, but if less than a quorum is present at a meeting, a majority of the Directors present may adjourn the meeting
from time to time, and the meeting may be held as adjourned without further notice, except as provided in Section 11 of this Article II. Any
business which might have been transacted at the meeting as originally noticed may be transacted at such adjourned meeting at which a
quorum is present.
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SECTION 13. Action at Meeting. At any meeting of the Board of Directors at which a quorum is present, a majority of the Directors
present may take any action on behalf of the Board of Directors, unless otherwise required by law, by the Certificate or by these By-Laws.
SECTION 14. Action by Consent. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if all members of the Board of Directors consent thereto in writing. Such written consent shall be filed with the records of
the meetings of the Board of Directors and shall be treated for all purposes as a vote at a meeting of the Board of Directors.
SECTION 15. Manner of Participation. Directors may participate in meetings of the Board of Directors by means of conference telephone
or similar communications equipment by means of which all Directors participating in the meeting can hear each other, and participation in a
meeting in accordance herewith shall constitute presence in person at such meeting for purposes of these By-Laws.
SECTION 16. Committees. The Board of Directors, by vote of a majority of the Directors then in office, may elect from its number one or
more committees, including, without limitation, an Executive Committee, a Compensation Committee, a Stock Option Committee and an
Audit Committee, and may delegate thereto some or all of its powers except those which by law, by the Certificate or by these By-Laws may
not be delegated. Except as the Board of Directors may otherwise determine, any such committee may make rules for the conduct of its
business, but unless otherwise provided by the Board of Directors or in such rules, its business shall be conducted so far as possible in the
same manner as is provided by these By-Laws for the Board of Directors. All members of such committees shall hold such offices at the
pleasure of the Board of Directors. The Board of Directors may abolish any such committee at any time. Any committee to which the Board
of Directors delegates any of its powers or duties shall keep records of its meetings and shall report its action to the Board of Directors. The
Board of Directors shall have power to rescind any action of any committee, to the extent permitted by law, but no such rescission shall have
retroactive effect.
SECTION 17. Compensation of Directors. Directors shall receive such compensation for their services as shall be determined by a
majority of the Board of Directors provided that Directors who are serving the Corporation as employees and who receive compensation for
their services as such, shall not receive any salary or other compensation for their services as Directors of the Corporation.
ARTICLE III
Officers
SECTION 1. Enumeration. The officers of the Corporation shall consist of a President, a Treasurer, a Secretary and such other officers,
including, without limitation, a Chairman of the Board of Directors and one or more Vice Presidents (including Executive Vice Presidents or
Senior Vice Presidents), Assistant Vice Presidents, Assistant Treasurers and Assistant Secretaries, as the Board of Directors may determine.
SECTION 2. Election. At the regular annual meeting of the Board following the annual meeting of stockholders, the Board of Directors
shall elect the President, the Treasurer and the Secretary. Other officers may be elected by the Board of Directors at such regular annual
meeting of the Board of Directors or at any other regular or special meeting.
SECTION 3. Qualification. No officer need be a stockholder or a Director. Any person may occupy more than one office of the
Corporation at any time. Any officer may be required by the Board of Directors to give bond for the faithful performance of his or her duties
in such amount and with such sureties as the Board of Directors may determine.
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SECTION 4. Tenure. Except as otherwise provided by the Certificate or by these By-Laws, each of the officers of the Corporation shall
hold office until the regular annual meeting of the Board of Directors following the next annual meeting of stockholders and until his or her
successor is elected and qualified or until his or her earlier resignation or removal.
SECTION 5. Resignation. Any officer may resign by delivering his or her written resignation to the Corporation addressed to the President
or the Secretary, and such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the
happening of some other event.
SECTION 6. Removal. Except as otherwise provided by law, the Board of Directors may remove any officer with or without cause by the
affirmative vote of a majority of the Directors then in office.
SECTION 7. Absence or Disability. In the event of the absence or disability of any officer, the Board of Directors may designate another
officer to act temporarily in place of such absent or disabled officer.
SECTION 8. Vacancies. Any vacancy in any office may be filled for the unexpired portion of the term by the Board of Directors.
SECTION 9. President. Unless otherwise provided by the Board of Directors or the Certificate, the President shall be the Chief Executive
Officer of the Corporation and shall, subject to the direction of the Board of Directors, have general supervision and control of the
Corporation’s business. If there is no Chairman of the Board or if he or she is absent, the President shall preside, when present, at all
meetings of stockholders and of the Board of Directors. The President shall have such other powers and perform such other duties as the
Board of Directors may from time to time designate.
SECTION 10. Chairman of the Board. The Chairman of the Board, if one is elected, shall have such powers and shall perform such duties
as the Board of Directors may from time to time designate.
SECTION 11. Vice Presidents and Assistant Vice Presidents. Any Vice President (including any Executive Vice President or Senior Vice
President) and any Assistant Vice President shall have such powers and shall perform such duties as the Board of Directors or the Chief
Executive Officer may from time to time designate.
SECTION 12. Treasurer and Assistant Treasurers. The Treasurer shall, subject to the direction of the Board of Directors and except as the
Board of Directors or the Chief Executive Officer may otherwise provide, have general charge of the financial affairs of the Corporation and
shall cause to be kept accurate books of account. The Treasurer shall have custody of all funds, securities, and valuable documents of the
Corporation. He or she shall have such other duties and powers as may be designated from time to time by the Board of Directors or the
Chief Executive Officer.
Any Assistant Treasurer shall have such powers and perform such duties as the Board of Directors or the Chief Executive Officer may from
time to time designate.
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SECTION 13. Secretary and Assistant Secretaries. The Secretary shall record all the proceedings of the meetings of the stockholders and
the Board of Directors (including committees of the Board) in books kept for that purpose. In his or her absence from any such meeting, a
temporary secretary chosen at the meeting shall record the proceedings thereof. The Secretary shall have charge of the stock ledger (which
may, however, be kept by any transfer or other agent of the Corporation). The Secretary shall have custody of the seal of the Corporation, and
the Secretary, or an Assistant Secretary, shall have authority to affix it to any instrument requiring it, and, when so affixed, the seal may be
attested by his or her signature or that of an Assistant Secretary. The Secretary shall have such other duties and powers as may be designated
from time to time by the Board of Directors or the Chief Executive Officer. In the absence of the Secretary, any Assistant Secretary may
perform his or her duties and responsibilities.
Any Assistant Secretary shall have such powers and perform such duties as the Board of Directors or the Chief Executive Officer may from
time to time designate.
SECTION 14. Other Powers and Duties. Subject to these By-Laws and to such limitations as the Board of Directors may from time to time
prescribe, the officers of the Corporation shall each have such powers and duties as generally pertain to their respective offices, as well as
such powers and duties as from time to time may be conferred by the Board of Directors or the Chief Executive Officer.
ARTICLE IV
Capital Stock
SECTION 1. Certificates of Stock. Each stockholder shall be entitled to a certificate of the capital stock of the Corporation in such form as
may from time to time be prescribed by the Board of Directors. Such certificate shall be signed by the Chairman of the Board of Directors,
the President or a Vice President and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary. The Corporation
seal and the signatures by Corporation officers, the transfer agent or the registrar may be facsimiles. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed on such certificate shall have ceased to be such officer, transfer agent
or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer,
transfer agent or registrar at the time of its issue. Every certificate for shares of stock which are subject to any restriction on transfer and
every certificate issued when the Corporation is authorized to issue more than one class or series of stock shall contain such legend with
respect thereto as is required by law. Notwithstanding anything to the contrary provided in these By-Laws, the Board of Directors of the
Corporation may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares
(except that the foregoing shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation), and by
the approval and adoption of these By-Laws the Board of Directors has determined that all classes or series of the Corporation’s stock may be
uncertificated, whether upon original issuance, re-issuance, or subsequent transfer.
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SECTION 2. Transfers. Subject to any restrictions on transfer and unless otherwise provided by the Board of Directors, shares of stock that
are represented by a certificate may be transferred on the books of the Corporation by the surrender to the Corporation or its transfer agent of
the certificate theretofore properly endorsed or accompanied by a written assignment or power of attorney properly executed, with transfer
stamps (if necessary) affixed, and with such proof of the authenticity of signature as the Corporation or its transfer agent may reasonably
require. Shares of stock that are not represented by a certificate may be transferred on the books of the Corporation by submitting to the
Corporation or its transfer agent such evidence of transfer and following such other procedures as the Corporation or its transfer agent may
require.
SECTION 3. Record Holders. Except as may otherwise be required by law, by the Certificate or by these By-Laws, the Corporation shall
be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of
dividends and the right to vote with respect thereto, regardless of any transfer, pledge or other disposition of such stock, until the shares have
been transferred on the books of the Corporation in accordance with the requirements of these By-Laws.
It shall be the duty of each stockholder to notify the Corporation of his or her post office address and any changes thereto.
SECTION 4. Record Date. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof or entitled to receive payment of any dividend or other distribution or allotment of any rights, or
entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the
Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is
adopted by the Board of Directors, and which record date: (1) in the case of determination of stockholders entitled to vote at any meeting of
stockholders, shall, unless otherwise required by law, not be more than sixty nor less than ten days before the date of such meeting and (2) in
the case of any other action, shall not be more than sixty days prior to such other action. If no record date is fixed: (1) the record date for
determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the
meeting is held and (2) the record date for determining stockholders for any other purpose shall be at the close of business on the day on
which the Board of Directors adopts the resolution relating thereto.
SECTION 5. Replacement of Certificates. In case of the alleged loss, destruction or mutilation of a certificate of stock, a duplicate
certificate may be issued in place thereof, upon such terms as the Board of Directors may prescribe.
