ANSYS Inc (ANSS) 2013 Q2 法說會逐字稿

Good morning and welcome to the ANSYS second-quarter 2013 earnings conference call. All participants will be in listen-only mode.

(Operator Instructions)

After today's presentation, there will be an opportunity to ask questions.

(Operator Instructions)

Please note, this event is being recorded. I would now like to turn the conference over to Jim Cashman, President and CEO. Please go ahead.

Good morning, everybody, and thanks for joining us. We're going to discuss our 2013 second-quarter financial results. So actually a little bookkeeping. Consistent with the standard protocol that we've been using for number of quarters now, all of the key financial information and the supporting data relative to Q2 and the first half of 2013 business results, and also as well is our current Q3 and fiscal-year 2013 outlook and the underlying assumptions are included in the earnings release and the related prepared remarks document that we posted on the homepage of our investor relations website this morning, so that's all therefore your perusal. But before we get started I'd like to like to reduce Maria Shields, our CFO, and have her go through our Safe Harbor statement so, Maria, if you would?

Okay, thanks, Jim. Good morning, everyone. I'd like to remind you that in addition to any risks and uncertainties that we highlight during the course of this call, important factors that may affect our future business results are discussed at length in our public filings with the SEC, all of which are also available via our website. Additionally, the Company's reported results should not be considered an indication of future performance, as there are risks and uncertainties that could impact our business in the future. These statements are based upon our view of the business as of today and ANSYS undertakes no obligation to update any such information unless we do so in a public forum. During the course of this call and in the prepared remarks we'll be making reference to non-GAAP financial measures and discussions of various of items that are excluded and a full reconciliation of GAAP to comparable non-GAAP financial measures are included in this morning's earnings release materials and the related form 8-K. So Jim, I'll turn it back over to you for some comments.

Okay. Well, actually -- thanks, Maria, and before we open up the call for Q&A I'd like to just briefly provide a little commentary about our Q2 results and our Q3 and fiscal-year 2013 outlook. So basically from our perspective Q2 was a very productive quarter, yielding strong results. They were above the high end of our range on both revenue and earnings. In addition, we largely focused on our own internal sales execution initiatives and spending disciplines as a result of Q1 and the things that we said during that call. Of course, not surprising to those of you who have followed ANSYS' historical performance over many years and many quarters, the strength of the revenue over performance resulted in operating leverage and margins that were also beyond what we had guided coming into the quarter.

So overall, for Q2 we achieved double-digit revenue growth in both recorded and constant currency, constant currency at around 13%. This performance was the outcome of double-digit constant currency growth in each of our three major geographies, as well as in the perpetual software license and maintenance and service revenue lines. The recurring revenue aspect of our business remained healthy at 69% for the quarter, even off of a strong paid-up license growth. The combination of new and renewal business in leases and maintenance yielded a new Q2 record-high deferred revenue and backlog balance of over $386 million. So all of this, of course, yielded superior margins and cash flows from operations of over $87 million, which is a 16% increase over Q2 of last year.

At our recent investor day we said we'd be looking for attractive uses of capital and opportunities to return value to our stockholders, and during the quarter we repurchased just over 988,000 shares, leaving about 2 million shares remaining in the authorized pool. So the result of all this is that we've increased our outlook for fiscal year 2013. This translates into a Q3 non-GAAP revenue in the range of $210 million to $216 million and EPS of $0.73 to $0.76 and revenue for the full year in the range of $860 million to $875 million with an EPS of $3 to $3.07.

Before we wrap up I'd like to provide some qualitative context around the guidance. First and foremost, the fundamentals of our business, the customer interest and the long-term market opportunity remain intact. Our outlook at this time factors in a continuation of the general macro uncertainty around the predictability, timing, composition of deals. That's a reality that we've been dealing with over the course of the past several years and throughout the first half of 2013 and we've been cognizant of this and actually, therefore, built it into our guidance for the remainder of the year. Our outlook also assumes an increased ramp in our second-half spend in connection with hiring resources and a variety of activities that are setting the stage for 2014 and beyond. To net it all out, our enthusiasm continues and we believe it's important to invest in our business to prepare for the long-term opportunity that we see over the next three-to-five years.

