UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 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)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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)

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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ☐   No  ☒

The number of shares of the Registrant's Common Stock, $0.01 par value per share, outstanding as of July 26, 2024 was 87,386,644 shares.

ANSYS, INC. AND SUBSIDIARIES

INDEX

PART I	FINANCIAL INFORMATION	Page No.
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets – June 30, 2024 and December 31, 2023	3
	Condensed Consolidated Statements of Income – Three and Six Months Ended June 30, 2024 and 2023	4
	Condensed Consolidated Statements of Comprehensive Income – Three and Six Months Ended June 30, 2024 and 2023	5
	Condensed Consolidated Statements of Cash Flows – Six Months Ended June 30, 2024 and 2023	6
	Condensed Consolidated Statements of Stockholders' Equity – Three and Six Months Ended June 30, 2024 and 2023	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4.	Controls and Procedures	45
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	46
Item 1A.	Risk Factors	46
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 3.	Defaults Upon Senior Securities	46
Item 4.	Mine Safety Disclosures	46
Item 5.	Other Information	46
Item 6.	Exhibits	47
	SIGNATURES	48

2

PART I – FINANCIAL INFORMATION

Item 1.Financial Statements:

ANSYS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share and per share data)	June 30, 2024		December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	1,098,958	$	860,201
Short-term investments	20,314		189
Accounts receivable, less allowance for doubtful accounts of $16,500 and $20,700, respectively	724,125		864,526
Other receivables and current assets	248,427		324,651
Total current assets	2,091,824		2,049,567
Long-term assets:
Property and equipment, net	86,294		77,780
Operating lease right-of-use assets	109,081		116,980
Goodwill	3,793,510		3,805,874
Other intangible assets, net	776,461		835,417
Other long-term assets	272,662		273,030
Deferred income taxes	189,783		164,227
Total long-term assets	5,227,791		5,273,308
Total assets	$	7,319,615	$	7,322,875
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	24,993	$	22,772
Accrued bonuses and commissions	70,285		170,909
Accrued income taxes	18,437		22,454
Other accrued expenses and liabilities	171,179		215,645
Deferred revenue	423,848		457,514
Total current liabilities	708,742		889,294
Long-term liabilities:
Deferred income taxes	59,752		75,301
Long-term operating lease liabilities	91,703		100,505
Long-term debt	754,049		753,891
Other long-term liabilities	118,866		113,520
Total long-term liabilities	1,024,370		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	1,689,883		1,670,450
Retained earnings	5,448,154		5,283,342
Treasury stock, at cost: 7,891,884 and 8,361,447 shares, respectively	(1,431,774)		(1,474,110)
Accumulated other comprehensive loss	(120,713)		(90,271)
Total stockholders' equity	5,586,503		5,390,364
Total liabilities and stockholders' equity	$	7,319,615	$	7,322,875

The accompanying notes are an integral part of the condensed consolidated financial statements.

3

ANSYS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended				Six Months Ended
(in thousands, except per share data)	June 30, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Revenue:
Software licenses	$	283,232	$	204,897	$	443,553	$	424,049
Maintenance and service	310,906		291,702		617,190		581,997
Total revenue	594,138		496,599		1,060,743		1,006,046
Cost of sales:
Software licenses	11,309		8,659		21,353		20,403
Amortization	22,385		20,079		44,869		39,697
Maintenance and service	35,661		39,602		71,800		75,892
Total cost of sales	69,355		68,340		138,022		135,992
Gross profit	524,783		428,259		922,721		870,054
Operating expenses:
Selling, general and administrative	228,623		202,142		448,266		390,726
Research and development	132,624		125,023		261,435		245,358
Amortization	6,120		5,470		12,265		10,651
Total operating expenses	367,367		332,635		721,966		646,735
Operating income	157,416		95,624		200,755		223,319
Interest income	12,208		3,402		23,203		7,480
Interest expense	(12,238)		(11,560)		(24,607)		(22,318)
Other expense, net	(854)		(3,483)		(1,861)		(3,660)
Income before income tax provision	156,532		83,983		197,490		204,821
Income tax provision	26,498		14,457		32,678		34,673
Net income	$	130,034	$	69,526	$	164,812	$	170,148
Earnings per share – basic:
Earnings per share	$	1.49	$	0.80	$	1.89	$	1.96
Weighted average shares	87,332		86,696		87,199		86,813
Earnings per share – diluted:
Earnings per share	$	1.48	$	0.80	$	1.88	$	1.95
Weighted average shares	87,777		87,192		87,779		87,312

