ANSYS Inc (ANSS) 2014 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to ANSYS's second quarter 2014 conference call. Please note, this call is being recorded. With us today are Mr. Jim Cashman, President and Chief Executive Officer, and Maria Shields, Chief Financial Officer. At this time, I would like to turn the call over to Mr. Jim Cashman for some opening remarks.

Okay. Thanks. Good morning, and thanks everyone for joining us to discuss our 2014 second quarter financial results. So let's get started by saying that the Earnings Release and the related prepared remarks document have been posted on the home page of our Investor Relations website this morning, and it contains all of the key financial information and supporting data relative to Q2 and the first half of our 2014 business results as well as our current Q3 and FY14 outlook. So, before we get started, I'd like to introduce Maria Shields, our CFO, for our Safe Harbor statement.

Thank you, 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 the prepared remarks, we'll be making reference to non-GAAP financial measures.

A discussion of the various 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. With that, Jim, I'll turn it back over to you.

Thanks, Maria. Before we open the call up for Q&A, I'd like to briefly provide some commentary about our Q2 results and our Q3 and FY14 outlook. From our perspective, Q2 was a very good quarter that combined results at the top end of our guidance while substantially building for future opportunities. We reported consolidated non-GAAP revenue at the high end of our Q2 outlook range of $234 million, an increase in 8% reported currency or 7% constant currency.

Non-GAAP EPS was $0.86, this was above the high end of our range even excluding a $0.03 related to nonrecurring tax benefits. We're encouraged by the continued progress that we've made in our Asia-Pacific business, as demonstrated by another quarter of double-digit growth.

Overall, the second quarter reflects a combination of improved execution in targeted areas of our business, the continuation of softness in certain markets as well as the various ongoing geopolitical tensions that we highlighted last quarter. Consistent with our stated capital allocation strategy, during the quarter we repurchased just over 970,000 shares, leaving about 2 million shares remaining in the current authorized pool. So here are some other highlights from the quarter.

We achieved revenue growth in all three major geographies, as well as double-digit constant currency growth in GIA, our Asia-Pacific area. We had 20 customers with orders in excess of $1 million. Now we had a similar number in Q2 of last year, but the amount this year represents a 27% increase in the underlying sales associated with them.

Our recurring revenue was very strong at 71%. Deferred revenue and backlog grew to an all-time high of $440 million. Non-GAAP operating margins remained strong, within our guidance range at 47.5%.

We generated $80 million in operating cash flows. There was one other specific data point of interest that we also called out last quarter. The relative strength of lease versus paid up license revenue.

This is also partially reflected in the increase in our recurring revenue percentage and was predominantly driven by continued growth in the lease space, most notably across all of our electronics products. The result of this is that we've updated our outlook for FY14.

This translates into Q3 non-GAAP revenue in the range of $233 million to $241 million, and EPS of $0.81 to $0.85. And revenue for the full year in the range of $943 million to $960 million with EPS of $3.29 to $3.37.

So 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 long-term market opportunity remain intact. We've also noticed that customer increase in interest has led to some more significant engagements, as evidenced by that 27% sales growth and our seven figure customers this past quarter.

These enterprise deals, they are very encouraging in that they embody really the three dimensions of growth that we've been talking about, user count, density and intensity, but they are more complex in terms of timing and composition. 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.

And one last highlight I'd like to mention regards Bob Kocis joining us as our new Vice President of Worldwide Sales and Support. Bob brings a wealth of experience, as well as some new perspectives and expertise that will just add to the existing talent within the ANSYS global team.

We're excited Bob's joined us to continue our drive toward the double-digit revenue growth, as well as long-term vision of Simulation Driven Product Development. With those brief comments, I'd be happy to open it up to Q&A.

We will now begin the question-and-answer session.

(Operator Instructions)

The first question comes from Sterling Auty with JPMorgan. Please go ahead.

Thanks. Good morning.

Good morning.

Hello.

So I didn't see in the prepared remarks or the press release, can you give us what the acquisition related revenue was in the quarter?

Again, it was approximately $2 million related to SpaceClaim.

Okay. And can you give us a sense on SpaceClaim, if you take a look at just one of -- a sample deal, who is that they're seeing the most in terms of -- is there a specific RFP that they're going in and competing and benchmarking against, or how is that kind of sales cycle structured?