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ARTICLE V
Indemnification
SECTION 1. Definitions. For purposes of this Article: (a) “Officer” means any person who serves or has served as a Director or officer of
the Corporation or in any other office filled by election or appointment by the stockholders or the Board of Directors of the Corporation and
any heirs, executors, administrators or personal representatives of such person; (b) “Non-Officer Employee” means any person who serves or
has served as an employee of the Corporation, but who is not or was not an Officer, and any heirs, executors, administrators or personal
representatives of such person; (c) “Proceeding” means any threatened, pending, or completed action, suit or proceeding (or part thereof),
whether civil, criminal, administrative, arbitrative or investigative, any appeal of such an action, suit or proceeding, and any inquiry or
investigation which could lead to such an action, suit, or proceeding; and (d) “Expenses” means any liability fixed by a judgment, order,
decree or award in a Proceeding, any amount reasonably paid in settlement of a Proceeding and any professional fees and other expenses and
disbursements reasonably incurred in a Proceeding or in settlement of a Proceeding, including fines, taxes and penalties relating thereto.
SECTION 2. Officers. Except as provided in Section 4 of this Article V, each Officer of the Corporation shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by the DGCL, as the same exists or may hereafter be amended (but, in the case of
any such amendment, only to the extent that such amendment permits the Corporation to provide broader rights than said law permitted the
Corporation to provide prior to such amendment) against any and all Expenses incurred by such Officer in connection with any Proceeding in
which such Officer is involved as a result of serving or having served (a) as an Officer or employee of the Corporation, (b) as a director,
officer or employee of any subsidiary of the Corporation, or (c) in any capacity with any other corporation, organization, partnership, joint
venture, trust or other entity at the written request or direction of the Corporation, including service with respect to employee or other benefit
plans, and shall continue as to an Officer after he or she has ceased to be an Officer and shall inure to the benefit of his or her heirs,
executors, administrators and personal representatives; provided, however, that the Corporation shall indemnify any such Officer seeking
indemnification in connection with a Proceeding initiated by such Officer only if such Proceeding was authorized by the Board of Directors
of the Corporation.
SECTION 3. Non-Officer Employees. Except as provided in Section 4 of this Article V, each Non-Officer Employee of the Corporation
may, in the discretion of the Board of Directors, be indemnified by the Corporation to the fullest extent authorized by the DGCL, as the same
exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation
to provide broader rights than said law permitted the Corporation to provide prior to such amendment) against any or all Expenses incurred
by such Non-Officer Employee in connection with any Proceeding in which such Non-Officer Employee is involved as a result of serving or
having served (a) as a Non-Officer Employee of the Corporation, (b) as a director, officer or employee of any subsidiary of the Corporation,
or (c) in any capacity with any other corporation, organization, partnership, joint venture, trust or other entity at the request or direction of the
Corporation, including service with respect to employee or other benefit plans, and shall continue as to a Non-Officer Employee after he or
she has ceased to be a Non-Officer Employee and shall inure to the benefit of his or her heirs, personal representatives, executors and
administrators; provided, however, that the Corporation may indemnify any such Non-Officer Employee seeking indemnification in
connection with a Proceeding initiated by such Non-Officer Employee only if such Proceeding was authorized by the Board of Directors of
the Corporation.
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SECTION 4. Good Faith. No indemnification shall be provided pursuant to this Article V to an Officer or to a Non-Officer Employee with
respect to a matter as to which such person shall have been finally adjudicated in any Proceeding (i) not to have acted in good faith and in a
manner he or she reasonably believed to be in, or not opposed to, the best interests of the Corporation, and (ii) with respect to any criminal
Proceeding, to have had reasonable cause to believe his or her conduct was unlawful. In the event that a Proceeding is compromised or
settled prior to final adjudication so as to impose any liability or obligation upon an Officer or Non-Officer Employee, no indemnification
shall be provided pursuant to this Article V to said Officer or Non-Officer Employee with respect to a matter if there be a determination that
with respect to such matter such person did not act in good faith and in a manner he or she reasonably believed to be in, or not opposed to,
the best interests of the Corporation, and, with respect to any criminal Proceeding, had no reasonable cause to believe his or her conduct was
unlawful. The determination contemplated by the preceding sentence shall be made by (i) a majority vote of those Directors who are not
involved in such Proceeding (the “Disinterested Directors”); (ii) by the stockholders; or (iii) if directed by a majority of Disinterested
Directors, by independent legal counsel in a written opinion. However, if more than half of the Directors are not Disinterested Directors, the
determination shall be made by (i) a majority vote of a committee of one or more disinterested Director(s) chosen by the Disinterested
Director(s) at a regular or special meeting; (ii) by the stockholders; or (iii) by independent legal counsel chosen by the Board of Directors in a
written opinion.
SECTION 5. Prior to Final Disposition. Unless otherwise determined by (i) the Board of Directors, (ii) if more than half of the Directors
are involved in a Proceeding by a majority vote of a committee of one or more Disinterested Director(s) chosen in accordance with the
procedures specified in Section 4 of this Article or (iii) if directed by the Board of Directors, by independent legal counsel in a written
opinion, any indemnification extended to an Officer or Non-Officer Employee pursuant to this Article V shall include payment by the
Corporation or a subsidiary of the Corporation of Expenses as the same are incurred in defending a Proceeding in advance of the final
disposition of such Proceeding upon receipt of an undertaking by such Officer or Non-Officer Employee seeking indemnification to repay
such payment if such Officer or Non-Officer Employee shall be adjudicated or determined not to be entitled to indemnification under this
Article V.
SECTION 6. Contractual Nature of Rights. The foregoing provisions of this Article V shall be deemed to be a contract between the
Corporation and each Officer and Non-Officer Employee who serves in such capacity at any time while this Article V is in effect, and any
repeal or modification thereof shall not affect any rights or obligations then existing with respect to any state of facts then or theretofore
existing or any Proceeding theretofore or thereafter brought based in whole or in part upon any such state of facts. If a claim for
indemnification or advancement of expenses hereunder by an Officer or Non-Officer Employee is not paid in full by the Corporation within
60 days after a written claim for indemnification or documentation of expenses has been received by the Corporation, such Officer or Non-
Officer Employee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim, and if successful
in whole or in part, such Officer or Non-Officer Employee shall also be entitled to be paid the expenses of prosecuting such claim. The
failure of the Corporation (including its Board of Directors or any committee thereof, independent legal counsel, or stockholders) to make a
determination concerning the permissibility of such indemnification or advancement of expenses under this Article V shall not be a defense
to the action and shall not create a presumption that such indemnification or advancement is not permissible
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SECTION 7. Non-Exclusivity of Rights. The provisions in respect of indemnification and the payment of expenses incurred in defending a
Proceeding in advance of its final disposition set forth in this Article V shall not be exclusive of any right which any person may have or
hereafter acquire under any statute, provision of the Certificate or these By-Laws, agreement, vote of stockholders or disinterested directors
or otherwise; provided, however, that in the event the provisions of this Article V in any respect conflict with the terms of any agreement
between the Corporation or any of its subsidiaries and any person entitled to indemnification under this Article V, then the provision which is
more favorable to the relevant individual shall govern.
SECTION 8. Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any Officer or Non-
Officer Employee against any liability of any character asserted against or incurred by the Corporation or any such Officer or Non-
Officer Employee, or arising out of any such status, whether or not the Corporation would have the power to indemnify such person against
such liability under the DGCL or the provisions of this Article V.
ARTICLE VI
Miscellaneous Provisions
SECTION 1. Fiscal Year. Except as otherwise determined by the Board of Directors, the fiscal year of the Corporation shall end on the last
day of December of each year.
SECTION 2. Seal. The Board of Directors shall have power to adopt and alter the seal of the Corporation.
SECTION 3. Execution of Instruments. All deeds, leases, transfers, contracts, bonds, notes and other obligations to be entered into by the
Corporation in the ordinary course of its business without Director action may be executed on behalf of the Corporation by the Chairman of
the Board, if one is elected, the President or the Treasurer or any other officer, employee or agent of the Corporation as the Board of
Directors or Executive Committee may authorize.
SECTION 4. Voting of Securities. Unless the Board of Directors otherwise provides, the Chairman of the Board, if one is elected, the
President or the Treasurer may waive notice of and act on behalf of this Corporation, or appoint another person or persons to act as proxy or
attorney in fact for this Corporation with or without discretionary power and/or power of substitution, at any meeting of stockholders or
shareholders of any other corporation or organization, any of whose securities are held by this Corporation.
SECTION 5. Resident Agent. The Board of Directors may appoint a resident agent upon whom legal process may be served in any action
or proceeding against the Corporation.
SECTION 6. Corporate Records. The original or attested copies of the Certificate, By-Laws and records of all meetings of the
incorporators, stockholders and the Board of Directors and the stock transfer books, which shall contain the names of all stockholders, their
record addresses and the amount of stock held by each, may be kept outside the State of Delaware and shall be kept at the principal office of
the Corporation, at the office of its counsel or at an office of its transfer agent or at such other place or places as may be designated from time
to time by the Board of Directors.
SECTION 7. Certificate. All references in these By-Laws to the Certificate shall be deemed to refer to the Certificate, as amended and/or
restated and in effect from time to time.
29
SECTION 8. Amendment of By-Laws.
(a) Amendment by Directors. Except as provided otherwise by law, these By-Laws may be amended or repealed by the Board of Directors.
(b) Amendment by Stockholders. These By-Laws may be amended or repealed at any annual meeting of stockholders, or special meeting of
stockholders called for such purpose, by the affirmative vote of a majority of the total votes eligible to be cast on such amendment or repeal
by holders of voting stock, voting together as a single class.
ARTICLE VII
Exclusive Jurisdiction of Delaware Courts
SECTION 1. Exclusive Jurisdiction of Delaware Courts. Unless the Corporation consents in writing to the selection of an alternative
forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding
brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other
employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any
provision of the Delaware General Corporation Law or the Certificate or By-Laws, or (iv) any action asserting a claim against the
Corporation governed by the internal affairs doctrine.
Adopted and effective February 13, 2025.