The accompanying notes are an integral part of the condensed consolidated financial statements.

4

ANSYS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended				Six Months Ended
(in thousands)	June 30, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Net income	$	130,034	$	69,526	$	164,812	$	170,148
Other comprehensive (loss) income:
Foreign currency translation adjustments	(8,410)		8,003		(30,357)		21,287
Unrealized losses on available-for-sale securities, net of tax	(8)		—		(85)		—
Comprehensive income	$	121,616	$	77,529	$	134,370	$	191,435

The accompanying notes are an integral part of the condensed consolidated financial statements.

5

ANSYS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended
(in thousands)	June 30, 2024		June 30, 2023
Cash flows from operating activities:
Net income	$	164,812	$	170,148
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	71,533		65,133
Operating lease right-of-use assets expense	11,515		10,750
Deferred income tax benefit	(42,584)		(36,764)
Provision for bad debts	768		2,311
Stock-based compensation expense	125,554		100,472
Other	774		855
Changes in operating assets and liabilities:
Accounts receivable	114,807		133,435
Other receivables and current assets	70,450		47,903
Other long-term assets	6,202		(1,847)
Accounts payable, accrued expenses and current liabilities	(134,618)		(122,952)
Accrued income taxes	(3,383)		5,575
Deferred revenue	(22,686)		(45,371)
Other long-term liabilities	386		(6,016)
Net cash provided by operating activities	363,530		323,632
Cash flows from investing activities:
Acquisitions, net of cash acquired	(1,586)		(197,786)
Capital expenditures	(23,836)		(12,037)
Purchases of short-term investments	(20,099)		(72)
Other investing activities	(3,854)		(5,732)
Net cash used in investing activities	(49,375)		(215,627)
Cash flows from financing activities:
Purchase of treasury stock	—		(196,494)
Restricted stock withholding taxes paid in lieu of issued shares	(76,707)		(59,855)
Proceeds from shares issued for stock-based compensation	10,446		13,622
Other financing activities	(2,922)		(1,294)
Net cash used in financing activities	(69,183)		(244,021)
Effect of exchange rate fluctuations on cash and cash equivalents	(6,215)		(500)
Net increase (decrease) in cash and cash equivalents	238,757		(136,516)
Cash and cash equivalents, beginning of period	860,201		614,391
Cash and cash equivalents, end of period	$	1,098,958	$	477,875
Supplemental disclosure of cash flow information:
Income taxes paid	$	60,537	$	83,635
Interest paid	$	23,992	$	21,847
Non-cash consideration in connection with acquisitions	$	—	$	5,056

The accompanying notes are an integral part of the condensed consolidated financial statements.

6

ANSYS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

	Common Stock			Additional Paid-In Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Loss		Total Stockholders' Equity
(in thousands)	Shares	Amount						Shares	Amount
Balance, January 1, 2024	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				(30,455)				(382)	34,443				3,988
Other comprehensive loss											(22,024)		(22,024)
Net income						34,778							34,778
Balance, March 31, 2024	95,267	$	953	$	1,641,813	$	5,318,120	7,971	$	(1,438,948)	$	(112,295)	$	5,409,643
Stock-based compensation activity				48,070				(79)	7,174				55,244
Other comprehensive loss											(8,418)		(8,418)
Net income						130,034							130,034
Balance, June 30, 2024	95,267	$	953	$	1,689,883	$	5,448,154	7,892	$	(1,431,774)	$	(120,713)	$	5,586,503