Sterling, I'm sorry, I wasn't quite finished with the one part of the answer. We also had about $1 million that was related to Reaction Design, so a total of about $3 million. So anyway, I wanted to clarify that one. So now the next one?

SpaceClaim, sales.

SpaceClaim -- who did they -- the sales cycle -- who did they seeing in the RFPs, if there are dedicated RFPs for that type of purchase.

The largest part of their business right now, Sterling, is through OEM channels and building out their partner ecosystem. Some of those partners happen to be overlap partners that were traditionally ANSYS partners, and then a smaller piece is to direct customers, some of them which are also overlap logos with traditional ANSYS customers. So I would say it's your R&D centers, more towards the designer users, the initial users in the process.

Again, we've talked about this from the very beginning. This is more of a conceptual design supporting simulation, our concept of Simulation Driven Product Development. This is a -- this really isn't a traditional CAD/CAM kind of play.

So, it's not -- don't view it in terms of the RFPs for a series of CAD players. Because as I say, it's really not a primary market that they've been -- it's one that can be served, but it's really not a primary market that they were targeting or that really is the main street of what we've been doing.

Got you. And then along that M&A front, can you give us an update on where you're at in your M&A strategy, what types of opportunities you're seeing? What are the parameters you're looking for at this point, given you've been successful in a lot of the tuck-ins that you've done already.

Well, there's really no change. In general, even with some of the technological advantages our product currently have, we've got a very robust internal spending pattern that's driving those forward, and sometimes we can acquire both talent and software capability to accelerate those.

But the other thing is, if you've noticed the constant rise in some of the major account agreements, if you look at what's even some of our public announcements with the expanded relationships and joint technology relationships we have with key customers, this gets into a little bit more by necessity, not just a technological capability but of a process play that actually supports the infusion of simulation throughout the development cycle.

So when you get to that the things related to process offerings, management of data, those type of things, so really there's nothing different than we've been talking about probably for the last couple of years. It's just that the -- it's an emerging body of capability. There's a different base of players, and so the process of building partnerships, as well as leading to acquisitions is a little bit longer than if you will the usual suspects.

Got it. Thank you.

The next question comes from Steve Koenig with Wedbush Securities. Please go ahead.

Hi. Thanks for taking my question, and I'll do a quick follow-up, as well. I wanted to ask first on the revenues for Q2, so you outperformed certainly relative to the midpoint of your guidance. Jim, would you -- or Maria, would you be able to rank for us or help us take apart what were the most important factors behind -- I'm sorry -- you outperformed relative to the midpoint of your revenue guidance. Could you identify for us the major factors maybe in order of importance for that outperformance?

The key aspect of it, obviously was we had growth in all regions, and they were all pretty much on target but getting to the upper end of the range and over consensus really was largely driven as I mentioned by the Asia-Pacific business, but then also keep in mind the acceleration that we still saw in those upper end customers, fairly significant.

It's the -- it takes a while for people to build into that seven figure range and to have the group that's already there that increased by a fairly substantial -- in excess of 20% growth in those were areas that were a little bit above that. And that was also -- that was somewhat mitigated, and could be counter balanced by the fact that we also mentioned there was an increased shift toward lease and time-based license versus the traditional perpetual, which on one hand, while it built up the deferred balance, it tends to mute a little bit the actual recognized revenue for the quarter.

So it's a good thing for us long-term. But even in spite of all that, when you balance it all out, it still wound up, like I said, above consensus at the pretty much toward the top of our revenue range.

Okay. Yes, I saw your bookings number was very good. Looked like it grew maybe 16% year on year. I did want to ask you then for my follow-up another question about SpaceClaim. Jim, could you talk to us a little bit about the product synergies with your core offering and how any revenue synergies might unfold over time?

Well, over time is a long question, and -- but in reality we do see that, because the ability to build, develop a conceptual geometry that can also keep pace with the optimization capabilities of simulation also allows a much friendlier entry point for casual users to start to utilize the capability and actually close the loop on that. Long-term, that's something that we clearly see, because we've also been talking about it being over past years one of those barriers that we'd be addressing going forward.

But as you see that going forward, keep in mind, we're a couple months into this, and while we've got some fairly significant and I think exciting integration plans, the integration of that capability is going to be an ongoing pursuit. Keep in mind also that for a couple years we were providing this on an OEM partner kind of basis. But the overall theme really is around the democratization of simulation.

It's really around ease of use. It's basically about being able to broaden the base, and if you will just remove some of the initial fears that people might have of stepping into it with a more embracing kind of user interface.