30
EXHIBIT 4.1
DESCRIPTION OF THE REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934
The following description sets forth certain material terms and provisions of the securities of ANSYS, Inc. (the
“Company”) that are registered under Section 12 of the Securities Exchange Act of 1934, as amended, and relevant provisions of
the Delaware General Corporation Law (the “DGCL”). This description does not purport to be complete. It is subject to, and
qualified in its entirety by reference to, the applicable provisions of our Restated Certificate of Incorporation (the “Certificate of
Incorporation”) and our Sixth Amended and Restated By-Laws (the “By-Laws”), each of which is incorporated by reference as
an exhibit to the Annual Report on Form 10-K of which this Exhibit 4.1 is a part, and the applicable provisions of the DGCL. We
encourage you to read our Certificate of Incorporation, our By-Laws, and the applicable provisions of the DGCL for additional
information.
Authorized Capital Stock
We are authorized to issue a total of three hundred two million (302,000,000) shares of capital stock consisting of (i) two
million (2,000,000) shares of undesignated Preferred Stock, par value $.01 per share (the “Preferred Stock”) and (ii) three
hundred million (300,000,000) shares designated as Common Stock, par value $.01 per share (the “Common Stock”).
Common Stock
Holders of Common Stock will be entitled to one vote per share on all matters submitted to a vote of stockholders, unless
otherwise provided by law or the Certificate of Incorporation. Our By-Laws provide that, except as otherwise required by law,
our Certificate of Incorporation, or our By-Laws, any matter before any meeting of stockholders will be decided by a majority of
the votes properly cast for and against such matter; provided, however, that directors will be elected by a plurality of votes cast at
any meeting of stockholders at which there is a contested election of directors. Our Common Stock does not have cumulative
voting rights.
Subject to the rights of holders of any outstanding Preferred Stock, holders of Common Stock are entitled to receive
dividends as may be declared and paid or set apart for payment from time to time by our Board of Directors, or any authorized
committee thereof, out of any assets or funds of the Company legally available for the payment of dividends. Holders of
Common Stock will be entitled to receive, upon any voluntary or involuntary liquidation, dissolution or winding up of the
Company, the net assets of the Company available for distribution to stockholders after satisfaction of our liabilities and the
preferential rights of any Preferred Stock that may then be issued and outstanding.
Holders of Common Stock have no conversion rights, or any redemption, sinking fund or preemptive rights with respect
to the Common Stock. Our Common Stock is not liable to further call or assessment by the Company or subject to any restriction
on alienability, except as required by law.
Preferred Stock
The rights of holders of Common Stock may be materially limited or qualified by the rights of holders of Preferred Stock
that we may issue in the future. Set forth below is a description of the Company’s authority to issue Preferred Stock and the
possible terms of that stock.
No shares of Preferred Stock are currently outstanding. Pursuant to our Certificate of Incorporation and subject to any
limitation prescribed by law, our Board of Directors or any authorized committee thereof has the authority, without further action
by our stockholders, to issue Preferred Stock from time to time in one or more series. Our Board of Directors or any authorized
committee thereof will have the right to determine or fix the rights, preferences, and restrictions of the Preferred Stock, including:
•
the title or designation of the series;
•
the number of shares in the series;
•
the dividend rate and whether dividends will be cumulative;
•
the voting rights, if any, of the holders of the series;
•
the terms, if any, on which the series may or will be redeemed;
•
the preference, if any, to which holders of the series will be entitled upon our liquidation, dissolution or winding up;
•
any sinking or retirement fund provisions of the shares;
•
the right, if any, of holders of the shares to convert or exchange them into, or for, another class of our stock or securities;
•
the purchase price of the shares;
•
the status of shares upon redemption or conversion; and
•
any other powers, preferences, rights, qualifications, limitations and restrictions as the Board of Directors or any
authorized committee thereof may deem advisable.
Certain Anti-Takeover Effects of Provisions of Our Certificate of Incorporation, Our By-Laws and the DGCL
Certain provisions of our Certification of Incorporation, our By-Laws, and the DGCL could have anti-takeover effects and
may delay, deter or prevent a tender offer or takeover attempt that a stockholder might consider to be in its best interests, as
discussed below:
DGCL Section 203 – Business Combinations with Interested Stockholders
We are subject to the provisions of Section 203 of the DGCL, regulating corporate takeovers. In general, those provisions
prohibit a Delaware corporation from engaging in any “business combination” with any interested stockholder for a period of
three years following the date that the stockholder became an interested stockholder, unless:
•
prior to the time that the person became an interested stockholder, the board of directors of the corporation approved
either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;
•
upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced,
excluding for the purpose of determining the number of shares outstanding (but not the outstanding voting stock owned
by the interested stockholder) those shares owned by (i) the corporation’s officers and directors and (ii) employee stock
plans in which employee participants do not have the right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer; or
•
at or subsequent to the time the business combination is approved by the corporation’s board of directors and authorized
at an annual or special meeting of its stockholders, and not by written consent, by the affirmative vote of at least 66-2/3%
of its outstanding voting stock that is not owned by the interested stockholder.
The term “business combination” is broadly defined to include mergers, consolidations, and sales and other dispositions
of assets having an aggregate market value equal to 10% or more of the consolidated assets of the corporation, and other
specified transactions resulting in financial benefits to the interested stockholder. An “interested stockholder” is a person who,
together with affiliates and associates, owns (or within three years did own) 15% or more of the corporation’s voting stock.
The restrictions on business combinations with interested stockholders contained in Section 203 of the DGCL do not
apply to a corporation whose certificate of incorporation or bylaws contains a provision expressly electing not to be governed by
the statute. Neither our Certificate of Incorporation nor our By-Laws contains a provision electing to “opt-out” of Section 203.
Section 203 of the DGCL could prohibit or delay mergers or other takeover or change in control attempts and, accordingly, may
discourage attempts to acquire us.
Undesignated Preferred Stock
As discussed above under “Preferred Stock,” our Board of Directors has the authority to designate and issue Preferred
Stock with voting or other rights or preferences that could delay, defer or prevent any attempt to acquire or control us.
Classified Board of Directors
The number of directors is fixed by resolution duly adopted from time to time by our Board of Directors. Until the
election of directors at the 2026 annual meeting of stockholders, the directors, other than those directors who may be elected by
the holders of Preferred Stock, are classified, with respect to the term for which they severally hold office, into three classes, as
nearly equal in number as possible. Any director elected prior to the 2024 annual meeting of stockholders will hold office for a
term expiring at the annual meeting of stockholders held in the third year following the year of their election. Each director
elected at the 2024 annual meeting of stockholders will be elected for a term expiring at the 2025 annual meeting of stockholders.
Each director elected at the 2025 annual meeting of stockholders will be elected for a term expiring at the 2026 annual meeting of
stockholders. At the 2026 annual meeting of stockholders and at each annual meeting of stockholders thereafter, all directors will
be elected for a term expiring at the next annual meeting of stockholders. Each director will hold office until the annual meeting
of stockholders at which such director’s term expires and serve until such director’s successor has been duly elected and qualified
or until such director’s earlier death, resignation, disqualification or removal. These provisions may tend to discourage a third
party from making a tender offer or otherwise attempting to obtain control of the Company because they generally make it more
difficult for stockholders to replace a majority of the directors.
Vacancies; Removal
Subject to any rights of any holders of Preferred Stock to elect directors and fill vacancies on the Board of Directors, all
vacancies created in our Board of Directors resulting from any increase in the authorized number of directors or the death,
resignation, disqualification, removal from office or other cause will be filled solely by the affirmative vote of a majority of the
remaining directors on our Board of Directors then in office, even if less than a quorum is present. Prior to the election of
directors at the 2026 annual meeting of stockholders, any director appointed to fill a vacancy on our Board of Directors will be
appointed for the full term of the class of directors in which the new directorship was created or the vacancy occurred and until
such director’s successor will have been duly elected and qualified or until his or her earlier death, resignation, disqualification or
removal. From and after the election of directors at the 2026 annual meeting of stockholders, any director appointed in
accordance with the first sentence of this section will hold office until the next annual meeting of stockholders and until such
director’s successor will have been duly elected and qualified or until his or her earlier death, resignation, disqualification or
removal. Subject to any rights of any holders of Preferred Stock to elect directors, when the number of directors is increased or
decreased, for as long as the Board of Directors continues to be classified, the Board of Directors will determine the class or
classes to which the increased or decreased number of directors will be apportioned; provided, however, that no decrease in the
number of directors will shorten the term of any incumbent director.
Subject to the rights of any holders of Preferred Stock to elect or remove any director, any director may be removed from
office (i) with or without “cause” (as defined in the Certificate of Incorporation) (except that any director who is serving a three-
year term prior to the 2026 annual meeting of stockholders may be removed only for cause) and (ii) by the affirmative vote of a
majority of the total votes which would be eligible to be cast by stockholders in the election of such director.
Proxy Access
Our By-Laws also include provisions permitting, subject to certain terms and conditions, stockholders who have
maintained continuous qualifying ownership of at least 3% of our outstanding Common Stock for at least three years to use our
annual meeting proxy statement to nominate a number of director candidates, not to exceed the greater of two candidates or 20%
of the number of directors in office.
Advance Notice Requirements
Our By-Laws establish advance notice procedures for stockholders seeking to nominate candidates for election to the
Board of Directors or for proposing matters which can be acted upon at stockholders’ meetings.
No Stockholder Action by Written Consent
Our Certificate of Incorporation prohibits stockholder action by written consent in lieu of a meeting.
Special Meetings of Stockholders
Our By-Laws provide that special meetings of stockholders may be called only by our Board of Directors. A special
meeting of stockholders will be called by the Board of Directors upon a written request from holders of record of shares of voting
stock representing in the aggregate at least 20% of our outstanding voting stock held continuously for a period of at least one year
prior to the date such request is delivered to the Secretary, subject to the requirements and limitations set forth in our By-Laws.