	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, 2023	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	(197,416)				(197,416)
Stock-based compensation   activity				(34,529)				(356)	34,350				(179)
Other comprehensive income											13,284		13,284
Net income						100,622							100,622
Balance, March 31, 2023	95,267	$	953	$	1,505,788	$	4,883,552	8,611	$	(1,498,693)	$	(109,438)	$	4,782,162
Treasury shares acquired, including excise tax									343				343
Stock-based compensation activity				44,365				(105)	10,013				54,378
Other comprehensive income											8,003		8,003
Net income						69,526							69,526
Balance, June 30, 2023	95,267	$	953	$	1,550,153	$	4,953,078	8,506	$	(1,488,337)	$	(101,435)	$	4,914,412

The accompanying notes are an integral part of the condensed consolidated financial statements.

7

ANSYS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

(Unaudited)

1.Organization

ANSYS, Inc. (Ansys, we, us, our) 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.

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 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 an Agreement and Plan of Merger (the Merger Agreement) with Synopsys, Inc., a Delaware corporation (Synopsys), and ALTA Acquisition Corp., a Delaware corporation and wholly owned subsidiary of Synopsys (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. During the quarter ended June 30, 2024, the transaction was approved by Ansys stockholders.

2.Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information for commercial and industrial companies, the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, the accompanying unaudited condensed consolidated financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements (and notes thereto) included in our Annual Report on Form 10-K for the year ended December 31, 2023 (2023 Form 10-K). The condensed consolidated December 31, 2023 balance sheet presented is derived from the audited December 31, 2023 balance sheet included in the 2023 Form 10-K. In our opinion, all adjustments considered necessary for a fair presentation of the financial statements have been included, and all adjustments are of a normal and recurring nature. Operating results for the three and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for any future period.

Accounting Guidance Issued and Not Yet Adopted

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. Early adoption is permitted. The standard only impacts footnote disclosures.

Income tax disclosures: In December 2023, the 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.

8

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 are held in various funds of a single issuer at June 30, 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 condensed 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.

3.Revenue from Contracts with Customers

Disaggregation of Revenue

The following table summarizes revenue:

	Three Months Ended						Six Months Ended
(in thousands, except percentages)	June 30, 2024			June 30, 2023			June 30, 2024			June 30, 2023
Revenue:
Subscription lease licenses	$	218,589		$	134,999		$	313,389		$	282,921
Perpetual licenses	64,643			69,898			130,164			141,128
Software licenses	283,232			204,897			443,553			424,049
Maintenance	293,826			273,692			583,166			542,285
Service	17,080			18,010			34,024			39,712
Maintenance and service	310,906			291,702			617,190			581,997
Total revenue	$	594,138		$	496,599		$	1,060,743		$	1,006,046
Direct revenue, as a percentage of total revenue	76.0		%	71.2		%	71.8		%	73.8		%
Indirect revenue, as a percentage of total revenue	24.0		%	28.8		%	28.2		%	26.2		%

Our software license revenue is recognized up front, while maintenance and service revenue is recognized over the term of the contract.

9

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 six months ended June 30, 2024 and 2023 were as follows:

(in thousands)	2024		2023
Beginning balance – January 1	$	479,754	$	435,758
Acquired deferred revenue	—		7,910
Deferral of revenue	1,038,334		961,520
Recognition of revenue	(1,060,743)		(1,006,046)
Currency translation	(11,425)		(2,636)
Ending balance – June 30	$	445,920	$	396,506

Total revenue allocated to remaining performance obligations as of June 30, 2024 will be recognized as revenue as follows:

(in thousands)
Next 12 months	$	862,037
Months 13-24	323,747
Months 25-36	130,501
Thereafter	77,722
Total revenue allocated to remaining performance obligations	$	1,394,007

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 six months ended June 30, 2024 and 2023 included amounts in deferred revenue and backlog at the beginning of the period of $541.8 million and $527.9 million, respectively.