Great. Thanks a lot.

Thank you.

The next question comes from Matt Williams with Evercore. Please go ahead.

Hi. Good morning. Thanks for taking the question.

I was just wondering if we could possibly get an update around sales hiring and what you're seeing in the market there in terms of your ability to on-board reps and maybe where you are relative to plan. It looked like you added about 60 employees in the quarter, and I think when you closed the SpaceClaim acquisition you were talking about bringing on-board about 50 from them. Just curious if we could get an update there. That would be helpful.

Sure. The 60 people, as you noted did include some from the acquisition. But we're pretty much on hiring plans and staffing plans. The on-boarding issue of course is a complex one when you consider the breadth of our products, but we've been having a pretty good hit rate on that. Obviously we had a very smooth transition at the -- as the head of sales role that we did that particular one.

So we're actually -- and the other thing is, keep in mind, you get some evidence, I mean, it's one spot, but you know that for the past few quarters we've been talking about rebuilding, actually bringing the Asia-Pacific team up to a new level that we think is commensurate with where we're headed. And we talked, started talking about that about nine months to a year ago, and over the last couple quarters we've been talking about the noted change there.

So I think in some ways we've been able to increase both the effectiveness of the type of person we're hiring, but also the ability to get them on-board a lot more quickly. That being said, it still is not a matter of weeks, it's a matter -- it takes months to really get people up to kind of a par kind of capability and productivity.

Great. That's helpful. And maybe just one quick follow-up from me. On the large deals that you talked about, obviously a nice increase year-over-year in the dollar value there. And I know in the past you've talked about creating a more strategic relationship with customers and even using some of your services capabilities to really make sure you're getting the most out of those agreements.

Are the increases that you're seeing in terms of dollar value, are these with customers that maybe came in and did a little bit a year ago and are adding capabilities as they're sort of renewing, or is it really a factor of just large deals kind of coming to you right off the bat?

It's a mix. It is mostly known customers. Keep in mind that at the time people thought many years ago that simulation was saturated. Most of these customers have been with us in let's say earlier generations of analysis software capability. They've been with us in many cases for 10, 15, 20, even more longer in terms of years. It's just that we had to do a lot of the other things that we've been doing over the last decade or so to bring it -- to make it more broadly usable to the Company.

So most of those are customers that have been with us for quite a while, and they continue to ramp up. Now, that being said, there are some that are immediate large sales. The majority of them I'd say are probably ones that used lower level capabilities for a number of years and now are branches into broader ones. But you still see that there's quite a bit of this that's a continual increasing base of recurring revenue combined with substantial new sales.

And again, the service aspect of it is the last part, and in general that's a body that we've been building up over the last year or two. Yes, that's having an impact on some of those top customers. It isn't universal across all of them. Some of them are just in a normal proliferation phase. But it definitely has helped us.

We've had a couple of press releases. If you check our website about formal joint technology agreements and things like that that have actually propelled some of that forward. But it's also one where it's not a standard practice that's really out there in industry, at least at the technical detail at which we deal with people ramping up on simulation. So that's one that we're continuing to build it as we grow the capability with the customers.

Great. Thanks so much for the color.

The next question comes from Anil Doradla with William Blair. Please go ahead.

Hello. I had a couple questions. Jim, the whole Eastern European crisis continues to go on. Can you remind us once again what the impacts were in this quarter, and how should we be looking it at, say, over the next 12 months?

At this point what we really did was we said that it was around $10 million for the year, and once it freezes up allocating what would have been in any one quarter, it's kind of tough. We could see over that range. Frankly, the reason why we didn't drum that up a lot on this call is because we mentioned it in Q1. We tried to account for it.

We pretty much assumed, like I think we stated at the time, we assumed something this complex and this nasty is going to go on for at least a year, and for that reason if anything -- if anything positive happens, it's all good for us. But we didn't see it changing any time soon, and quite frankly we didn't see it changing in Q2. If anything, it got slightly more strident.

But again, we pretty much balance a lot of that out. So while it still is an impact, it was factored into our guidance from the last call. It's continued to be baked in there, and if we do get some positive movement on there, it will be a pleasant surprise.