Amendments/Repeal of Provisions in the Certificate of Incorporation or By-Laws
Our Certificate of Incorporation provides that no amendment or repeal of the Certificate of Incorporation will be made
unless the same is first approved by the Board of Directors pursuant to a resolution adopted by the Board of Directors in
accordance with Section 242 of the DGCL, and, except as otherwise provided by law, thereafter approved by the stockholders.
Whenever any vote of the holders of voting stock is required, and in addition to any other vote of holders of voting stock that is
required by the Certificate of Incorporation or by law, the affirmative vote of a majority of the total votes eligible to be cast by
holders of voting stock with respect to such amendment or repeal, voting together as a single class, at a duly constituted meeting
of stockholders called expressly for such purpose will be required to amend or repeal any provisions of the Certificate of
Incorporation.
Our By-Laws provide that the By-Laws may be amended or repealed (i) by the Board of Directors (except as provided
otherwise by law) or (ii) at any annual meeting of stockholders, or special meeting of stockholders called for such purpose, by the
affirmative vote of a majority of the total votes eligible to be cast on such amendment or repeal by holders of voting stock, voting
together as a single class.
Certain Effects of Authorized but Unissued Stock
We may issue additional shares of Common Stock or Preferred Stock without stockholder approval, subject to applicable
rules of the Nasdaq Stock Market and the DGCL, for a variety of corporate purposes, including future public or private offerings
to raise additional capital, corporate acquisitions, and employee benefit plans and equity grants. The existence of unissued and
unreserved Common Stock and Preferred Stock may enable us to issue shares to persons who are friendly to current management,
which could discourage an attempt to obtain control of the Company by means of a proxy contest, tender offer, merger or
otherwise. We will not solicit approval of our stockholders for issuance of Common Stock or Preferred Stock unless our Board of
Directors believes that approval is advisable or is required by applicable stock exchange rules or the DGCL.
Transfer Agent and Registrar
The transfer agent and registrar for our Common Stock is Equiniti Trust Company, LLC.
Listing of the Common Stock
Our Common Stock is listed on the Nasdaq Global Select Market under the symbol “ANSS.”
EXHIBIT 19.1
ANSYS, INC.
INSIDER TRADING POLICY AND PROCEDURES 1
______________________________________________________________________________________________________________
________________________
1 As approved by the Board of Directors of ANSYS, Inc. on January 8, 2024.
SECTION I. SCOPE
This Insider Trading Policy and Procedures (as amended and restated from time to time, the “Policy”) sets forth the policies of
ANSYS, Inc. and each of its subsidiaries (collectively, the “Company”) regarding insider trading and the disclosure of information
concerning the Company and provides guidelines with respect to transactions in the securities of the Company. This Policy is applicable
to: (i) the Company and those Insiders (as hereafter defined) authorized to act on the Company’s behalf with respect to transactions in
the Company’s securities, (ii) directors, officers and employees of the Company (such persons are referred to herein as “Insiders”); (iii)
an Insider’s spouse, child, stepchild, parent, stepparent, grandparent, sibling, in-laws or other family member living in the same
household; (iv) all persons who execute trades on behalf of Insiders; and (v) investment funds, trusts, retirement plans, partnerships,
corporations and other types of entities over which Insiders have the ability to influence or direct investment decisions concerning
securities (the persons and entities covered by clauses (iii) through (v) above are hereinafter referred to as “Affiliated Persons”). The
Company may also determine that other persons should be subject to this Policy, such as contractors and consultants, who have
access to material nonpublic information.
Each Insider is responsible for his or her individual compliance with this Policy and other applicable Company policies and for
managing his or her own knowledge of material, nonpublic information regarding the Company. In all cases, the responsibility for
determining whether an individual is in possession of material nonpublic information rests with that individual, and any action on the part
of the Company, the Compliance Officers (as defined below in Section III) or any other employee or director pursuant to this Policy (or
otherwise) does not in any way constitute legal advice or insulate an individual from liability under the securities laws. Insiders are
responsible for ensuring compliance with this Policy by all of their Affiliated Persons. Unless the context otherwise requires, references
to Insiders in this Policy refer collectively to Insiders and their Affiliated Persons.
It is the purpose of this Policy to define the rules and processes by which the Company (and Insiders authorized to execute
trades on its behalf) and Insiders may trade in the Company’s securities in a manner that is compliant with all applicable laws and
regulations, and that preserves and enhances the Company’s reputation for integrity and ethical conduct. This Policy applies to any and
all transactions in the Company’s securities, including its common stock, options to purchase common stock and other equity incentive
awards (as described in more detail in Section IV.G), and any other type of securities that the Company may issue, such as preferred
stock, bonds, convertible debentures, warrants and exchange- traded options or other derivative securities.
The Company Secretary will deliver this Policy to all new Insiders at the start of their employment or relationship with the
Company. Upon first receiving a copy of this Policy, each Designated Insider must sign an acknowledgment that he or she has received
a copy and agrees to comply with the terms of this Policy. If you have been notified or deemed a Designated Insider, you must return
the acknowledgement attached hereto within ten (10) days of receipt to:
ANSYS, Inc.
Attention: Stock Administration Southpointe
2600 ANSYS Drive
Canonsburg, PA 15317
or via email: compliance@ansys.com
“
”
Such acknowledgment will constitute consent for the Company to impose sanctions for violation of this Policy or any successor policy or
procedures, and to issue any necessary stop-transfer orders to the Companys transfer agent to ensure compliance with this Policy. As
discussed in Section VI, violation of this Policy by any Insider could lead to significant legal problems and other serious consequences
for such Insider, such as disciplinary action by the Company, including sanctions, demotions, and termination of employment, if the
Company believes this Policy has been violated. Insiders will be required, upon the Company’s request, to re-acknowledge and agree to
comply with this Policy. For such purpose, an Insider will be deemed to have acknowledged and agreed to comply with this Policy when
a copy of the Policy has been delivered to the Insider by regular or electronic mail (or other delivery option used by the Company) by a
Compliance Officer or his or her designee.
SECTION II. INSIDERS AND INSIDER TRADING
A.
INSIDER TRADING
It is generally illegal for the Company and any Insider to trade in the Company’s securities while in possession of material,
nonpublic information about the Company. It is also generally illegal for any Insider to disclose material, nonpublic information about the
Company to others who may trade on the basis of such information. These illegal activities are commonly referred to as “insider
trading.” The ANSYS, Inc. Board of Directors has adopted this Policy to satisfy the Company’s obligation to reasonably
supervise the activities of the Company and its personnel and to avoid any situation that could damage the Company’s
reputation for integrity and ethical conduct. Further, this Policy is intended to assist the Company and its personnel by
providing guidelines for trading in a legally compliant manner.
Any Insiders who are unsure whether the information that they possess is material or nonpublic should carefully review Section
II.B-C of this Policy and/or consult a Compliance Officer for guidance. Remember: Compliance Officers must review and approve
the pre-clearance of all trades in Company securities, including elections under the Employee Stock Purchase Plan, by
Designated Insiders (as defined below in Section II.D) in accordance with the procedures set forth in Section IV.D.
B.
MATERIAL INFORMATION
Information is considered “material” if a reasonable investor would consider that information important in making a decision to
buy, hold, or sell securities. Any information that could be expected to affect the Company’s stock price, whether it is positive or
negative, should be considered material. There is no bright-line standard for assessing materiality; rather, materiality is based on an
assessment of all of the facts and circumstances, and is often evaluated by enforcement authorities, including the Securities and
Exchange Commission (the “SEC”), with the benefit of hindsight. While it is not possible to identify all categories of information that
would be deemed “material,” some examples of information that ordinarily would be regarded as material are listed below.
•
financial performance, especially sales numbers, quarterly and year-end earnings, significant changes in financial performance
or liquidity and expectations for future periods;
•
any factor that would cause the Company’s financial results to be substantially different from the Company’s publicly announced
projections or analyst estimates;
•
significant mergers or acquisitions or potential mergers and acquisitions, tender offers, joint ventures, the sale of significant Company
assets or subsidiaries, or a change in control transaction;
•
new major contracts, partnerships customers, or finance sources, or the loss thereof;
’
•
significant changes or significant developments in products or product lines, or significant pricing changes;
•
financings and other events regarding the Company’s securities;
•
significant changes in senior management;
•
actual or threatened major litigation or regulatory actions or the resolution of such litigation or regulatory actions, or changes in law or
significant enforcement actions against the Company and any analysis of the impact of such matters on the Company’s business or
business model;
•
cybersecurity or privacy breaches that have a significant impact on the Company, its employees, customers or others; and
•
bankruptcy, corporate restructuring or receivership.
C.
NONPUBLIC INFORMATION
“Nonpublic” information is information that has not been previously disclosed by the Company to the general public by means of
a press release, SEC filing or other medium for broad public access. Disclosure to even a large group of people, such as customers,
employees or investors, does not constitute public disclosure nor does disclosure by another party, such as an unconfirmed rumor in a
blog or newspaper.
Before trading occurs, there also must be adequate time for the market as a whole to digest the information that has been
disclosed. For purposes of this Policy, information will be considered public after the close of trading on the second trading day following
the Company’s public release of the information.
D.
LIST OF DESIGNATED INSIDERS
The Company Secretary will maintain a list (the “DCI List”) of the Company’s designated Insiders who must adhere to certain
procedures in this Policy at all times, whether or not such persons are aware of any material nonpublic information (the “Designated
Insiders”). The DCI list will include:
•
all members of the Board of Directors of the Company;
•
all members of the Senior Leadership Team;
•
the executive assistants of the CEO, CFO, Senior Vice Presidents, General Counsel, and VP of Corporate Development and Global
Partnerships;
•
members of the Company’s legal department and finance department as determined by the General Counsel and CFO, respectively;
•
the controller and employees in the controller’s group who are involved in the preparation of financial statements and SEC filings as
determined by the VP of Worldwide Accounting and SEC Reporting;
•
employees with knowledge of consolidated financial performance forecasts as determined by the CFO;
•
investor relations professionals as designated by the CFO;
•
corporate communications professionals as determined by the VP of Marketing;
•
members of the Company’s sales operations department as determined by the VP of Global Marketing, Channel and GTM
Operations;
•
other Company employees designated by a member of the Company’s Senior Leadership Team, with notice to the Company
Secretary;
•
such other persons as the Compliance Officers may determine to be Designated Insiders as further described below; and
•
Affiliated Persons of any of the above.