4.Acquisitions

During the three and six months ended June 30, 2024, we incurred acquisition-related expenses of $12.4 million and $26.7 million, respectively, 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 condensed 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 expanded our position as a simulation solution provider within the automotive industry. The effects of the acquisition were not material to our condensed 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.

10

The operating results of each acquisition have been included in our condensed consolidated financial statements since each respective date of acquisition. The effects of the acquisitions were not material to our condensed consolidated results of operations.

5.Other Receivables and Current Assets and Other Accrued Expenses and Liabilities

Our other receivables and current assets and other accrued expenses and liabilities comprise the following balances:

(in thousands)	June 30, 2024		December 31, 2023
Receivables related to unrecognized revenue	$	157,924	$	253,646
Income taxes receivable, including overpayments and refunds	25,091		22,104
Prepaid expenses and other current assets	65,412		48,901
Total other receivables and current assets	$	248,427	$	324,651
Accrued vacation	38,333		42,435
Accrued expenses and other current liabilities	132,846		173,210
Total other accrued expenses and liabilities	$	171,179	$	215,645

Receivables related to unrecognized revenue represent the current portion of billings made for customer contracts that have not yet been recognized as revenue.

6.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:

	Three Months Ended				Six Months Ended
(in thousands, except per share data)	June 30, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Net income	$	130,034	$	69,526	$	164,812	$	170,148
Weighted average shares outstanding – basic	87,332		86,696		87,199		86,813
Dilutive effect of stock plans	445		496		580		499
Weighted average shares outstanding – diluted	87,777		87,192		87,779		87,312
Basic earnings per share	$	1.49	$	0.80	$	1.89	$	1.96
Diluted earnings per share	$	1.48	$	0.80	$	1.88	$	1.95
Anti-dilutive shares	1		50		27		350

11

7.Goodwill and Intangible Assets

Intangible assets are classified as follows:

	June 30, 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	$	1,146,254	$	(597,181)	$	1,146,022	$	(557,359)
Customer lists	285,300		(100,577)		289,874		(89,800)
Trade names	189,639		(147,331)		190,203		(143,880)
Total	$	1,621,193	$	(845,089)	$	1,626,099	$	(791,039)
Indefinite-lived intangible asset:
Trade name	$	357			$	357

Finite-lived intangible assets are amortized over their estimated useful lives of two years to seventeen years.

As of June 30, 2024, estimated future amortization expense for the intangible assets reflected above was as follows:

(in thousands)
Remainder of 2024	$	55,019
2025	115,124
2026	115,953
2027	119,173
2028	112,820
2029	99,010
Thereafter	159,005
Total intangible assets subject to amortization	776,104
Indefinite-lived trade name	357
Other intangible assets, net	$	776,461

The changes in goodwill during the six months ended June 30, 2024 and 2023 were as follows:

(in thousands)	2024		2023
Beginning balance – January 1	$	3,805,874	$	3,658,267
Acquisitions and adjustments(1)	1,583		115,644
Currency translation	(13,947)		18,205
Ending balance – June 30	$	3,793,510	$	3,792,116

(1) 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.

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 events or circumstances changed during the six months ended June 30, 2024 that would indicate that the fair values of our reporting unit and indefinite-lived intangible asset are below their carrying amounts.

12

8.Cash Equivalents and Short-Term Investments

During the six months ended June 30, 2024, we invested in available-for-sale debt securities, which are included in short-term investments in the condensed consolidated balance sheets. As of June 30, 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(1)
Cash equivalents:
Money market funds	$	257,967	$	—	$	—	$	257,967
Total cash equivalents	257,967		—		—		257,967
Short-term investments:
Corporate debt securities	15,267		—		(84)		15,183
Municipal bonds	4,981		—		(29)		4,952
Other short-term investments	179		—		—		179
Total short-term investments	20,427		—		(113)		20,314
Total cash equivalents and short-term investments	$	278,394	$	—	$	(113)	$	278,281

(1) See Note 9, "Fair Value Measurements" for further discussion on fair values.