Actually one last highlight I'd like to mention is that today is a key milestone date for ANSYS. It's the first, second and fifth year anniversaries respectively of Esterel, Apache and the Ansoft acquisitions and I just wanted to express my own personal note of thanks, in addition to the teams here, to all the employees that have contributed to help us bring these great technologies and companies together into the ANSYS family and to create the world's leader in engineering simulation technology. So with that, we'd now be prepared, operator, to begin with the Q&A portion of the session and head off with that.

Certainly.

(Operator Instructions)

Steve Ashley, Robert W. Baird & Co.

I'd just like to start by asking a question on the deferred revenue and backlog. It declined sequentially -- not a lot; just a little -- just wondering if there was anything related to the timing of maintenance renewals? Or if there was just any commentary around that?

First of all, the main point I want to make is, I think maybe what may appear to be missing here is the fact that the deferred revenue on the balance sheet in Q2 of 2013 is treated differently than it was in Q2 of 2012, so a significant component of what was formerly booked as deferred revenue is now reflected in the backlog. So really the issue is, we may be comparing apples to oranges there because we really weren't that. So we still wind up with about 13% growth. You can look at there's a 13% increase in that but actually you might be looking at a number of -- comparing $386 million versus $343 million in the deferred so that may be part of it.

So in general I don't think the issue is quite as you said. The one thing I would mention that you commented on that always plays a role is that the timing of different renewal orders and maintenance and things like that -- that obviously can affect it. But as you can see, if you net out the numbers and use a constant comparison it drives up much more consistently.

So, yes, but that was not my question. My question is, on a sequential basis, from March to June --

Oh, sequential, I'm sorry.

Backlog and deferred revenue balance declined slightly. Historically that has increased during that period, and so that was -- I was wondering if there was anything just related to maintenance renewals or anything along that line?

No, I'm sorry.

Actually I was triggered off of something I read in one of your pre-notes and so I missed the sequential part of it, I apologize for that. No, if you look at that maybe the biggest issue -- first of all, there's nothing out of the ordinary there. Probably the one thing that can affect that as much is anything is some of the -- that is where some of the renewals, timing if they came in a little bit earlier before or if they lagged a month, that can cause a little bit.

And the other thing is that the nature of the Apache orders are -- they tend to be a much smaller number of customer bases but they tend to be larger multi-year deals, and that puts a certain lumpiness in there. So any one of those would swing a month or two. It might cosmetically affect it, but there's nothing endemic behind the numbers that is contrary to the overall message.

Thank you very much.

Dan Cummins, B. Riley.

Thanks very much. I'm going to issue congratulations in advance for ANSYS once again getting out of debt soon. You do that so well -- you get in and out of debt for all of the right reasons. I think of that, Jim, when you mention the anniversaries or mentioning the deals, the great deals.

And I apologize in advance for what is a, what have you done for me lately, question -- but that total revenue guidance for 3Q, it's flat even at the high end, and that I think implies a down Q-over-Q for license. And that would be unusual for ANSYS, even based on your performance in the last few, what I would call squirrelly years. So I'm curious if your seven- or eight-figure deals, if you had any in 2Q -- is that creating a tough seasonal comp? Or are you giving us a little bit new extra dose of caution here with the guidance? Thank you.

I guess -- well first of all, all of us of are a little bit puzzled at the premise. So we're -- are you talking sequentially Q3 to Q2, because that's normally a thing? But our numbers aren't -- we're just having trouble understanding the premise, because as stated I don't think we agree with it.

Okay. Flat at the high end on the guide. I think your service revenue typically ticks up and up and up, so that would imply that license would go down?

What are you comparing to? Maybe that will help us understand where you're coming from.

The last couple of years, the 3Q over 2Q compare --

Oh.

-- in which license does not go down, or has not, traditionally. That's all I'm wondering. So I'm just thinking, did you have some very large deals in 2Q, particularly on perpetual license? That's what I'm getting at.