One or more of the Compliance Officers may deem any director, officer or employee of the Company a Designated Insider at
any time and instruct the Company’s Stock Administrator to add the individual to the DCI List, including upon commencement of a
potential material acquisition or upon employment with the Company. One or more of the Compliance Officers may also at any time
instruct the Company Stock Administrator to remove any individual’s designation as a Designated Insider from the DCI List.
The Compliance Officers shall review and update the DCI List from time to time, but in any event no less frequently than
annually. The Company Stock Administrator will promptly update the DCI List upon any terminations of employment of persons on the
DCI List. The Company Stock Administrator will promptly notify E*TRADE (or any successor stock administration services used by the
Company) of the DCI List and any changes thereto, as necessary.
SECTION III. INSIDER TRADING COMPLIANCE OFFICERS
The Company has designated the Chief Financial Officer and the General Counsel as its insider trading compliance officers
(“Compliance Officers”). With respect to each proposed trade in the Company’s securities by a Designated Insider or the Company, one
or both of the Compliance Officers will review and either a) prohibit the proposed trade in the Company’s securities or b) approve the
pre- clearance of such trade in accordance with the procedures set forth in Section IV.D and Section V. The Compliance Officers may
consult with the Company’s other officers and/or outside legal counsel and will receive pre-clearance for his or her own trades from the
other Compliance Officer according to the same procedures and standards as all other Designated Insiders. A Compliance Officer may
delegate all or a part of his or her duties under this Policy to a designate for specified time periods.
SECTION IV. SPECIAL TRADING RESTRICTIONS AND PROCEDURES
A.
PROHIBITED ACTIVITIES
When Insiders know or are in possession of material, nonpublic information about the Company, they are generally prohibited
from the following activities (except as otherwise expressly provided herein):
•
trading in the Company’s securities;
•
having others trade for them in the Company’s securities;
•
altering their election to participate in the ANSYS, Inc. Employee Stock Purchase Plan, as amended, or altering their instructions
regarding the level of withholding or purchase of Company securities under such plan;
•
entering into a written plan (a “Rule 10b5-1 Plan”) that complies with the requirements of Rule 10b5-1 under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), or amending or terminating an existing Rule 10b5-1 Plan;
•
giving trading advice of any kind about the Company except that they should, when appropriate, advise others not to trade if doing so
might violate the law or this Policy;
•
disclosing material nonpublic information to persons within the Company whose jobs do not require them to have that information, or
outside of the Company to other persons, including, but not limited to, family, friends, business associates, investors and expert
consulting firms, unless any such disclosure is made in accordance with the Company’s policy regarding the protection or authorized
external disclosure of information regarding the Company including, without limitation, the Company’s Regulation FD Policy; and
•
disclosing material, nonpublic information about the Company to anyone else who might then trade (“tipping”).
In addition, it is the policy of the Company that no Insider (or any other person designated as subject to this Policy) who, in the
course of working for the Company, learns of material nonpublic information about a company with which the Company does business,
including a partner, customer or supplier of the Company, may trade in that company’s securities until the information becomes public or
is no longer material.
These prohibitions continue whenever and for as long as an Insider knows or is in possession of material, nonpublic information.
Trading in the Company’s securities if an Insider has material, nonpublic information about the Company is expressly
prohibited for all Insiders.
There are no exceptions to this Policy, except as specifically noted herein. Transactions that may be necessary or justifiable for
independent reasons (such as the need to raise money for an emergency expenditure), or small transactions, are not excepted from this
Policy. The securities laws do not recognize mitigating circumstances and, in any event, even the appearance of any improper
transaction must be avoided to preserve the Company’s reputation for adhering to the highest standards of conduct. Remember,
anyone scrutinizing an Insider’s transactions will be doing so after the fact, with the benefit of hindsight. As a practical matter, before
engaging in any transaction, Insiders should carefully consider how enforcement authorities and others might view the transaction in
hindsight.
B.
SPECIAL TRADING RESTRICTIONS
1.
No Trading Except During Windows. No Designated Insider may trade in Company securities outside of the
applicable “trading windows” as described in Section IV.C except as specifically permitted hereunder.
2.
All Trades Must be Reviewed and Pre-Cleared by a Compliance Officer. With respect to each proposed
trade in the Company’s securities by a Designated Insider or the Company, one or both of the Compliance Officers will review
and either a) prohibit the proposed trade in the Company’s securities or b) approve the pre-clearance of such trade in
accordance with the procedures set forth in Section IV.D and Section V; provided, however, that both Compliance Officers,
acting together, may pre-clear one or more specified groups to trade for a period of time (for example, all finance and accounting
Designated Insiders during the open trading window following the issuance of quarterly or annual earnings information in
connection with the filing of a form 10-Q or 10-K) such that those persons would not be required to request such pre- clearance
individually as provided in Section IV.D.
3.
No Hedging Transactions. No Insider may at any time purchase financial instruments (including prepaid
variable forward contracts, equity swaps, collars, puts, calls, and exchange funds), or otherwise engage in transactions that
hedge or offset, or are designed to hedge or offset, any decrease in the market value of the Company’s equity securities that are
(i) granted to an Insider by the Company as part of such Insider’s compensation or (ii) held, directly or indirectly, by the Insider.
For purposes of clarity, no categories of hedging transactions are permitted by Insiders under this Policy.
4.
Short-Term Trading. Short-term trading of the Company’s securities may be distracting to an Insider and may
unduly focus such Insider on the Company’s short-term stock market performance instead of the Company’s long-term business
objectives. For these reasons, any Insider who purchases the Company’s securities in the open market may not sell any
securities of the Company of the same class during the six months following the purchase (or vice versa).
5.
Short Sales. Short sales of the Company’s securities (i.e., the sale of a security that the seller does not own)
may evidence an expectation on the part of the seller that the securities will decline in value, and therefore have the potential to
signal to the market that the seller lacks confidence in the Company’s prospects. In addition, short sales may reduce a seller’s
incentive to seek to improve the Company’s performance. For these reasons, short sales of the Company’s securities are
prohibited by Insiders. In addition, Section 16(c) of the Exchange Act prohibits officers and directors from engaging in short
sales.
6.
Publicly-Traded Options. Given the relatively short term of publicly-traded options, transactions in options may
create the appearance that an Insider is trading based on material nonpublic information and focus an Insider’s attention on
short-term performance at the expense of the Company’s long-term objectives. Accordingly, transactions in put options, call
options, or other derivative securities, on an exchange or in any other organized market, are prohibited by Insiders by this Policy.
7.
No Margin Accounts and Pledges. Securities held in a margin account as collateral for a margin loan may be
sold by the broker without the customer’s consent if the customer fails to meet a margin call. Similarly, securities pledged (or
hypothecated) as collateral for a loan may be sold in foreclosure if the borrower defaults on the loan. Because a margin sale or
foreclosure sale may occur at a time when the pledger is aware of material nonpublic information or otherwise is not permitted to
trade in the Company’s securities, Insiders are prohibited from holding the Company’s securities in a margin account or
otherwise pledging the Company’s securities as collateral for a loan.
8.
Standing and Limit Orders. Standing and limit orders (except standing and limit orders under an approved
Rule 10b5-1 Plan as described in Section IV.E) create heightened risks for insider trading violations similar to the use of margin
accounts. There is no control over the timing of purchases or sales that result from standing instructions to a broker, and as a
result, the broker could execute a transaction when an Insider is in possession of material nonpublic information. Insiders are
prohibited from placing such standing and limit orders.
9.
All Gifts Must be Reviewed and Pre-Cleared by a Compliance Officer. With respect to each gift of the
Company’s securities by a Designated Insider or the Company, one or both of the Compliance Officers will review and either a)
prohibit the proposed gift of the Company’s securities or b) approve the pre-clearance of such gift in accordance with the
procedures set forth in Section IV.D and Section V.
C.
TRADING WINDOWS
There are times when the Company or certain members of the ANSYS, Inc. Board of Directors or senior management may be
aware of material, nonpublic information. Although Insiders may have differing levels of knowledge with respect to such information, if
an Insider engages in a trade before such information is disclosed to the public or resolved, such Insider and the Company might be
exposed to a charge of insider trading that could be costly and difficult to refute. In addition, a trade by an Insider during such a period
could result in adverse publicity for the Company. Therefore, subject to limited exceptions, Designated Insiders may trade in Company
securities only during four quarterly trading windows and then only after obtaining pre-clearance from a Compliance Officer in
accordance with the procedures set forth in Section IV.D. Unless otherwise advised, the four trading windows consist of the
periods that begin after the close of trading on the first full trading day following the Company’s issuance of a press release
(or other method of broad public dissemination) announcing its quarterly or annual earnings. The trading window will
normally end at the close of business on the 15 day of the month in which the Company’s fiscal quarter ends. Designated
Insiders may be allowed to trade outside of a trading window in the following special circumstances:
1.
In accordance with the procedure for waivers described in Section IX; or
2.
Pursuant to a pre-approved Rule 10b5-1 Plan as described in Section IV.E.