Of the $15.2 million corporate debt securities, $15.1 million are in a loss position at June 30, 2024. Of the $5.0 million municipal bonds, $4.6 million are in a loss position at June 30, 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 June 30, 2024:

(in thousands)	Amortized Cost		Fair Value
Less than 1 year	$	8,045	$	8,023
1-3 years	12,203		12,112
Total	$	20,248	$	20,135

13

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 our borrowings.

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)	June 30, 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	$	257,967	$	257,967	$	—	$	—
Short-term investments:
Corporate debt securities	$	15,183	$	—	$	15,183	$	—
Municipal bonds	$	4,952	$	—	$	4,952	$	—
Other short-term investments	$	179	$	—	$	179	$	—
Deferred compensation plan investments	$	2,398	$	2,398	$	—	$	—
Equity securities	$	593	$	593	$	—	$	—

			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.

14

The short-term investments in the preceding tables represent available-for-sale debt 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 condensed 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 condensed 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 our condensed consolidated balance sheets.

10.Leases

Our right-of-use 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 $4.5 million per annum through 2024 and $4.7 million per annum for 2025 - 2029.

The components of our global lease cost reflected in the condensed consolidated statements of income are as follows:

	Three Months Ended				Six Months Ended
(in thousands)	June 30, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Lease liability cost	$	7,128	$	7,069	$	14,456	$	14,110
Variable lease cost not included in the lease liability(1)	1,259		1,428		2,642		2,611
Total lease cost	$	8,387	$	8,497	$	17,098	$	16,721

(1) 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 is as follows:

	Three Months Ended				Six Months Ended
(in thousands)	June 30, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Cash paid for amounts included in the measurement of the lease liability:
Operating cash flows from operating leases	$	(6,941)	$	(6,926)	$	(14,154)	$	(13,705)
Right-of-use assets obtained in exchange for new operating lease liabilities	$	5,024	$	902	$	6,413	$	5,316

	As of June 30,
	2024		2023
Weighted-average remaining lease term of operating leases	5.8 years		6.6 years
Weighted-average discount rate of operating leases	3.3	%	3.2	%

15

The maturity schedule of the operating lease liabilities as of June 30, 2024 is as follows:

(in thousands)
Remainder of 2024	$	14,238
2025	26,667
2026	22,555
2027	18,027
2028	16,213
Thereafter	29,777
Total future lease payments	127,477
Less: Present value adjustment	(11,387)
Present value of future lease payments(1)	$	116,090

(1) Includes the current portion of operating lease liabilities of $24.4 million, which is reflected in other accrued expenses and liabilities in the condensed consolidated balance sheets.

There were no material leases that have been signed but not yet commenced as of June 30, 2024.

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 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 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 rate in effect for the three and six months ended June 30, 2024 was 6.24% and 6.28%, respectively, as compared to 5.88% and 5.72% for the three and six months ended June 30, 2023, respectively. The rate in effect as of June 30, 2024 and for the third quarter of 2024 under the 2022 Credit Agreement is 6.26%.

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.

16

As of June 30, 2024, we had $755.0 million of borrowings outstanding under the term loan, with a carrying value of $754.0 million, which is net of $1.0 million of unamortized debt discounts and issuance costs. The total amount was included in long-term debt. As of June 30, 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 June 30, 2024 and December 31, 2023.

12.Income Taxes

Our income before income tax provision, income tax provision and effective tax rates were as follows:

	Three Months Ended						Six Months Ended
(in thousands, except percentages)	June 30, 2024			June 30, 2023			June 30, 2024			June 30, 2023
Income before income tax provision	$	156,532		$	83,983		$	197,490		$	204,821
Income tax provision	$	26,498		$	14,457		$	32,678		$	34,673
Effective tax rate	16.9		%	17.2		%	16.5		%	16.9		%

13.Stock Repurchase Program

There were no share repurchases in the first half of 2024. For the six months ended June 30, 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 June 30, 2024, 1.1 million shares remained available for repurchase under the program.