Well, Q2 was very strong. I'd say what we've built in, Dan, is Q3 historically has been the -- I'll call it riskiest -- quarter. Just that it's a shortened sales cycle with the extended European vacations and even the extended US vacations. So we have built in some conservatism in the fact that large deals can easily slip out of Q3 into Q4 if all the people that need to sign off aren't around.

Okay, right.

I was looking at your at your guide for last year, I think the guide was actually up a little bit last year, 3Q over 2Q, but that's fine, I appreciate that. Thank you.

All I can say is, behind the scenes that's why we are puzzled by it, because we don't -- it's important to see which dots you're trying to connect, because really behind the scenes we 'e not seeing anything that indicates a flag in that standpoint and there are a lot of different ways that we can look at.

A lot of it's just timing and volatility. As the deals get bigger they can easily move out of one quarter and into another, and we're just trying to set -- we're in what everybody knows is an elongated sales cycles and Q3 has always historically been the iffyest quarter depending on how much can close after that vacation season.

Okay and so my follow up is just -- I thought there were some extra words of caution in the notes around China and India. Just curious if Jim has any extra color to add there? Thanks.

I think if you look at commentary by a lot of software and enterprise software manufacturers, there is a little bit -- there are issues in there. There are business climate issues in India that are going on. There are spending patterns and growth things in China. You look at the uncharacteristic change in the India currency as of recent.

There's a lot of things there that -- it's just one of those things. We're treating them as warning signals so we just put additional attention onto those. And historically we've always called out if there's an area where we think there may be something, or if even in those areas where periodically we -- in the past when we've had execution issues we tended to try to call those out and this is just trying to give the overall story. But there's really -- again, there's really nothing hidden beyond that.

Okay, thank you very much.

Jay Vleeschhouwer, Griffin Securities, Inc.

Jim, you did have an unusually large sequential increase in your perpetual license revenues from March to June -- about $15 million -- which is larger than the first or second quarter sequential increases on average in prior years. So the question -- somewhat following up on the earlier question -- is, could you correlate that increase in perpetual to either geographic performance or any of your functional areas, such as mechanical or fluids or anything of that kind or large deal performance, if you could?

And then as well, how are you thinking about perpetual for the rest of the year? And then a follow up.

Well, all the business -- first, all of the businesses progress. Mechanical's been pretty strong. I'd say the other thing is a small portion of that actually was catch up from Q1; some of that was pull-forward from outlying quarters, later in the year. So there were elements of that. Something comes in the pipeline and we normally have six to nine months visibility, and we normally have those type of things and then -- but they don't always come in exactly on schedule and sometimes they come forward. We had a little bit of that.

We actually had a fair number of the larger deals that came in, some that came in a little bit larger than usual. But like I said -- and then on your geography aspect -- we tried to cover it as well as you can cover it in a brief commentary posted on the website, but every one of the geographies grew double digits in constant currency. But they didn't grow within each region uniformly. So there were some that -- there were pockets of relative strength and weakness throughout each of the regions, so it really wasn't like there was one overall high tide that got raised in any one area.

Okay. As follow up, over the last three quarters your maintenance revenue has grown more quickly than your license revenues. You've had double-digit growth for each of the last three quarters in maintenance on a GAAP basis, and that's better than your license revenues. Could you comment on that? And is that some way correlated, perhaps, with your earlier line of questioning about your deferred?

Well, again, the deferred I think we tried to -- we covered in the fact that, yes, we are comparing some apples to oranges and things like that. Now the other thing is, we've had a number of years of pretty good buildup, of growth; and as a result of that, as the maintenance base continues to accumulate, even if we had a relatively softer Q1 we still have accumulation that is being pulled out of deferred, so it's not unusual for that to grow. That's one reason why seeing the license growth come back much more strongly in Q2 was a positive sign for us.

Okay, thanks, Jim.

Richard Davis, Canaccord Genuity.

Hey, guys, it's D.J. on the line.