From time to time, an event may occur that is material to the Company and is known by only a few Insiders. So long as the
event remains 1) nonpublic and 2) material or subject to an ongoing assessment as to its materiality, the relevant Insiders and others
who have access to such information may not trade in the Company’s securities. In addition, the Company’s financial results may be
sufficiently material in a particular fiscal quarter that, in the judgement of a Compliance Officer, the relevant Insiders and others who
have access to such information should refrain from trading in the Company’s securities even sooner than the trading windows
described above. In these situations, the Compliance Officer(s) may notify the relevant Insiders that they should not trade in the
Company’s securities, without necessarily disclosing the reason for the restriction. The existence of an event-specific trading restriction
period or extension of a period where trading is prohibited will not be announced to the Company as a whole, and should not be
communicated to any other person. Even if the Compliance Officer(s) has not designated a particular Insider as a person who should
not trade due to an event-specific restriction, such person should not trade while aware of material nonpublic information. Exceptions
will not be granted during an event- specific trading restriction period.
th
D.
PRE-CLEARANCE PROCEDURES FOR TRADES BY DESIGNATED INSIDERS
1.
Designated Insiders. Except as provided in Section IV.B.2, no Designated Insider may trade in Company
securities until:
a.
the Designated Insider provides notice, in writing, via electronic mail to DCI-Trade-Request@ansys.com,
of the type and amount of the proposed trade(s). In order to provide adequate time for the preparation of
any required reports and other processing, the notification should be received by a Compliance Officer at
least one (1) full trading day prior to the intended trade date, unless a Compliance Officer elects to
accept receipt after such deadline;
b.
the Designated Insider has certified to a Compliance Officer and the Company Stock Administrator in
writing, including via email to DCI-Trade-Request@ansys.com, prior to the proposed trade(s) that:
(i)
the Designated Insider is not in possession of material, nonpublic information concerning the
Company; and
(ii)
to the Designated Insider’s best knowledge, the proposed trade(s) does not violate the trading
restrictions of Section 16 of the Exchange Act and is or will be in compliance with Rule 144 of the
Securities Act of 1933, as amended (the “Securities Act”);
c.
a Compliance Officer or her designee, or both Compliance Officers or their designees in the case of a
request from a member of the Board of Directors or a Designated Insider subject to the Section 16
reporting requirements, has confirmed that they have approved the pre-clearance of the requested
trade(s) and has certified such approval of pre-clearance in writing. Such certification may be made via
electronic mail.
2.
Additional Information. Designated Insiders shall provide to a Compliance Officer any documentation
reasonably requested by him or her in furtherance of the foregoing procedures. Any failure to provide such requested information will be
grounds for rejection of the pre-clearance request by a Compliance Officer.
3.
No Obligation to Permit Trades. The existence of the foregoing procedures does not in any way obligate a
Compliance Officer to review and approve the pre-clearance of any trade requested by Designated Insiders. A Compliance Officer may
reject any trading request at his or her sole reasonable discretion.
4.
Completion of Trades. The Company Stock Administrator will issue by email written correspondence to the
requestor and the Compliance Officers indicating pre-clearance of the trade, which will detail the Designated Insider’s trading window
when the Designated Insider may complete the proposed trade(s). The authorized window will be a maximum of three consecutive
trading days, provided the window is open and the Designated Insider is not aware of material nonpublic information at the time of the
trade. If the Designated Insider does not execute such requested trade during the designated window, then the Designated Insider will
be required to make a new trading request.
E.
EXEMPTION FROM CERTAIN TRADING RESTRICTIONS: PRE-APPROVED RULE 10b5-1 PLAN
Transactions effected pursuant to a pre-approved Rule 10b5-1 Plan will not be subject to the Companys trading windows or pre-
clearance procedures as described above. Rule 10b5-1 of the Exchange Act provides an opportunity for selected Designated Insiders
to establish arrangements to trade in Company securities at designated times, even outside the trading windows, or when in possession
of undisclosed material information, provided that the transaction occurs pursuant to a Rule 10b5-1 Plan that was adopted at a time
when such Insider was not aware of any material, nonpublic information.
The Company permits the establishment of Rule 10b5-1 Plans solely for members of the ANSYS, Inc. Board of Directors, then-
members of the Company’s Senior Leadership Team or equivalent successor group of Company executives, or any such other person
that is approved in writing by both Compliance Officers.
If an Insider intends to trade pursuant to a Rule 10b5-1 Plan, such plan, arrangement or trading instructions must:
1.
satisfy the requirements of Rule 10b5-1 of the Exchange Act (as described in Section IV.F.1);
2.
be documented in writing;
3.
be established during a trading window in which such Insider does not possess material, nonpublic information, and
otherwise is in compliance with the restrictions set forth in this Section IV;
4.
be entered into in good faith and not as part of a plan or scheme to evade the prohibitions of Section 10(b) or Rule 10b-5
of the Exchange Act (once the Rule 10b5-1 Plan has been entered into, the Insider entering into the plan must act in
good faith with respect to the plan); and
5.
be pre-approved by both Compliance Officers.
Any deviation from, or alteration to, the specifications of an approved Rule 10b5-1 Plan (including, without limitation, the amount,
price or timing of a purchase or sale) must be reported immediately to a Compliance Officer.
A Compliance Officer may refuse to approve a plan, arrangement or trading instruction, as he or she deems appropriate,
including, without limitation, if he or she determines that such plan, arrangement or trading instruction does not satisfy the requirements
of Rule 10b5-1. A Compliance Officer may consult with the Companys outside legal counsel before approving a plan, arrangement or
trading instruction. If a Compliance Officer does not approve an Insider’s plan, arrangement or trading instruction, such Insider must
adhere to the pre-clearance procedures and trading windows set forth above until such time as a plan, arrangement or trading
instruction is approved.
’
’
Any modification of an Insiders prior Rule 10b5-1 Plan requires pre-approval by a Compliance Officer. Such modification must
occur during a trading window and while such Insider is not aware of material, nonpublic information. Such modification must be made
in good faith and not as part of a plan or scheme to evade the prohibitions of Section 10(b) or Rule 10b-5 of the Exchange Act. Any
modification to the amount, price or timing of the purchase or sale of the Company’s securities will generally be considered a
termination of such plan and the adoption of a new plan. A Compliance Officer may reject any requests for modification of an existing
Rule 10b5-1 Plan in his or her discretion.
F.
PROCEDURES FOR APPROVING RULE 10b5-1 PLANS
1.
Rule 10b5-1 Plan Requirements. Any Rule 10b5-1 Plan must meet the requirements of Rule 10b5-1 under the
Exchange Act and any other requirements of the Company, including the following:
a.
the Rule 10b5-1 Plan must affirm an intent to comply with Rule 10b5-1 under the Exchange Act;
b.
if the Insider entering into the Rule 10b5-1 Plan is an “officer” (as defined in Section 16 of the Exchange
Act) of the Company or a member of the Board of Directors of the Company (together with such officers,
“Section 16 Persons”), the plan must include (i) a certification by the Insider that the Insider is not aware
of material non-public information about the Company or its securities and (ii) a certification by the Insider
that the Insider is adopting the plan in good faith and not as part of a plan or scheme to evade the
prohibitions of Section 10(b) or Rule 10b-5 of the Exchange Act;
c.
the Rule 10b5-1 Plan must specify the nature of the plan (e.g., purchase or sale);
d.
the Rule 10b5-1 Plan must specify the terms of all transactions (identify the amounts, prices and dates of
transactions);
e.
the plan must provide for a waiting period of at least the later of (1) 90 days after the adoption (or
modification) of the plan and (2) two business days following the disclosure of the Company’s financial
results in a Form 10-Q or Form 10-K for the fiscal quarter in which the plan was adopted (or modified)
(but not to exceed 120 days following plan adoption or modification), before execution of the first
transaction under the plan;
f.
the Rule 10b5-1 Plan must specify a termination date that is at least six months following the effective
date of the plan (but no longer than two years);
g.
if the Insider entering into the Rule 10b5-1 Plan is a Section 16 Person, the plan must include reporting
compliance provisions, instructing parties effecting transactions to provide timely notification of such
transactions for purposes of assuring compliance with applicable reporting requirements, such as those
arising under Rule 144 of the Securities Act and Section 16 of the Exchange Act;
’
h.
Section 16 Persons are limited to one active Rule 10b5-1 Plan at any time; and
i.
if the Rule 10b5-1 Plan is designed to effect the open-market purchase or sale of the total amount of
securities subject to such plan in a single transaction (a “single-trade plan”), the Insider entering into the
plan must not have entered into another single-trade plan in the prior 12-month period that also qualified
for the affirmative defense under Rule 10b5-1.
2.
Procedures. An eligible Designated Insider may seek approval of a Rule 10b5-1 Plan as follows:
a.
the Insider coordinates with his or her broker to draft a proposed Rule 10b5- 1 Plan;
b.
the Insider provides to the Compliance Officers via email to DCI-Trade-Request@ansys.com the
proposed draft Rule 10b5-1 Plan, including the details of the proposed trades and trading prices;
c.
one of the Compliance Officers notifies the Insider via email: (1) of the Company’s approval or rejection of
the contents of the proposed Rule 10b5- 1 Plan, (2) assuming approval, then the proposed signatory of
the Rule 10b5-1 Plan on behalf of the Company (the “Company Signatory”), and (3) the dates during
which such signatory is available to sign (the “Available Dates”);
d.
upon the approval described in (c) above, the Insider certifies via email to DCI-Trade-
Request@ansys.com and the Company Signatory, that:
(i)
the Insider is not in possession of material, nonpublic information concerning the Company; and
(ii)
to the Insider’s best knowledge, the proposed Rule 10b5-1 Plan does not violate the trading
restrictions of Section 16 of the Exchange Act and is in compliance with Rule 144 of the Securities
Act;
c. the second Compliance Officer then approves or rejects the putting into place of the proposed Rule 10b5-1
Plan (the “Second Compliance Approval”);
e.
upon receipt of the Second Compliance Approval, the Insider: (1) completes (or asks his or her broker to
complete) the Rule 10b5-1 Plan document with the date of signature, which must be one of the Available
Dates; (2) signs the Rule 10b5-1 Plan; (3) emails the signed Rule 10b5-1 Plan to DCI-Trade-
Request@ansys.com, the Company Signatory, and copying his or her broker contact, prior to noon EST
on the relevant Available Date;
f.
the Company Signatory countersigns the Rule 10b5-1 Plan on the relevant Available Date and sends a
copy by email to the Insider, DCI-Trade-Request@ansys.com and the identified broker; and
g.
the Insider ensures that the broker countersigns the Rule 10b5-1 Plan and sends a copy to DCI-Trade-
Request@ansys.com.
