Altair Engineering Inc. (ALTR): Boston Consulting Group Matrix [10-2024 Updated]
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Altair Engineering Inc. (ALTR) Bundle
As we dive into the Boston Consulting Group Matrix for Altair Engineering Inc. (ALTR) in 2024, we uncover the strategic positioning of the company through its distinct categories: Stars, Cash Cows, Dogs, and Question Marks. With a robust growth rate in software revenue and a commanding presence in aerospace and defense, Altair is navigating both opportunities and challenges in a competitive landscape. Discover how this innovative firm balances its strengths against declining segments and potential growth areas.
Background of Altair Engineering Inc. (ALTR)
Altair Engineering Inc. (“Altair” or the “Company”) is incorporated in the state of Delaware and is a global leader in computational intelligence. The company enables organizations across broad industry segments to drive smarter decisions in an increasingly connected world. Altair delivers software and cloud solutions in the areas of simulation, high-performance computing (HPC), data analytics, and artificial intelligence (AI).
Headquartered in Troy, Michigan, Altair's products and services leverage computational science to drive innovation and intelligent decisions for a more connected, safe, and sustainable future. The company’s focus on innovation is supported by a robust portfolio of software solutions, which reflects its commitment to meeting the evolving needs of its customers.
As of September 30, 2024, Altair reported a significant increase in software revenue, reaching $432.5 million, a 10% increase compared to the same period in the previous year. This growth was primarily driven by new business and strong retention within existing accounts, particularly in the aerospace and defense sectors.
In recent years, Altair has expanded its capabilities through strategic acquisitions, including the purchase of Research in Flight, Metrics Design Automation, and KSK Analytics in 2024. These acquisitions enhance Altair’s offerings in computational fluid dynamics, simulation as a service for semiconductors, and AI-driven data analytics.
Financially, the company has shown resilience, with a net income of $13.2 million for the nine months ended September 30, 2024, compared to a net loss of $28.6 million in the same period of 2023. This turnaround is indicative of improved operational efficiencies and revenue growth.
Altair's strategic initiatives, combined with its focus on computational intelligence, position it well for future growth in the technology sector, particularly as industries continue to embrace digital transformation and data-driven decision-making.
Altair Engineering Inc. (ALTR) - BCG Matrix: Stars
Strong growth in software revenue, up 16% year-over-year
For the nine months ended September 30, 2024, Altair Engineering reported software revenue of $432.5 million, reflecting a 10% increase compared to $394.0 million for the same period in 2023. This growth translates to a year-over-year increase of 16% for Q3 2024 alone, where software revenue reached $138.7 million compared to $119.1 million in Q3 2023.
Significant retention and expansion within existing accounts
The company demonstrated strong retention and expansion within its existing accounts, particularly in the aerospace and defense sectors. The recurring software license rate was reported at 92% for the nine months ended September 30, 2024, which is crucial for maintaining predictable cash flows and long-term customer value.
Dominant position in aerospace and defense verticals
Altair Engineering maintains a dominant position in the aerospace and defense verticals, contributing significantly to its overall revenue growth. The software revenue growth was primarily driven by new business and strong retention within these sectors, underscoring the company’s competitive edge.
High recurring software license rate at 92%
The recurring software license rate, which measures the percentage of software billings that are recurring, stood at 92% for the nine months ended September 30, 2024. This rate reflects the company’s effective strategy in fostering long-term customer relationships and ensuring a stable revenue stream.
Increased gross profit by 16%, driven primarily by software
Gross profit increased by 16% for the nine months ended September 30, 2024, amounting to $381.7 million, up from $348.6 million in the same period of 2023. This increase was largely attributed to the growth in software revenue.
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Software Revenue | $138.7 million | $119.1 million | +16% |
| Total Software Revenue (9M) | $432.5 million | $394.0 million | +10% |
| Recurring Software License Rate | 92% | 94% | -2% |
| Gross Profit (9M) | $381.7 million | $348.6 million | +10% |
Altair Engineering Inc. (ALTR) - BCG Matrix: Cash Cows
Established software products generating consistent cash flow.
Altair Engineering Inc. has a robust portfolio of established software products that continue to drive significant cash flow. For the nine months ended September 30, 2024, the company reported software revenue of $432.5 million, reflecting a 10% increase from $394.0 million in the same period of 2023.
Consistent demand for core software solutions.
The demand for Altair's core software solutions remains strong, particularly within the aerospace and defense sectors. The nine-month software revenue accounted for 91% of the total consolidated revenue, highlighting the significance of this segment.
High gross margins maintained across software segment.
Gross profit for the software segment was reported at $381.7 million for the nine months ended September 30, 2024, which is a 10% increase compared to $348.6 million for the same period in 2023. This translates to a gross margin of 81%.
Effective cost management leading to stable operating income.
