March 1, 2012NASDAQ MarketSite
© 2012 ANSYS, Inc. Created for ANSYS, Inc. by BullsEye Resources www.bullseyeresources.com.
ANSYS 2012 Investor Day Executive Summary
ANSYS 2012 Investor Day March 1, 2012 New York, NY
2 © 2012 ANSYS, Inc. PROPRIETARY & CONFIDENTIAL Created for ANSYS by BullsEye Resources
TABLE OF CONTENTS
Session Session Title Speaker(s) Page
Key Themes 3
1 A Renaissance in Engineering James E. Cashman III, President and CEO 5
2 Key Initiatives Driving Revenues Joshua Fredberg, Vice President, Marketing 8
3 Sales and Service Update Frank Bernieri, Vice President, North American Sales
11
4 Apache Design: History, Market, and Potential Value of ANSYS/Apache
Andrew Yang, Ph.D., Vice President and General Manager; President, Apache Design, Inc.
13
5 Financial Update Maria T. Shields, Vice President, Finance and Administration, and CFO
16
6 Questions and Answers Annette N. Arribas (Moderator), Investor Relations and Global Insurance Officer
Frank Bernieri, Vice President, North American Sales
James E. Cashman III, President and CEO
Joshua Fredberg, Vice President, Marketing
Maria T. Shields, Vice President, Finance and Administration; Chief Financial Officer
Andrew Yang, Ph.D., Vice President and General Manager; President, Apache Design, Inc.
18
Biographies 21
Important Factors Regarding Future Results The Company cautions investors that its performance is subject to risks and uncertainties. Some matters that will be discussed throughout this presentation may constitute forward‐looking statements that involve risks and uncertainties which could cause actual results to differ materially from those projected. These risks and uncertainties are discussed at length, and may be amended from time to time, in the Company’s Annual Report to Stockholders and its filings with the SEC, including our most recent filings on Forms 10‐K and 10‐Q. We undertake no obligation to publicly update or revise any forward‐looking statements, whether changes occur as a result of new information or future events, after the date they were made. THESE SUMMARIES REFLECT BULLSEYE RESOURCES, INC.’S SUBJECTIVE CONDENSED SUMMARIZATION OF THE ANSYS, INC. 2012 INVESTOR DAY CONFERENCE, AND THERE MAY BE MATERIAL ERRORS, OMISSIONS OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE SESSIONS. IN NO WAY DOES ANSYS, INC. OR BULLSEYE RESOURCES ASSUME ANY RESPONSIBILITY FOR THE INFORMATION CONTAINED HEREIN, OR ANY DECISIONS MADE BASED UPON THE INFORMATION PROVIDED IN THIS DOCUMENT.
ANSYS 2012 Investor Day March 1, 2012 New York, NY
3 © 2012 ANSYS, Inc. PROPRIETARY & CONFIDENTIAL Created for ANSYS by BullsEye Resources
Key Themes
Overview
ANSYS performed well in 2011 and is well positioned to
continue to do so in 2012 and beyond. Despite decades of
growth, the penetration of simulation software remains low
and the upside potential remains very high. The market for
simulation continues to grow as enterprises emphasize R&D
and because simulation enables companies to develop products
better, faster, and less expensively. ANSYS is focused on
accelerating the adoption of simulation.
As the simulation market grows, ANSYS is well positioned. The
Company has the industry’s largest and best development
team; market‐leading solutions; global reach; a large customer
base of industry leaders; and a unique sales model with strong
channel partners. The Company also has the financial strength
to continue to invest in R&D, sales and marketing, and strategic
acquisitions. The Company’s focus and strengths enable ANSYS
to capitalize on the market’s emerging opportunities.
Context At ANSYS’ 2012 Investor Day, Marketing, Sales, and Finance
leaders joined CEO Jim Cashman in reviewing results from
2011, describing the Company’s vision and product strategy,
and discussing initiatives to accelerate the penetration of
simulation software. Also, Andrew Yang explained what Apache
Design does, why ANSYS acquired Apache, and why it is a good
fit.
Key Themes
ANSYS’ focus and discipline have enabled the Company to continue to deliver on its commitments.
ANSYS has a long and consistent history of meeting
commitments, reflected by the Company’s continued growth.
The past year was no exception, as in 2011 ANSYS once again
performed well. The Company’s non‐GAAP revenue, earnings
per share, and margins all exceeded the original outlook for the
year. These results reflect the Company’s focus, technology,
geographic and industry diversity, customer relationships, and
continued investments in product development.