And one of the key themes that is going on in processors is the rise of ARM-based processors. It's a theme that's going to impact the infrastructure markets in 2015 with the rise of half a dozen semiconductor companies launching these products. Jim, you talked about commoditization of processing and wanted to know how you're looking at ARM based processors competing with the Intel platform, bringing the cost down significantly, and how should we be looking at your business, say, over the next 36 months with the rise of these Samnian chips.

In general, any -- there are a lot of different technology bases, but any increase in the availability, drop in cost of any kind of processing, anything driven along that turns out to be a net tailwind for us. And that's everything from a little bit earlier graphics processing units and the fact that they're in there and linking into there, so any form of computing that's out there is -- we're going to tap into it, because frankly as valuable as our software is, it's also -- it also uses a lot of computing resource.

So we go after that whether it's large scale, any of the new, innovative kind of capabilities we'll continue to tap into, and anything that drops the overall hardware cost of that is something that just creates more opportunity for us. So ARM one aspect of that, GPU, and for that matter even some of the things that we see with some of the on-demand kind of licensing and access to that.

So really, it's more of a broader based question but virtually anything that increases the proliferation of the computing capacity and in particular, embeds it in the Company even in -- a customer company, even in advance of us involved in a software engagement has turned out to be a net plus. We've come along way from the day where every time we sold a license we also had to work with them to help procure a UNIX box or something like that to run along. All of this is good movement for us.

Finally, if I could sneak in one small thing, the record backlog, anything that surprised you on the upside on that front?

Well, not really. But we have seen as we've done -- one of the things we saw was traditionally we had kind of our own balance in lease license. It was very stable for a long amount of time. You look at some of the companies that we partnered with, and they each had their own individual model. Amsoft, in, particular really didn't have a lease model. But Apache had virtually all lease model and a lot of it multi-year.

As we started to get integration between the products what we saw was that okay customers that traditionally might have been Apache product but are starting to buy increasing amounts of Ansoft products, well, their -- whatever their dialed in purchase mechanism was for the time-based license, and that's what I mentioned when we saw the lease part of our business actually growing more quickly.

So that was one aspect of it. The other thing is that we do see there are trends toward more of the on-demand kind of usage which is inherently time-based by definition. So we have those two major elements going forward. Those are really the only major trends we saw.

And then again, the other thing is keep in mind, keep in mind what the -- those larger customer deals we talked about that were growing disproportionately, well, since they've been continually accumulating business, part of that accumulation of course is the growth of the maintenance business in addition to some of that also being increased lease business. And of course all that adds to the backlog.

Thanks a lot and congratulations.

Thank you.

(Operator Instructions)

The next question comes from Jay Vleeschhouwer with Griffin Securities. Please go ahead.

Thank you. Good morning.

Good morning.

Hi. I'd like to ask a couple questions regarding in effect your sustainable competitive differentiation built around the breadth of your portfolio. And specifically you've talked, for instance, about systems engineering or what you call your comprehensive system solution on the one hand, including the acquisitions of Apache for electronics, of course, Esterel, Reaction Design for chemical processes. I imagine that's partly aimed at new types of batteries, for example, and SpaceClaim, which when private had a nice niche in automotive.

And so the question I have is do you see automotive as perhaps the principal vertical market in which you can, A, more succeed in systems engineering? So not to exclude other areas, but auto perhaps would be the most significant area. As you're probably aware, one of the major US car companies recently made a very interesting selection, not involving you, around systems engineering, but it's perhaps indicative of what's going on in that space.

Well, I mean, the bottom line is, like anything we do, we assume it's got a broader base. The only thing I'd say is that we've noted over the last couple years in particular that automotive, it's -- while it's not the sole market, it's one that's been under a lot of transformation. Before it was around hybrid drives and battery technology, motor efficiency, things that are inherently multi-physics.

We talked about the fact that the amount of electronic content in car, whether it's entertainment systems, active safety systems, engine and control kind of systems, the combining of the electronics and the mechanics, obviously, was another key aspect. You mentioned Reaction Design, and yes, we see that that kind of -- while it's not really aimed necessarily at chemical, the main thing was toward combustion and fuel efficiency, which of course not only is good for aero,but it's also very good for automotive.

It's more along the lines when you see the convergence of all the regulatory pressures, of all the safety concerns, fuel efficiency, of a whole range of those things, the standard practices that used to be locked in 30, 40 years ago, they're not really the main failure point and failure mechanism. Because when you switch over to new systems that might have unintended consequences, you look at the system combinations, a broad range of things, and that just created in it -- not that automotive itself is inherently more applicable to this.