14.Stock-Based Compensation

Total stock-based compensation expense and its net impact on basic and diluted earnings per share are as follows:

	Three Months Ended				Six Months Ended
(in thousands, except per share data)	June 30, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Cost of sales:
Maintenance and service	$	3,682	$	3,478	$	7,025	$	6,356
Operating expenses:
Selling, general and administrative	38,761		32,194		72,969		56,099
Research and development	24,447		20,629		45,560		38,017
Stock-based compensation expense before taxes	66,890		56,301		125,554		100,472
Related income tax benefits	(14,046)		(10,669)		(37,289)		(28,855)
Stock-based compensation expense, net of taxes	$	52,844	$	45,632	$	88,265	$	71,617
Net impact on earnings per share:
Basic earnings per share	$	(0.61)	$	(0.53)	$	(1.01)	$	(0.82)
Diluted earnings per share	$	(0.60)	$	(0.52)	$	(1.01)	$	(0.82)

17

15.Geographic Information

Revenue to external customers is attributed to individual countries based upon the location of the customer. Revenue by geographic area is as follows:

	Three Months Ended				Six Months Ended
(in thousands)	June 30, 2024		June 30, 2023		June 30, 2024		June 30, 2023
United States	$	314,555	$	210,422	$	514,503	$	457,129
Japan	48,984		62,728		85,516		100,814
China and Hong Kong	27,838		32,144		72,772		71,580
Germany	36,272		40,665		72,470		79,339
South Korea	26,647		26,076		51,017		47,940
Other Europe, Middle East and Africa (EMEA)	94,530		85,573		176,947		167,977
Other international	45,312		38,991		87,518		81,267
Total revenue	$	594,138	$	496,599	$	1,060,743	$	1,006,046

Property and equipment by geographic area is as follows:

(in thousands)	June 30, 2024		December 31, 2023
United States	$	62,695	$	56,421
India	6,277		5,057
France	5,317		4,771
Other EMEA	6,784		6,924
Other international	5,221		4,607
Total property and equipment, net	$	86,294	$	77,780

16.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 $7.3 million. As such charges are not probable at this time, an estimated liability has not been recorded on the condensed consolidated balance sheet as of June 30, 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 present 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 $7.3 million estimated liability. 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.

18

Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and notes thereto for the six months ended June 30, 2024, and with our audited consolidated financial statements and notes thereto for the year ended December 31, 2023 included in the 2023 Form 10-K filed with the Securities and Exchange Commission (SEC). The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles (GAAP).

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 6,300 and 6,200 people as of June 30, 2024 and December 31, 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. Our investments in artificial intelligence capabilities across our simulation portfolio and technical support services enhance the customer experience, democratize simulation and further next-generation innovation.

The engineering simulation software 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 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; and

•Sustainability, including minimizing waste and physical prototyping, and improving circularity and development time.

19

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.

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 as a wholly owned subsidiary of Synopsys. Our Board of Directors has unanimously approved the Merger Agreement. Our stockholders also voted to approve the Merger Agreement in the quarter ended June 30, 2024. If consummated, our common stock will be delisted from the Nasdaq Global Select Market and deregistered under the Exchange Act. The completion of the merger is subject to customary closing conditions, including, among others, approval under certain applicable antitrust and foreign investment regimes. We anticipate the transaction to close in the first half of 2025.

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.