A renaissance is under way in engineering.
After decades of incrementalism in the adoption of engineering
simulation, the market is primed to jump to a new adoption
curve. A renaissance is truly at hand, which bears similarities to
the Renaissance that took place around 500 years ago.
Similarities include a globalization in commerce, convergence of
art and science, explosion of information technology, and need
for multidiscipline approaches. The renaissance under way in
engineering makes this an exciting and transformational time
for the simulation space.
The pressures on engineers and product developers have never been greater.
In today’s highly competitive global context, companies see
innovation and product development as critical to their future
success—and are investing heavily in R&D. In all industries,
enterprises are developing sophisticated new products.
Engineers are under pressure to make sure these complex
products work as intended, while getting them to market
quickly. With companies betting their future on product
development, the cost of being wrong and value of being right
have never been greater.
Simulation provides the ability to transform product development.
Historically, the process for product development has involved
developing a concept, locking in a design, developing a physical
prototype, testing it, analyzing it, and either fixing it or
proceeding to production. The need to lock in design
parameters decreased flexibility, slowed development, and
increased costs.
ANSYS’ vision of Simulation‐Driven Product Development™
(SDPD) provides a better way. Early in the design process—
before locking in—engineers can run numerous simulations to
understand how a component, system, or product will perform
in the real world. Engineers can ask what‐if questions, create
virtual prototypes, conduct design analysis, and optimize the
design. The results of utilizing simulation early in the design
process are shorter development cycles, less expensive design
processes, and products that perform better in the real world.
Also, ANSYS simulation tools transform the process for
development, shifting it from a silo‐based approach to a more
collaborative, enterprise‐wide approach.
Despite proven success, simulation penetration remains low. ANSYS is focused on accelerating penetration.
Industry leaders in all geographies, industries, and segments
use ANSYS simulation tools. This includes aerospace and
defense, automotive, electronics, industrial equipment,
materials and chemical processing, energy, consumer products,
and more. As numerous case studies reveal, ANSYS is helping
transform how companies develop new products, with
breakthrough results.
Still, despite compelling data on cost savings and cycle time,
positive ROI, and strong testimonials, the Company estimates
that just 1% of engineers at “average” customer companies and
ANSYS 2012 Investor Day March 1, 2012 New York, NY
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only 2–8% at “advanced” customers use ANSYS tools. The
market is far from saturated, and there remains plenty of
opportunity for future growth.
The key is driving adoption by overcoming the hurdles that
hinder adoption. The major hurdle is convincing potential users
of the accuracy of simulation so they will have confidence in
the results. Other hurdles include training engineers to be
comfortable using simulation tools and changing design
processes and cultures to incorporate simulation. These hurdles
are surmountable, but they are significant and will take time.
ANSYS mobilizes around a number of customer initiatives that
present opportunity for ANSYS growth. These are centered on
increasing the number of users as well as density and intensity
of usage. Initiatives include amplifying engineering by broadly
“democratizing simulation”; creating an open collaboration
platform for simulation; working with IT departments so
organizations can develop a cost‐effective, scalable IT
infrastructure that enables simulation to take place; changing
corporate culture through use of systems‐level simulation of
smart products; and encouraging the use of robust design.
As the penetration of simulation increases, ANSYS is extremely well positioned.
As the simulation market continues to grow and mature—with
initiatives by ANSYS accelerating the process—ANSYS is in a
good spot. Reasons why ANSYS will take advantage of changes
taking place in the market include:
• Focus. ANSYS is dedicated exclusively to engineering
simulation; this is all ANSYS does. As a result of this focus
over the past 40 years, ANSYS has become the world’s
leading provider of simulation software and services; has
produced a continuous stream of product innovations; and
has built long‐term trust‐based relationships. There is no
change in the Company’s focus.
• Technology. ANSYS technology enables customers to
predict with confidence that their products will survive
and thrive in the real world. Customers can simulate
multiple concepts virtually and decide what to invest in.
Customers trust ANSYS software to help ensure the
integrity of their products. The Company’s technological
innovations are produced by the world’s largest and most
capable development team focused on simulation.
• Product vision/strategy. ANSYS has a clear vision for
Simulation‐Driven Product Development, a product
strategy focused on providing a complete simulation
system, and unequaled product depth and breadth.