Every product can apply to this. But the pressures for change and the transformations that are going on are particularly noted in the automotive, and that's why we have seen some of those things going on. Like I said, we've also seen it in commercial aviation and of course the rapid transition of things we've seen a lot in electronics. That's one reason why those have tended to be predominating industries for a number of times. But you're correct. Automotive is one that has been particularly noteworthy as of recent.

Secondly, could you update us on what's going on with EKM and your cloudy investments? Is it fair to think about those two as going increasingly together, that you're trying to grow your EKM business and of course your cloudy investments as now a part of your collaboration strategy.

Actually, that's spot-on. It's probably a little premature to talk about it at this time but in fact, not surprisingly, EKM related to cloud offerings related to collaboration, and actually related to the commercialization of our own offerings inside the cloud has been one that's actually gone -- has actually been one of the more technologically advancing areas for us in the last few months.

The other thing is, we find that it was just the same technologies, our architecture is fine in public cloud or private cloud, but the ability to link all of those together was particularly key. So essentially that's one element where we've continued to -- we talked about the increased R&D spend that we're doing internally.

That's one where there aren't -- there isn't a lot of off-the-shelf things that are really there that are usable for us, and the ability to link in with the innate knowledge created by a simulation product becomes important. That's been a significant part in addition to ease of use of our own internal investment strategy. That's one.

Obviously we've also talked about as being a potential target for some of the M&A activities, but like I say, a lot of these things really don't exist, or there would be a lot of assembly required. It's just that we're always interested in different middleware and infrastructural software that can actually drive that forward. It actually plays into one of the elements of our acquisition strategy.

And lastly, with regard to sales, when Bob was at DTC part of his experience there entailed working with the channel. And my question is would you anticipate now that you have the new head of sales that the role or proportion of sales coming from the channel might change? And on the direct side would you anticipate perhaps taking somewhat more of a vertical alignment as with the aforementioned automotive market or anything else?

The verticalization, we don't want to sit there and over-slice that. In general, we already have teams that are associated, but largely around major accounts and clusters of industry. So it's really not a pure industry alignment, but it's a very focused sales program backed with some targeted marketing.

On the other thing, our main thing is that we want to make sure is our product -- as our product portfolio continues to broaden, the biggest issue we've had are taking these slightly smaller companies that have been with us a number of years and helping them move up the learning curve if you will, on-boarding them to new technology.

And that part of tapping into that channel experience was one thing that we were -- just one of those extra pluses that we wanted to tap into, and this new VP provides an expertise base in there that's particularly strong. A lot of people have ideas on the direct, but it's a little bit more complicated when you're balancing all of that.

It's not that you're going to see anything dramatically different. I hope what you'll continue to see over a multi-year period is commensurate and correlated growth between the two and keeping balance.

Thanks, Jim.

Thank you.

The next question comes from Steve Ashley with Robert W Baird. Please go ahead.

Thanks for taking my question. I want to just go back and revisit an earlier line of questioning on SpaceClaim. In regards to the product road map, what needs to happen to that product for it to reach maybe an important first milestone? You talked about it being kind of a longer term evolutionary process.

I think the understanding here is you're going to try to import some ANSYS technology and simulation into that product. Does that sound right? What kind of time frame are we talking about for that to happen?

I don't think you see it so much as capability being imported into SpaceClaim. I think what you see are some of the SpaceClaim constructs, user interaction styles being more pervasive throughout the ANSYS family in terms of having that newer user interface. A lot of our legacy products, while they're very popular, some of them have -- they've been around for a long time, and so have their user interfaces. And if you think of how user interaction has changed with software and how difficult it is to affect those changes through it, it's pretty complicated.

But with this using -- interacting with a conceptual geometry and gradually refining it as you learn more and more about it is a very natural way of working with things. And so really it's more of the merging and embedding of the combining of the capabilities of simulation with the capabilities of conceptual geometry creation, linking them together so you can do closed loop kind of optimization in a way that actually -- where geometry can be both an input and a parameter to be altered and allow those all to come together. But at the same point is taking advantage of the ease of use, because SpaceClaim was very effective at reaching a broad base of users and being very intuitive, easy to learn.