So, Maria, maybe first if I can just check my math on currency-adjusted organic growth -- is it 10% in the quarter -- is that right?

Yes.

And then, how fast did Apache grow -- can you ballpark comment on that?

In the mid- to upper-teens range.

Okay. And then, maybe on the lease business -- it's been flat sequentially the last couple of quarters, and the three variables that could impact that are obviously currency and then new business and retention. So I don't think we've heard you talk about retention on that side of the business in the past. Can you comment on why we're not seeing growth in the lease business? I figured that would be a pretty linear grower? Maybe any color there?

Yes, D.J, what I'll say is, for the core leases -- i.e., the Apache side of the business -- that tend to be longer-term leases, we aren't seeing any issues. On the historical ANSYS side of the equation, though, the lease base has got different components. You have some that are just -- because of the nature of their business they tend to lease. But you also have some that are short-term rentals in nature that are --

Yes, like (inaudible) capacity type thing?

Yes, or that are specific to projects that they're doing for the government for XYZ period of time; or smaller consulting shops that only need it for -- so they tend to have a little bit of churn, if you will, in that part of the lease space.

Again I'll go -- I'd like to jump in. I'm sorry, I didn't -- jump in on the core premise. If you look at it, depending upon leases are more popular in certain parts of the world and therefore can be more subject -- plus or minus -- on currency. If you look at constant currency, it's in -- leases grew in the 8% to 9% range, which is -- given the fact that other parts of the business have tended to grow little bit quicker. As people go into enterprise licenses they tend to start to evolve into, if you will, owned versus rent-type of scenarios. And as such, I think that if you look at the overall lease space, it's actually -- we saw no real -- again, we didn't see anything leading up to trigger a concern along that line. And in fact, it's somewhat tied in with the historical patterns.

Okay, got it. Thanks for the color, guys.

Ross MacMillan, Jefferies & Company.

I just wanted to ask one on geography -- one of the things that struck me in this report was the strength of the other European non-German non-UK business, which suggests that you actually saw strength maybe in parts of Europe that have been more challenging of late. Could you just comment on what you're seeing in that other European segment and where the strength came from?

Well, again, overall growth was pretty reasonable. If you saw Germany, for instance, which is a strong package, you look at -- you're in that 13% range; but if you look at other areas that were contributing, yes, there are some areas that are down and those are in the news all the time.

But in particular, the developing territories, most notably Russia; France had good recovery this year. There's no doubt some of the Mediterranean regions, a little bit more subdued, to put it mildly. But just to put things in that perspective -- that's probably where you'd see the geography, where some of the main bulwarks continue to do pretty well and some of the developing territories did in excess of that.

I guess that's my question. You're not seeing a turn in the countries within Europe necessarily that have been hardest hit yet? You're not seeing a turn in some of --?

No, those were major components typically for us, anyway. I'd probably categorize them as wobbly stable.

Okay, that is helpful. (laughter)

(Inaudible) with that, didn't I?

And then, just going back to whether it's deferred or backlog -- just so I'm clear. If I look at -- let's look at the total deferred plus total backlog, and look at that number and think about that as something that we can think about using for bookings where we look at revenues plus change in that total deferred revenue and backlog piece. Obviously, this was weaker than Q1, but would you have us look at the blended rate, let's say, for the first half of the year? Is that the right way to look at it, because there can be issues of timing on maintenance renewals or lease renewals or other elements? So we should really be looking at this on a more blended basis -- is that the right way to look at it?

If you integrate it over time it's somewhat analogous to climate versus weather. You can have a climate of a certain thing but the temperature can spike up and down on any particular day.

So you're not seeing anything in your business from an order intake that was anything but in line to better than you expected?

I'd basically call it in line combined with a lot of the other stuff.

That's very helpful. Thanks, Jim.

(Operator Instructions)

Mark Schappel, The Benchmark Company.

Nice job in the quarter.

Jim, could you just give us some additional color on your Japanese business? A while back you made some big changes over there and it would be helpful for an update.