• Sales and service model. ANSYS’ sales model focuses on
developing long‐term relationships, which produces a
significant recurring revenue stream. These relationships
are supported by industry and technology expertise. The
Company has a unique hybrid model of direct sales,
indirect sales, service, and support. In addition, long‐
standing channel partners bring technical sophistication
and local support. This model provides a competitive
advantage for ANSYS.
• Financial stability. ANSYS’ business model provides good
visibility into future revenues. The Company’s financial
stability allows ANSYS to continue to invest in product
development, sales and marketing, and strategic
acquisitions.
These strengths and advantages position ANSYS well to
capitalize on the opportunities that will exist as more engineers
adopt simulation software.
The acquisition of Apache Design further strengthens ANSYS’ position.
The acquisition of Apache (the leading provider of low‐power
simulation solutions) strengthens ANSYS’ product portfolio with
best‐in‐class solutions in a growing, strategically important
area. It brings to ANSYS new technology, new customers, and
new talent, all of which will help accelerate ANSYS’ growth.
ANSYS 2012 Investor Day March 1, 2012 New York, NY
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Ansys Inc. (ANSS)Daily from 22-Feb-2002 to 23-Feb-2012 High:1102.00Indexed Total Return as of 22-Feb-2002 = 100 Low: 58.47U.S. Dollar (Split / Spinoff - Adjusted) Last: 1050.92
Data Source: IDC / Exshare
A Renaissance in Engineering Speaker: James E. Cashman III, President and Chief Executive Officer
Overview
As the pace of innovation accelerates and R&D spending
continues to rise, companies in all industries are focused on
product development. They want to get to market faster with
more sophisticated products, but they need confidence that
their products will work. The cost of being wrong in product
development and the value of being right have never been
greater.
Being right means solving extremely complex design problems.
Historically, product development processes have been slow,
expensive, and inflexible. ANSYS’ vision is Simulation‐Driven
Product Development™ (SDPD), in which product developers
transform their product development processes through use of
multiphysics simulation tools.
This transformation is under way in many organizations. Yet,
despite ANSYS’ consistent growth, the use of simulation tools
by engineers remains low, even at ANSYS’ leading customers—
and the opportunity is significant. ANSYS will drive growth by
increasing the number of simulation users, density of usage,
and intensity of use. This growth requires accelerating adoption
by continuing to innovate.
Context
Mr. Cashman provided an introduction to ANSYS, shared
ANSYS’ vision for Simulation‐Driven Product Development™
(SDPD), and explained the trends ANSYS sees. He also discussed
the Company’s penetration, the hurdles to increasing
penetration, and what ANSYS is doing to accelerate adoption.
Key Takeaways
Through focus and technological innovation, ANSYS has met commitments and created significant advantages.
Over the past 10 years, ANSYS has consistently met
commitments, a history reflected by the Company’s continued
growth and the appreciation of the share price.
Once again in 2011, ANSYS delivered on its commitments. The
Company’s non‐GAAP revenue, earnings per share, and margins
all exceeded the outlook for the year. (The 2011 results, capital
deployment plans, and 2012 outlook were discussed by CFO
Maria Shields. A summary of her remarks is on page 16.)
ANSYS results reflect:
• Focus. ANSYS is dedicated exclusively to engineering
simulation; this is all ANSYS does. As a result of this focus,
over the past 40 years ANSYS has become the world’s
leading provider of simulation software and services,
produced a continuous stream of product innovations, and
built long‐term trust‐based relationships. There is no
change in the Company’s focus.
• Technology. ANSYS technology enables customers to
predict with confidence that their products will survive
and thrive in the real world. Customers can simulate
multiple concepts virtually and decide what to invest in.
Customers trust ANSYS software to help ensure the
integrity of their products. The Company’s technological
innovations are produced by the world’s largest
development team focused on simulation.
• Support and services. ANSYS technology and people bring
clarity and insight to customers’ most complex
phenomena through fast, accurate, and reliable
simulation. This includes sharing best practices about
SDPD.
• Diversity. ANSYS is truly international, with more than 60%
of revenue coming from outside the United States. In
2011, 33% of revenue was from North America, 34% was
from Europe, and 33% was from Asia and other markets.
ANSYS business is also highly diversified by industry. No
industry accounts for more than 20% of ANSYS revenue,
with electronics, automotive, and aerospace and defense
each representing 16% to 18%. No individual customer
represents more than 5% of the Company’s revenue.
• Customer leadership. In every industry—from automotive
to energy to biomed to consumer products—the leading
companies use and rely on ANSYS technology. Today
ANSYS has more than 40,000 customers, including 96 of
the top 100 industrial companies on the FORTUNE Global
500 list. Many of these customers are underpenetrated,
providing significant opportunities for further growth.