3.
Additional Information. Any Designated Insider requesting approval of a Rule 10b5-1 Plan shall provide to a
Compliance Officer any documentation reasonably requested by him or her in furtherance of the foregoing procedures. Any failure to
provide such requested information will be grounds for denial of approval by a Compliance Officer.
4.
No Obligation to Approve Plans. The existence of the foregoing approval procedures does not in any way
obligate a Compliance Officer to approve any Rule 10b5-1 Plan requested by an Insider. A Compliance Officer may reject any Rule
10b5-1 Plan at his or her reasonable discretion.
G.
EMPLOYEE BENEFIT PLANS
1.
Employee Stock Purchase Plan. The trading prohibitions and restrictions set forth in this Policy do not apply to
periodic wage withholding contributions by the Company or employees of the Company which are used to purchase Company
securities pursuant to the employees’ advance instructions under the ANSYS, Inc. Employee Stock Purchase Plan, as amended (the
“ESPP”). However, no Designated Insider may (a) elect to participate in the plan or alter his or her instructions regarding the level of
withholding or purchase by the Insider of Company securities under such plan, or (b) make cash contributions to such plan (other than
through periodic wage withholding) without complying with the procedures set forth in Section IV.D above. Any sale of securities
acquired under the ESPP is subject to the prohibitions and restrictions of this Policy.
Any Designated Insider wishing to participate in the ESPP must, during an open window, follow the steps outlined in Section
IV.D.1 above. In addition to the certifications specified in Section IV.D.1.b, the Designated Insider (the “Electing Designated Insider”)
shall submit to DCI-Trade- Request@ansys.com: (1) a statement of his or her intention to enroll in the ESPP during the next ESPP
election period and (2) his or her desired percentage enrollment level. The Stock Administrator will maintain a record of all such ESPP
election submissions made by Electing Designated Insiders (the “ESPP Elections”). Three days prior to the expiration of each ESPP
enrollment period, the Stock Administrator shall review the ESPP Elections and, to the extent any Electing Designated Insider has not at
that time submitted a valid ESPP Election, or has submitted an ESPP Election at an enrollment level different than the relevant ESPP
Election, the Stock Administrator shall notify and inform the relevant Electing Designated Insider. The Electing Designated Insider shall
then promptly submit an election consistent with his or her ESPP Election prior to the end of the relevant ESPP enrollment period.
2.
Exercise of Stock Options. The trading prohibitions and restrictions set forth in this Policy do not apply to the
exercise of an employee stock option through a cash only exercise in which there are no transactions in the market. However, such a
transaction is subject to the Section 16 reporting requirements for those applicable Insiders and, therefore, these applicable Insiders
must comply with the post-trade reporting requirement described in Section IV.I below for any such transaction. In addition, the
securities acquired upon the exercise of an option to purchase Company securities are subject to the above procedures and all other
requirements of this Policy. In particular, such securities may not be sold by Designated Insiders except during a trading window, after
pre-clearance from a Compliance Officer has been received. Moreover, this Policy applies to any sale of the Companys securities to
constitute part or all of the exercise price of an option, including any sale of the Company’s stock as part of a broker assisted cashless
exercise of an option, or any other market sale of the Companys stock for the purpose of generating the cash needed to pay the
exercise price of an option.
3.
Restricted Stock/Restricted Stock Unit Awards. This Policy does not apply to the vesting of restricted stock
or restricted stock units, or the existence of a tax withholding right pursuant to which an employee may elect to have the Company
withhold shares of the Company’s stock to satisfy tax withholding requirements upon the vesting of such awards. This Policy does
apply, however, to any market sale of such stock.
H.
FORMER EMPLOYEES: POST-TERMINATION TRANSACTIONS
Following the termination of any Insiders service to, or employment with, the Company, such Insider is responsible for
maintaining compliance with any legal, regulatory, or other restrictions related to trading. In addition, Section 16 imposes certain
reporting obligations and short-swing trading restrictions on directors and executive officers that may survive termination of employment.
Under Section 16(b), directors and executive officers must forfeit to the Company any “short-swing” profit deemed to be realized by
such Insiders on a matched purchase and sale, or sale and purchase, of Company securities within any six-month period (if such
purchase or sale was initiated prior to the Insiders termination of employment), unless one or both of the transactions are exempt from
Section 16(b) liability.
I.
POST-TRADE REPORTING
Insiders who are subject to Section 16 current reporting requirements are required to report, or ensure the Insider’s
broker reports, to a Compliance Officer any transaction (including transactions pursuant to a Rule 10b5-1 Plan) in securities of
the Company by them or their Affiliated Persons no later than the end of the day in which the transaction occurs. Compliance
by applicable Insiders with this provision is imperative given the requirement of Section 16 of the Exchange Act that applicable Insiders
generally must report changes in beneficial ownership of Company securities within two (2) trading days after such transaction. The
sanctions for noncompliance with this reporting deadline include disclosure in the Company’s proxy statement for the next annual
meeting of stockholders, as well as possible civil or criminal sanctions for chronic or egregious violators. Please note that this reporting
requirement in no way impacts an Insider’s obligation to subject the transaction to review in accordance with the procedures set forth in
Section IV.D.
An Insider who is subject to Section 16 reporting requirements is to provide a report to a Compliance Officer which should
include the date of the transaction, quantity of securities, price and broker-dealer through which the transaction was effected. This
reporting requirement may be satisfied by sending (or having such applicable Insider’s broker send) duplicate confirmations of trades to
a Compliance Officer if such information is received by a Compliance Officer on or before the required date. This requirement is in
addition to any required notification that the Company receives from the broker who completes the trade.
’
’
’
SECTION V. CORPORATE TRADING
The Company is prohibited from entering into a Rule 10b5-1 Plan or amending or terminating an existing Rule 10b5-1 Plan while
in possession of material, nonpublic information regarding the Company. Other than pursuant to an effective Rule 10b5-1 Plan, the
Company is prohibited from repurchasing its securities while in possession of material non-public information.
Prior to engaging in an open market repurchase or entering, amending or terminating a Rule 10b5-1 Plan, an Insider authorized
to act on the Company’s behalf shall secure the approval of each of the Compliance Officers as well as the Chief Executive Officer.
These Officers are encouraged to consult with the Company’s other officers and/or outside legal counsel in determining whether the
Company is in possession of material, nonpublic information.
SECTION VI. POTENTIAL CIVIL, CRIMINAL AND DISCIPLINARY SANCTIONS
A.
CIVIL AND CRIMINAL PENALTIES
The purchase or sale of securities while aware of material nonpublic information, or the disclosure of material nonpublic information to
others who then trade in the Company's securities, is prohibited by the federal and state laws. Insider trading violations are pursued
vigorously by the SEC, U.S. Attorneys and state enforcement authorities as well as by authorities under the laws of foreign jurisdictions.
Punishment for insider trading violations is severe and could include significant fines and imprisonment.
While the regulatory authorities concentrate their efforts on the individuals who trade, or who tip inside information to others who trade,
the federal securities laws also impose potential liability on companies and other persons if they fail to take reasonable steps to prevent
insider trading by Company personnel.
Needless to say, a violation of law, or even an SEC investigation that does not result in prosecution, can tarnish a person's reputation
and irreparably damage a career.
B.
COMPANY DISCIPLINE
Violation of this Policy or federal or state insider trading laws may subject the person violating such Policy or laws to disciplinary
action by the Company up to and including termination. The Company reserves the right to determine, in its own discretion and on the
basis of the information available to it, whether this Policy was violated. The Company may determine that specific conduct violates this
Policy, whether or not the conduct also violates the law. It is not necessary for the Company to await the filing or conclusion of a civil or
criminal action against the alleged violator before taking disciplinary action.
SECTION VII. REPORTING OF VIOLATIONS
Any Insider who violates this Policy or any federal or state laws governing insider trading, or knows of any such violation by any
Insider, must report the violation immediately to a Compliance Officer. However, if the conduct in question involves a Compliance
Officer, if the Insider has reported it to a Compliance Officer and does not believe that he or she has dealt with it properly, or if the
Insider does not feel that he or she can discuss the matter with a Compliance Officer, the Insider may raise the matter utilizing the
Company’s EthicsPoint system as described below.
In addition to the procedure outlined above and as a means of providing an alternate reporting channel for anyone reporting a
violation, the Company has implemented EthicsPoint, a web based system for reporting business ethics violations, including insider
trading. This system is available at https://secure.ethicspoint.com/domain/media/en/gui/1543/index.html
The Chair of the Audit Committee of the ANSYS, Inc. Board of Directors receives all reports generated through the EthicsPoint
system, and such reports will be addressed pursuant to a protocol approved by the Audit Committee. The availability of or use of this
system does not provide relief for individual responsibility regarding a violation of any business ethics, including this Policy.
SECTION VIII. UNAUTHORIZED DISCLOSURE; PROHIBITION ON INTERNET COMMENTARY
While the Company encourages its stockholders and potential investors to obtain as much information as possible about the
Company, the Company believes that information should come from publicly-filed SEC reports, press releases and other sources as
described in the Company’s Regulation FD Policy, rather than from speculation or unauthorized disclosures by Insiders or any of their
Affiliated Persons. For this reason, the Company has designated certain members of management to respond to inquiries regarding the
Company’s business and prospects as set forth in the Company’s Regulation FD Policy. This centralization of communication is
designed to ensure that the information the Company discloses is accurate and considered in light of previous disclosures. Formal
announcements are generally reviewed by management and legal counsel before they are made public. Any communications that do
not go through this review process create an increased risk to the Company, as well as to the individual responsible for the
communication of civil and criminal liability.