Well, that's obviously something that takes -- particularly at that level it takes a long time. And we identified the issue months ago, did some structural changes in there that probably I won't comment on right now. But they obviously become manifest in a short time, but did some structural changes in there. There's no doubt that some of the economic churn and the currency swings on there have changed things quite a bit from a numbers standpoint.

But if you -- maybe if you look at -- the most interesting thing is, in Japan, if you look at what happens is, while it actually showed a negative growth, it was largely currency driven, because if you look at the constant currency growth in Japan, it was double digits itself in constant currency -- which to us is a positive sign going forward. In fact, reversing the trend almost -- it almost -- it was like 9.5% year to date; so that actually shows not just -- it shows a trend line in there that we think is encouraging.

But I will tell you, there is a lot of work that continues to go on right now. There's a lot of discussion with the recent election and Abe and some of the things that he is talking about doing there and what will happen. There is still some industries there that are reeling a little bit from pretty intense global competitive pressure. And I don't think their responses have been fully mapped out or felt, so I think that, that's some other issues that we'll have to wait and see, but we have to still service those markets like we would everywhere else because everybody's facing competition.

Thank you.

Steve Koenig, Wedbush Securities.

Jim, your commentary suggests the outperformance was very balanced; it wasn't any one large deal.

That's correct.

So it makes me wonder -- when I compare your performance in Q2 to the CAD vendors -- the enterprise CAD vendors -- you are much stronger. And simulation has more growth in it, we believe; but still the divergence in the performance was kind of striking and I'm having trouble reconciling your performance with theirs. Any thoughts there, since you work with those vendors and you play in those markets. Why are to doing so much better?

The first thing I'll comment on is, we don't walk in their shoes, so it's -- I'm sure we don't see all the nuances there. They may have a series of different challenges. We focus on the market that we excel at, that we know, where we've got things identified. We're working with -- well, there's over 40,000 customers, but there's several hundred in earnest that we're working on some pretty exciting things with. But they also tend to be slow, steady and multi-year type of aspects.

And so, from us I guess we're seeing -- if you look at it we're seeing things in line with the multi-year and in-year guidances that we've been given; the progression that we've been going on. And so from our standpoint, which is the only part we can really comment on, we just see what we've been talking about for a long time. And I know some quarters it falls on deaf ears and some people don't get the story and things like that.

So, to us that's the same. As to regard of what others are doing -- the only thing that we do notice sometimes is if there's a common link. The issues where we see the most headwinds seem to line up with areas where they see the most headwinds. But I don't know if there's -- I don't know the causality of that overall. So I just can't contrast to, specifically -- it's just we're focused and we're in a different market where we tend to have a very strong position.

Okay, all right.

And then I want to ask you for my follow up -- with your share repurchases, it was a pretty large amount. I hadn't seen as large a quarterly repurchase -- I went back to 2005 and I didn't see any.

Well, it was close to that last year, Steve.

Yes, in the full year. But it does look like you're doing more there. I'm just wondering -- are you changing your approach or maybe ramping that up a little?

No, it was opportunistic and, quite frankly, the opportunity presented itself in Q1. We'd like to thank the market because we availed ourselves of the opportunity and we think it works out well for our stockholders.

But, no, it was one of those opportunistic things and we do not do things programmatically; we do have a philosophical direction and then we try to manage that throughout the year. And there's really nothing different along those lines. But a great opportunity occurred for us, much as it did when the stock was at $18, $19, several years back. And we actually happen to really believe in the story and the potential, so when that opportunity comes, we grab it.

Okay, that helps. Thank you, very much. Congrats.

Matt Williams, Evercore Partners.

Of the 40 new additions in the quarter, I was wondering if you could provide some color on how much of that was in the sales and marketing-related area? And just a general update on where your hiring plans on the sales side are, relative to what you thought at the beginning of the year?

Yes, it largely -- look, we always -- in our infrastructure we always add key components and there was some of that going on. That happens on the time. But the lion's share of it, because we're largely about creating and promoting software, there were some in the development area, but the ongoing sales and support are probably the key aspects. They were more the plurality of those additions.