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 three and six months ended June 30, 2024 as compared to the three and six months ended June 30, 2023 reflected the following variances:

	Three Months Ended June 30, 2024		Six Months Ended June 30, 2024
Revenue	19.6	%	5.4	%
GAAP Operating income	64.6	%	(10.1)	%
Non-GAAP Operating income	47.7	%	8.7	%
GAAP Diluted earnings per share	85.0	%	(3.6)	%
Non-GAAP Diluted earnings per share	56.3	%	12.8	%

20

Our results reflect an increase in revenue during the three and six months ended June 30, 2024 due to growth in subscription lease license and maintenance revenue. We also experienced increased operating expenses during the three and six months ended June 30, 2024, primarily due to increased acquisition and personnel costs. Acquisition costs primarily consist of costs related to the Merger Agreement with Synopsys. Quarterly dynamics may not be representative of the momentum in our business given the shifting mix of license types and renewal cycles that can be volatile quarter to quarter. This further highlights the importance of measuring our results based on our fiscal year rather than individual quarters.

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. All constant currency results presented in this Item 2 exclude 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 the 2024 period. Constant currency growth rates are calculated by adjusting the 2024 period reported amounts by the 2024 period 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 three and six months ended June 30, 2024 as compared to the three and six months ended June 30, 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 period exchange rates are reflected in the table below. Amounts in parenthesis indicate an adverse impact from currency fluctuations.

(in thousands)	Three Months Ended June 30, 2024		Six Months Ended June 30, 2024
Revenue	$	(9,806)	$	(13,709)
GAAP Operating income	$	(6,715)	$	(10,113)
Non-GAAP Operating income	$	(6,761)	$	(9,939)

In constant currency, our variances were as follows:

	Three Months Ended June 30, 2024		Six Months Ended June 30, 2024
Revenue	21.6	%	6.8	%
GAAP Operating income	71.6	%	(5.6)	%
Non-GAAP Operating income	51.4	%	11.3	%

21

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.

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 three and six months ended June 30, 2024 and 2023 our ACV was as follows:

	Three Months Ended June 30,
(in thousands, except percentages)	2024				2023		Change
	Actual		Constant Currency		Actual		Actual			Constant Currency
	Amount						Amount		%	Amount		%
ACV	$	520,545	$	533,712	$	488,349	$	32,196	6.6	$	45,363	9.3

	Six Months Ended June 30,
(in thousands, except percentages)	2024				2023		Change
	Actual		Constant Currency		Actual		Actual			Constant Currency
	Amount						Amount		%	Amount		%
ACV	$	927,950	$	944,145	$	887,756	$	40,194	4.5	$	56,389	6.4

Recurring ACV includes both subscription lease license and maintenance ACV and excludes perpetual license and service ACV.

Our trailing twelve-month recurring ACV, converted from the functional currency to U.S. Dollars at the 2023 period monthly average exchange rates, was as follows:

	Twelve Months Ended June 30,				Change
(in thousands, except percentages)	2024		2023		Amount		%
Recurring ACV at 2023 monthly average exchange rates	$	1,993,296	$	1,746,058	$	247,238	14.2

22

Industry Commentary:

During the second quarter of 2024, ACV growth was supported by our core industries of automotive, high-tech and aerospace and defense (A&D). Growth in the automotive industry was supported by increasing demand for our multiphysics automation capabilities and electronics solutions. We continue to see our automotive customers increase simulation users and products to progress net-zero initiatives. Growth in the high-tech industry was driven by demand for our semiconductor, optics and materials intelligence solutions to support our customers’ efforts to advance complex 3D-IC chip designs, augmented reality products and sustainability initiatives. We continue to see investment from the A&D sector as organizations adopt more digital engineering technologies to advance defense platform capabilities, deliver more robust products for space applications and develop novel propulsion systems to improve commercial aviation sustainability.