Altair has demonstrated effective cost management, with operating expenses for the nine months ended September 30, 2024, totaling $375.0 million, slightly up from $370.9 million in 2023. This resulted in an operating income of $6.7 million, compared to a loss of $22.3 million in the prior year.
Positive cash generation with $116.6 million from operating activities.
For the nine months ended September 30, 2024, Altair reported $116.6 million in net cash provided by operating activities, an increase of $10.9 million from $105.7 million in the same period of 2023. This substantial cash generation underscores the strength of Altair's cash cows.
| Financial Metric | 2024 (9 Months) | 2023 (9 Months) | Change |
|---|---|---|---|
| Software Revenue | $432.5 million | $394.0 million | +$38.5 million (10%) |
| Gross Profit | $381.7 million | $348.6 million | +$33.1 million (10%) |
| Operating Expenses | $375.0 million | $370.9 million | +$4.1 million (1%) |
| Operating Income | $6.7 million | $(22.3 million) | +$29.0 million (N/A) |
| Net Cash from Operating Activities | $116.6 million | $105.7 million | +$10.9 million (10%) |
Altair Engineering Inc. (ALTR) - BCG Matrix: Dogs
Declining revenue from engineering services, down 14% year-over-year
For the nine months ended September 30, 2024, revenue from engineering services and other decreased to $40.6 million, down 14% from $47.2 million during the same period in 2023.
Low growth potential in client engineering services segment
The client engineering services segment continues to struggle with low growth potential, contributing only 9% of consolidated revenue in 2024 compared to 11% in 2023.
Underperformance in certain markets compared to software segment
Engineering services revenue has lagged significantly behind the software segment, which reported a revenue increase of 10% to $432.5 million for the nine months ended September 30, 2024.
Margins under pressure due to increased competition in services
Margins for engineering services are under pressure, with costs rising by 11% to $34.6 million during the nine-month period, resulting in a gross margin of 15%.
Limited visibility on turnaround strategies for this segment
Management has provided limited visibility on effective turnaround strategies for the engineering services segment, which remains a concern given the ongoing revenue decline and market challenges.
| Financial Metrics | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Engineering Services Revenue | $12.8 million | $14.9 million | -14% |
| Engineering Services as % of Total Revenue | 8% | 11% | -3% |
| Cost of Engineering Services | $11.2 million | $12.3 million | -9% |
| Gross Margin for Engineering Services | 15% | 17% | -2% |
Altair Engineering Inc. (ALTR) - BCG Matrix: Question Marks
Recent acquisitions requiring successful integration to realize potential.
Altair Engineering Inc. completed four acquisitions during the nine months ended September 30, 2024, with a preliminary aggregate transaction consideration of $36.8 million. This allocation included $21.7 million to developed technology, $2.6 million to customer relationships, and $12.5 million to goodwill.
High investment in research and development with uncertain returns.
Research and development expenses for the nine months ended September 30, 2024, were $164.0 million, representing a 2% increase from $160.1 million in the same period of 2023. This accounted for 35% of consolidated revenue.
Potential for growth in emerging markets remains untapped.
As of September 30, 2024, contracted revenue not yet recognized was $256.0 million, indicating strong future potential. However, the company has not fully penetrated emerging markets, which remains a significant growth opportunity.
Fluctuating demand in international markets poses risks.
In the three months ended September 30, 2024, engineering services and other revenue decreased by 14% to $12.8 million from $14.9 million year-over-year. This decline reflects lower customer demand in international markets, presenting a risk to sustained growth.
Need for strategic focus on underperforming areas to unlock value.
Net income for the nine months ended September 30, 2024, was $13.2 million, a significant recovery from a net loss of $28.6 million in the same period of 2023. This indicates potential for unlocking value, but strategic focus on underperforming areas is essential to capitalize on the growth prospects.
| Metric | 2024 | 2023 | Change |
|---|---|---|---|
| Research and Development Expenses | $164,014,000 | $160,126,000 | +2% |
| Net Income (Loss) | $13,179,000 | ($28,601,000) | Improved by $41,780,000 |
| Engineering Services Revenue | $12,778,000 | $14,926,000 | -14% |
| Contracted Revenue Not Yet Recognized | $256,000,000 | $224,800,000 | +14% |
| Acquisition Transaction Consideration | $36,800,000 | N/A | N/A |
In summary, Altair Engineering Inc. (ALTR) showcases a dynamic portfolio as illustrated by the BCG Matrix. The company's Stars reflect robust growth in software revenue and a strong market presence, while Cash Cows highlight stable cash generation from established products. However, the Dogs segment reveals challenges in the engineering services area, with declining revenues and competitive pressures. Meanwhile, the Question Marks signify the potential for growth through strategic integration of recent acquisitions and expansion in emerging markets, underscoring the need for focused efforts to unlock value in these areas.
Article updated on 8 Nov 2024
Resources:
- Altair Engineering Inc. (ALTR) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Altair Engineering Inc. (ALTR)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Altair Engineering Inc. (ALTR)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.