In addition, with the advent of the Internet, and the emergence of electronic bulletin boards and chat rooms, electronic
discussions about companies and their business prospects have become common. Inappropriate communications disseminated on the
Internet may pose an inherently greater risk due to the size of the audience they can reach. These forums have the potential to move a
stock price significantly, and very rapidly – yet the information disseminated through electronic bulletin boards and chat rooms often is
unreliable, and in some cases, may be deliberately false. The SEC has investigated and prosecuted a number of fraudulent schemes
involving electronic bulletin boards and chat rooms. You may encounter information about the Company on the Internet that you believe
is harmful or inaccurate, or other information that you believe is true or beneficial for the Company. Although you may have a natural
tendency to deny or confirm such information on an electronic bulletin board or in a chat room, any sort of response, even if it presents
accurate information, could be considered improper disclosure and could result in legal liability to you and/or to the Company. Please
follow the procedures set forth in the Company’s Regulation FD Policy to notify the Company of any such information.
The Company is committed to preventing inadvertent disclosures of material, nonpublic information, preventing unwitting
participation in Internet-based securities fraud, and avoiding the appearance of impropriety by persons associated with the Company.
Accordingly, this Policy prohibits you from discussing material, nonpublic information about the Company or its subsidiaries
with anyone, including other employees, except as required in the performance of your duties. You should not under any
circumstances provide information or discuss matters involving the Company with the news media, the investment
community or stockholders, even if you are contacted directly by such persons, without express prior authorization. This
restriction applies whether or not you identify yourself as associated with the Company. You should refer all such contact or inquiries to
the appropriate persons identified in the Company’s Regulation FD Policy.
Except as otherwise expressly provided in the Company’s Regulation FD Policy, this Policy prohibits you from making any
comments or postings about the Company on any Internet bulletin boards, chat rooms or websites, or responding to comments or
postings about the Company’s business made by others. This prohibition applies whether or not you identify yourself as associated with
the Company.
SECTION IX. CONFIDENTIAL INFORMATION
The Company also has strict policies relating to safeguarding the confidentiality of its internal, proprietary information. These
policies include procedures regarding identifying, marking and safeguarding confidential information and employee confidentiality
agreements. You should comply with these policies at all times.
SECTION X. WAIVERS
A waiver of any provision of this Policy in a specific instance may be authorized in writing by a Compliance Officer or his or her
designee, and any such waiver shall be reported to the ANSYS, Inc. Board of Directors.
SECTION XI. MODIFICATIONS
Ansys, Inc. Audit Committee - Appendix
The Company may at any time change this Policy or adopt such other policies or procedures which it considers appropriate to
carry out the purposes of its insider trading policy. Notice of any such change will be delivered to Insiders by regular or electronic mail
(or other delivery option used by the Company) by a Compliance Officer or designee. An Insider will be deemed to have received, be
bound by and agree to revisions of this Policy when any such revision has been delivered to such Insider.
SECTION XII. QUESTIONS
You are encouraged to ask questions and seek any follow-up information that you may require with respect to the matters set
forth in this Policy. Please direct all questions to the Compliance Officers, who are the Chief Financial Officer and General Counsel of
the Company. In their absence, you may also contact the Company’s Legal Department.
* * * * *
Failure to observe this Policy could lead to significant legal problems, and could have other serious consequences, including
termination of employment.
This document states a Company policy and is not intended to be regarded as the rendering of legal or other advice.
ACKNOWLEDGMENT
I hereby acknowledge that I have read, that I understand, and that I have complied with and agree to continue to comply with,
the ANSYS, INC. Insider Trading Policy and Procedures (the Policy ). I also understand and agree that I will be subject to sanctions,
including termination of employment, that may be imposed by the Company, in its sole discretion, for violation of the Policy, and that the
Company may give stop-transfer and other instructions to the Companys transfer agent against the transfer of Company securities by
the undersigned in a transaction that the Company considers to be in contravention of the Policy.
Date:
Signature:
Name:
(Please Print)
Title:
“
”
’
EXHIBIT 21.1
Subsidiaries of the Registrant as of December 31, 2024
Jurisdiction of Incorporation
ANSYS Austria GmbH
Austria
Fluent China Holdings Limited
Barbados
ANSYS Belgium S.A.
Belgium
ANSYS do Brasil LTDA
Brazil
ANSYS Canada Limited
Canada
ANSYS Technology (Shanghai) Co., Ltd.
China
OPTIS CN Limited
China
Cullimore and Ring Technologies, Inc.
Colorado
Ansys International LLC
Delaware
OnScale, LLC
Delaware
Grove Financing Sub 3, LLC
Delaware
ANSYS France SAS
France
ANSYS Germany GmbH
Germany
DYNAmore Gesellschaft fur FEM Ingenieurdienstleistungen GmbH
Germany
ANSYS Hellas Single Member S.A.
Greece
OPTIS Hong Kong Limited
Hong Kong
ANSYS Software Private Limited
India
ANSYS Ireland Ltd.
Ireland
ANSYS Software, Ltd.
Israel
ANSYS Italia, S.r.l
Italy
ANSYS Japan K.K.
Japan
ANSYS Luxembourg Holding Company S.à.r.l.
Luxembourg
Computational Engineering International, Inc.
North Carolina
Ansys Government Initiatives, LLC
Pennsylvania
ANSYS Poland s p.z.o.o
Poland
ANSYS Rwanda Limited
Rwanda
ANSYS Singapore Pte. Ltd.
Singapore
ANSYS Korea LLC
South Korea
ANSYS Iberia, S.L.
Spain
Engineering Simulation and Scientific Software Rocky DEM S.L.U.
Spain
ANSYS Sweden AB
Sweden
DYNAmore Nordic AB
Sweden
ANSYS Switzerland GmbH
Switzerland
desktop.studio GmbH
Switzerland
Matterhorn Merger Sub GmbH
Switzerland
Taiwan ANSYS Technologies Co.
Taiwan
ANSYS MEA FZ-LLC
United Arab Emirates
ANSYS UK Limited
United Kingdom
Granta Design Limited
United Kingdom
Grove Acquisition Sub Limited
United Kingdom
Grove Financing Sub Limited
United Kingdom
Grove Financing Sub 2 Limited Partnership
United Kingdom
Grove Financing Sub 4 Limited
United Kingdom
Motor Design Limited
United Kingdom
OnScale Limited
United Kingdom
Phoenix Integration, Inc.
Virginia
EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement Nos. 333-152765, 333-174670, 333-177030, 333-196393, 333-206111, 333-212412,
333-256252 and 333-265553 on Form S-8 of our reports dated February 19, 2025, relating to the financial statements of ANSYS, Inc. and the effectiveness
of ANSYS, Inc.’s internal control over financial reporting appearing in this Annual Report on Form 10-K for the year ended December 31, 2024.
/s/ Deloitte & Touche LLP
Pittsburgh, Pennsylvania
February 19, 2025
EXHIBIT 31.1
CHIEF EXECUTIVE OFFICER CERTIFICATION
I, Ajei S. Gopal, certify that:
1.
I have reviewed this annual report on Form 10-K of ANSYS, Inc. ("Ansys");
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of Ansys as of, and for, the periods presented in this report;
4.
Ansys' other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for Ansys
and have:
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to Ansys, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c.
Evaluated the effectiveness of Ansys' disclosure controls and procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.
Disclosed in this report any change in Ansys' internal control over financial reporting that occurred during Ansys' most recent fiscal quarter
(Ansys' fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, Ansys'
internal control over financial reporting; and
5.
Ansys' other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to Ansys'
auditors and the audit committee of Ansys' board of directors (or persons performing the equivalent functions):
a.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect Ansys' ability to record, process, summarize and report financial information; and
b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in Ansys' internal control over
financial reporting.
Date:
February 19, 2025
/s/ Ajei S. Gopal
Ajei S. Gopal
President and Chief Executive Officer
(Principal Executive Officer)
EXHIBIT 31.2
CHIEF FINANCIAL OFFICER CERTIFICATION
I, Rachel Pyles, certify that:
1.
I have reviewed this annual report on Form 10-K of ANSYS, Inc. ("Ansys");
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of Ansys as of, and for, the periods presented in this report;
4.
Ansys' other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for Ansys
and have:
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to Ansys, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c.
Evaluated the effectiveness of Ansys' disclosure controls and procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.
Disclosed in this report any change in Ansys' internal control over financial reporting that occurred during Ansys' most recent fiscal quarter
(Ansys' fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, Ansys'
internal control over financial reporting; and
5.
Ansys' other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to Ansys'
auditors and the audit committee of Ansys' board of directors (or persons performing the equivalent functions):
a.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect Ansys' ability to record, process, summarize and report financial information; and
b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in Ansys' internal control over
financial reporting.
Date:
February 19, 2025
/s/ Rachel Pyles
Rachel Pyles
Chief Financial Officer and Senior Vice President of Finance
(Principal Financial Officer)
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of ANSYS, Inc. (the "Company") on Form 10-K for the year ended December 31, 2024 as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, Ajei S. Gopal, President and Chief Executive Officer of the Company, certify, pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1)
The Report fully complies with requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company.
This certification is provided solely pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall
not be deemed to be part of the Report or filed for any purpose whatsoever.
/s/ Ajei S. Gopal
Ajei S. Gopal
President and Chief Executive Officer
(Principal Executive Officer)
February 19, 2025
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of ANSYS, Inc. (the "Company") on Form 10-K for the year ended December 31, 2024 as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, Rachel Pyles, Chief Financial Officer and Senior Vice President of Finance of the
Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1)
The Report fully complies with requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company.
This certification is provided solely pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall
not be deemed to be part of the Report or filed for any purpose whatsoever.
/s/ Rachel Pyles
Rachel Pyles
Chief Financial Officer and Senior Vice President of Finance
(Principal Financial Officer)
February 19, 2025