And I think, frankly, if we're talking six months from now, you'll probably see a similar thing leading up to our 2014 year. But that's where we continue to plan to evolve. So it -- probably if I had to put it in order, I'd say sales and support first, with key developers as being a second; and then, like I said, throughout the organization we added some key hires through there just to strengthen and augment different areas of the business.

Okay, that's helpful.

And then just as a follow up -- it would seem to indicate that the number of large deals was ticked down a little bit sequentially; no big surprise there I don't guess. But given the results, it would seem to imply that on the run rate side of the business or on the smaller deal side that things were pretty good there. And just trying to get a sense around how the recent additions on the sales side going back over the last couple of quarters, how they're performing? And if they're impacting the lower end of the market as you might've thought?

Well, if you recall from the previous commentary we talked about, with the growth we've been experiencing we had quite a few new salespeople but we also had existing salespeople who had graduated into sales management position and were starting to get their sea legs under them on that. And yes, I think part of what you saw this time was evidenced by a steady ramp-up. It's not like in three months people then are [folly thing]; they continue to grow for -- in our case sometimes over multiple years. But we saw that ramp-up actually take course.

All right, thanks.

Is there a second part to that, that I missed? I'm sorry, I want to make sure I -- I thought there might --

No, no, that's it. And I understand there's some time to ramp there and was just curious if those recent adds over the last couple of quarters are ramping according to plan, because it does seemed like outside of the large deals that the small and midsized deals were pretty good in the quarter. So I was just curious.

Yes. Well, the small and midsize deals were good. Again, sequentially is a little bit difficult because of the renewal cycles, so things tend to follow different patterns. However, the large deals continue to accumulate on a comparable basis -- that was the part that I thought that I might've missed. Now obviously, since we said that at the end of Q1 things had ramped up a little slower than we had hoped for, I wouldn't say that it's all according to plan. But now if the curve shifts a little bit, we're on the right slope now, albeit a little bit later. There was a little slower initiation of that. But now I just wanted to say that we're -- everything is -- everything didn't happen in the first part of the year.

Great, that is helpful. Thanks, congrats on the quarter.

Barbara Coffey, Standard & Poor's.

When you take a look at what's going on in the electronics market, to some degree you may have a bit of a different competitive landscape. Can you speak to why you think you're seeing such growth there? And is it dislocation of existing competitors, or new needs that you're meeting?

It's mostly greenfield for things. So I think where we've enabled from a process and a breadth standpoint, people to able to utilize that. Now I think the thing is, again, when you say electronics -- and I just when anybody says electronics -- that is getting to be such a pervasive term, because some people might say, okay, well, chipsets are doing this. Well, sometimes even when chipsets are in between releases there's a lot of people that are trying to get a lot of electronics functionality. So when we talk about [megatronics], when we talk about fly by wire, when we talk about a whole range of things like that, they push towards mobility in personal devices and things, then people are actually saying, okay, now how can I get new generation of products, either from new custom system on chip type of things, or from using existing building blocks to give additional functionality.

The other thing is that with electronic something that's going on is it happens in cycles that are so rapid that sometimes they don't have the history or sometimes the luxury of doing these massive prototype and testing cycles. So in some cases they actually tend to rely more on simulation; they tend to be more leaders along that line. That's probably about the only singularities that I see on the electronic side.

And speaking to the competitive landscape on that?

Well, the competitive landscape -- it's, I think that's one thing where just the depth and breadth of the product lines, it really -- the external competition really doesn't play much of a factor there. What does play a factor is internal company's organizational agility and the evolution of their processes and things like that. You're getting into things where the increased convergence of all the physics and the increased complexity of their products actually start to manifest problems that historically weren't there before because they had a bead on the old trajectories of technology.

But as you start combining electronics and mechanics, all the battery technology, you can see that appearing in the headlines every day as to product issues that come. And they're largely driven around these increasingly complex new materials, new electronics, things like that going in. And in some cases the pace of complexity is outpacing the ability of, if you will, traditional engineering wisdom to map, and it only takes a couple of outliers in your bell curve to create negative headlines.