In fact, we had a chance to witness that ourselves when we OEMed it as -- when they were a third party supplier to us. And we saw the impact that it was already starting to have just with the initial baby steps in terms of implementing that. So I wouldn't see in terms of shoving a bunch of simulation capabilities into SpaceClaim, but I think what happens is it becomes very blurry as to where SpaceClaim -- where geometry creation starts and where simulation ends, it becomes part of an overall process. And linking those together both by data and user interaction are key aspects of it.

That was really good. In terms of is it possible that with ANSYS 16 later this year we could also see some of that ease of use elements being in the ANSYS offering?

I'm sorry, Steve, I didn't mean to cut you off. That's absolutely part of the road map. And even though we're always adding features into the software, solving new classes of problems, I think that we even mentioned the last couple of calls that ease of use is really the banner aspect of moving forward, and that's across all of our product lines.

So it's not just that it's some of the ease of use with geometry, but in terms of what we're doing with all the major product lines, be they electronics, be they fluids or be that structure, starting to put that in. Now, the ease of use, keep in mind, that's a pretty broad-based thing. Ease of use is everything from user interaction, it's to automation of capabilities that always could be strung together, but you had to do them more manually, and now they do them more as automated steps.

And, frankly, some of the ease of use we're getting through the ANSYS customization tool kit, allowing people to customize it to things they want to do or different corporate best practices they have. When we say ease of use it's a really, really broad term. But there are three -- those are the three major fronts that we're working on.

Just real quick, Maria, do you happen to remember in the year ago third quarter you did a large license deal. Do you happen to remember which geography that occurred in?

You mean second quarter, Steve?

There was second quarter where we had a really large one.

That's when I meant to say.

That one we're familiar with. The Q3 one, not so much.

That was in North America, Steve.

Yes.

Perfect. Thanks so much.

The next question comes from Greg Halter with Great Lakes Review. Please go ahead.

Good morning.

Good morning, Greg.

Hello.

Wondered if you could comment on your capital allocation strategy, obviously cash flow has been very strong currently and historically. Obviously you bought back stock. But any thoughts on the continuation of the buyback and/or dividend and/or M&A.

Again, keep in mind, these weren't tactic that we invoked over the last few years. It really is part of a strategy. It's really the same thing we talked about before. It's always been positive accretive acquisitions that help us build our product road map and actually if you will pull the future in sooner, and it secondarily is the share repurchase, which I think we demonstrated in large part.

Keep in mind, as I mentioned in some of my opening comments was we still have around $2 million already authorized, and that's not to say that that's the end game. I'm just saying, that's on the shelf and ready to go. But those elements continue to be the two major bullwarks of our capital allocation.

All right. I don't know if you mentioned this or not. I know you had some comment about the employee count. What openings do you currently have and versus maybe a quarter ago or year ago?

Well, the good news is we've closed some of that quite a bit. We do have -- we always have a number of openings, because we're always -- first of all, keep in mind, for us recruiting is a -- it's a process. It's not an event. It's something that we know we need to continually build.

We know there's certain runway that it takes so we continue go things going on. We don't have quite the number of openings that we did, because we filled some of them. The most important part is in particular the productive sales headcount and keeping that fully fleshed out, that's really been kind of the top of the thing. Bottom line is, we're continuing to hire.

Second of all, we're in disproportionately in good shape, in terms of the sales headcount, although we're always looking for increased talent there. And we're just continuing to -- the recruiting process in a generic sense, just knowing that over the next couple of years that we want to continue to add top flight talent to the team.

Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Jim Cashman for any closing remarks.

Okay. Well, thanks a lot everybody. So basically in closing, the emphasis for the remainder of 2014 it's an ongoing focus on sales execution, and then as some of you noted already the delivery of ANSYS 16, key release for us.

Actually, many of us just spent the last quarter traveling to our annual user group meetings, and we actually engaged with well over 10,000 of our customers and partners from around the globe. So, all I can say is that backing up the numbers and the guidance that we talked about today, those customers, their receptivity and enthusiasm for the long-term vision is actually continuing to strengthen, which gives us a pretty good visibility into that revenue range for 2014 that we mentioned. And it certainly gives us increased confidence in the long-term opportunity.

So again, the normal shout-out is that we continue to get a lot of propelling by a strong combination, the vision continues solid. I think our business model has demonstrated time and time again to be very resilient, the customers are loyal, those ones who keep increasing that large mega customer base. The partners, the technology and now this growing base of exceptional employees they are really what has made it possible and continue to make it possible in the future. And I'd like to thank all them. But thank you for your time, and we'll be speaking again with you next quarter.

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