Geographic Trends:

The following table presents our geographic revenue variances using actual and constant currency rates during the three and six months ended June 30, 2024 as compared to the three and six months ended June 30, 2023:

	Three Months Ended June 30, 2024				Six Months Ended June 30, 2024
	Actual		Constant Currency		Actual		Constant Currency
Americas	47.2	%	47.3	%	11.7	%	11.7	%
EMEA	3.6	%	4.4	%	0.8	%	0.6	%
Asia-Pacific	(7.4)	%	(1.6)	%	(1.1)	%	3.9	%
Total	19.6	%	21.6	%	5.4	%	6.8	%

The value and duration of multi-year subscription lease contracts executed during the period significantly impact the recognition of revenue. As a result, revenue may fluctuate, particularly on a quarterly basis, due to the timing of such contracts, relative differences in duration of long-term contracts from quarter to quarter and changes in the mix of license types sold compared to the prior year. Large swings in revenue growth rates are not necessarily indicative of customers' software usage changes or cash flows during the periods presented. To drive growth, we continue to focus on a number of sales improvement activities across our geographic regions, including sales hiring, pipeline building, productivity initiatives and customer engagement activities.

Use of Estimates:

The preparation of our 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 values 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.

Forward-Looking Information

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 (the Securities Act), as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (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, Inc., including the expected date of closing and the potential benefits thereof, and other aspects of future operation. 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.

23

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 obtaining regulatory approvals, and other conditions related to the completion of the transaction;

•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; 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, 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 and misuse of employee or customer data whether as a result of a cybersecurity incident or otherwise;

•increased 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;

24

•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; 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 the 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;

•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).

Important Information and Where to Find It

This Quarterly Report on Form 10-Q refers to a proposed transaction between Synopsys and Ansys. In connection with the proposed transaction, Synopsys filed with the SEC, and the SEC declared effective on April 17, 2024, a registration statement on Form S-4 (File No. 333-277912), that included a prospectus with respect to the shares of common stock of Synopsys to be issued in the proposed transaction and a proxy statement of Ansys which is referred to herein as the "proxy statement/prospectus." Ansys and Synopsys have filed and may continue to file with the SEC other documents regarding the proposed transaction. This Quarterly Report on Form 10-Q is not a substitute for the proxy statement/prospectus or registration statement or any other document that Synopsys or Ansys may file with the SEC. The definitive proxy statement/prospectus has been mailed to all Ansys stockholders as of the record date. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT, PROXY STATEMENT/PROSPECTUS AND ALL OTHER RELEVANT DOCUMENTS FILED OR THAT WILL BE FILED BY ANSYS OR SYNOPSYS WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.

25

Investors and security holders may obtain free copies of the registration statement, proxy statement/prospectus and all other relevant documents filed or that will be filed with the SEC by Synopsys or Ansys through the website maintained by the SEC at www.sec.gov.

The documents filed by Ansys with the SEC also may be obtained free of charge at Ansys' website at https://investors.ansys.com/ or upon written request to kelsey.debriyn@ansys.com. The documents filed by Synopsys with the SEC also may be obtained free of charge at Synopsys’ website at https://investor.synopsys.com/overview/default.aspx or upon written request to Synopsys at Synopsys, Inc., 675 Almanor Avenue, Sunnyvale, California 94085, Attention: Investor Relations.

No Offer or Solicitation

This Quarterly Report on Form 10-Q is not intended to and shall not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made, except by means of a prospectus meeting the requirements of Section 10 of the Securities Act.

26

Results of Operations

The results of operations discussed below are on a GAAP basis unless otherwise stated.

Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023

Revenue:

	Three Months Ended June 30,
(in thousands, except percentages)	2024				2023		Change
	GAAP		Constant Currency		GAAP		GAAP			Constant Currency
	Amount						Amount		%	Amount		%
Revenue:
Subscription lease licenses	$	218,589	$	221,955	$	134,999	$	83,590	61.9	$	86,956	64.4
Perpetual licenses	64,643		65,679		69,898		(5,255)		(7.5)	(4,219)		(6.0)
Software licenses	283,232		287,634		204,897		78,335		38.2	82,737		40.4
Maintenance	293,826		299,113		273,692		20,134		7.4	25,421		9.3
Service	17,080		17,197		18,010		(930)		(5.2)	(813)		(4.5)
Maintenance and service	310,906		316,310		291,702		19,204		6.6	24,608		8.4
Total revenue	$	594,138	$	603,944	$	496,599	$	97,539	19.6	$