Thank you.

Sterling Auty, JPMorgan.

Hello, guys, it's Saket here for Sterling.

Question for you, actually, on the annual guidance. The second-quarter results came in about $7 million better than the midpoint for second-quarter guidance, and full year is going up by about $3 million to $4 million. So is some of that for some of the pull forward effect that Jim spoke about earlier? Or is there some other item that's maybe impacting that?

Obviously some of it did. Yes, we talk about the pipeline and just because things were pulled forward, a lot of times it's not that -- sometimes we're able to help effect it and sometimes the customer just wants it quicker and predicting how that'll come. So the bottom line is, a portion of that I'm sure was affected by it. But keep in mind, each time we do a refresh on that we continue to evolve our bottoms-up forecast; we continue to build off of all of that; so part of it is net improvement and part of it is pull-forward.

Got it. And then in Europe -- it sounded like your business there is still feeling some effects of a wobbly macro, if you will. And we're just starting to see manufacturing in Europe starting to stabilize. So, how long do you think it'll take before your broader base of customers starts to invest a little bit more consistently in simulation?

Well, first of all, when the economy is good and things stabilize, that's a high tide that is good for everybody. But even the standpoint of Europe, if you look at constant currency for the quarter, it was in that mid- to upper-teens range, too; so it was basically a pretty good story. Again, it tends to be more -- actually, I guess I'd say trifurcated in terms of the stable bigger entities, the wobbly Mediterranean areas, as you mentioned it, and the developing and new territories. There's actually three different stories all playing together and they amalgamate in.

But there's no doubt that, yes, the environment, the headwinds have the strongest there, but our team has responded pretty well and we are anchored by a pretty strong cadre of multinational customers that even if internally Europe may be seeing things from an overall standpoint based on companies that are producing and marketing on a global stage. And from that standpoint there still is a demand -- an inherent demand that keeps pace with that.

Got it, and then last question if I could squeeze it in, and apologies if I missed this -- but how many remaining open reqs for hiring do you have for the rest of 2013?

I don't -- I would say it's probably at least 50 on the low end. I'll be honest, I haven't looked recently, but no doubt one of the things that we are planning for the second half is, given the volatility and the uncertainty around the first half, we are going to continue to hire, because we've got a lot planned for 2014 and we want to make sure that we've got as much of the foundation built before we head into 2014 as we possibly can.

Yes, we have open reqs but the other thing is, as you get into the last half of the year you're starting to bleed over into the operational planning for the ongoing year. And at that standpoint we refactor everything; and some of those reqs may mutate into something else. Some of them will continue to be steady and some of them may be obviated. So it's -- that's why the numerics as you get into the end of the year is a little bit. But for ballpark, the number that Maria gave is a good working number.

Great, that's it for me. Thanks.

And showing no further questions, I will turn the conference back over to Management for any closing remarks.

Okay. So in close, thanks, everybody, for the attendance and that question.

So summarizing here -- the emphasis for the remainder of 2013, it's going to be an ongoing focus on sales execution. We've got a major delivery of our software, ANSYS 15. So obviously, focusing on bringing that over the goal line. We're going to continue to navigate through whatever the new normal is, balancing short-term volatility against, really, the long-term opportunity, which I think has been manifest over the last few years, the last decade -- whatever.

Because the one thing we do know for certain is that the customer receptivity and enthusiasm for the long-term vision just continues to strengthen. So, in fact -- actually a side note here is that many of us has just spent the last quarter, as I mentioned, traveling to our annual user group meetings and we had the chance to engage with somewhere around 15,000 of our customers and partners from around the globe. So the confidence comes directly from those interactions. This is not just a generic thing; there's a lot of specific bolstering that came from our own user community.

So basically continue to be propelled by strong combination of a steady vision, a strong business model, again, those loyal customers and partners, obviously leading technology; and, of course, that base of technology and employees that have grown over the last number of years with us that have made it all possible.

So, I guess I'll just thank you all for your time and we'll speak to you again next quarter.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.