• Independence. ANSYS is financially independent, with long‐
term financial stability. ANSYS is also technologically
independent, with flexibility to bridge all CAD and eCAD
systems, as well as all major IT operating systems.
ANSYS 2012 Investor Day March 1, 2012 New York, NY
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ANSYS’ Vision: Simulation‐Driven Product Development™.
ANSYS customers face increasing competitive pressure and
have little margin for error. They are competing in global
markets, and their customers have high expectations. Success
requires shorter product lifecycles and faster time to market.
These competitive pressures are increasing the pace of
innovation and R&D spending. The number of patents filed
continues to increase each year, and the rate of growth in
worldwide R&D spending outpaces GDP growth. Companies in
all industries are committed to R&D, and a frequent refrain
among executives is, “We will win with tomorrow’s products,
not today’s.” Companies are seeking to “jump the ‘S’ curve” by
developing next‐generation technologies that leapfrog the
existing technologies in a market.
“The cost of being wrong [with product development] has
never been greater and the value of being right has never
been greater.” – Jim Cashman
To succeed in today’s competitive environment, companies
need to rethink how they develop products. Historically
product development has been a sequential process (shown
below) of developing a concept, locking in a design, developing
a physical prototype, testing it, analyzing it, and either fixing it
or proceeding to production. The need to lock in design
parameters decreased flexibility, slowed development, and
increased costs.
ANSYS’ vision of Simulation‐Driven Product Development™
(SDPD) transforms how companies develop products. Product
designers can run simulations, ask what‐if questions, create
virtual prototypes, conduct design analysis, and engage in
parametric design optimization. SDPD can occur rapidly and
repeatedly, and organizations can get it right before locking in
decisions about components, tooling, or processes. The vision
for SDPD involves:
• Advanced technologies. This entails using simulation
technologies to study all aspects of a product including
structural mechanics, fluid dynamics, high‐ and low‐
frequency electromagnetics, thermal mechanics, and
more.
• Virtual prototypying. Engineers don’t want to use just one
advanced technology; they want to use multiple technol‐
ogies, and they want them to be integrated. Virtual
prototyping provides the ability to look at multiple physics
and complete systems. It also enables not just looking at
the product, but simulating the entire environment in
which the product will operate.
• Process compression. ANSYS’ vision involves automating
aspects of the product development process, spreading
best practices, and democratizing simulation.
• Dynamic CAE collaboration. Product development will be
transformed when development silos give way to
collaborative organizational development processes.
In achieving this vision, ANSYS is committed to ongoing
investment in R&D, which has increased more than 10 times
over the past 15 years. These investments, which include
internal R&D efforts coupled with technology acquisitions and
partnerships, have produced breakthrough multiphysics
technologies and a portfolio of products with unequalled depth
and breadth. ANSYS solutions—which provide a competitive
advantage—are scalable, flexible, and fit within different
customer environments and workflows.
ANSYS will drive future growth by accelerating the adoption of simulation.
ANSYS’ leadership position is based on repeatedly jumping the
‘S’ curve in the simulation market with a stream of innovative
new technologies. (In many cases, ANSYS has jumped its own S
curve.) Yet, even though ANSYS’ business and the simulation
market have steadily grown, the market is still unpenetrated.
ANSYS 2012 Investor Day March 1, 2012 New York, NY
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The Company estimates that, currently, fewer than 10% of the
engineers at ANSYS’ leading customer companies use ANSYS
products, and only about 1% of all engineers are users at
average accounts.
“We have had steady growth in a highly unpenetrated
market.” – Jim Cashman
Projecting the future addressable market for simulation is
impossible, just as it once was for the computer market.
Looking back, in 1943 IBM’s Thomas Watson thought the world
market for computers was five, and in 1977 Ken Olsen of Digital
said there was no reason why anyone would want a computer
in his home. It is clear that many more engineers will adopt
simulation technology in the coming years. Could the
simulation market be 10 times greater? 20 times greater? 100
times greater than it is today? It is impossible to know. The key
question is not how big the potential market could be; it is how
to accelerate the timing of adoption. From ANSYS’ perspective,
the key to driving adoption is overcoming the hurdles that exist.
Hurdles to Adoption
The key hurdles are:
• Internal validation. Potential users need confidence that
simulation will work.
• Accuracy. Potential users must know that they can trust
the results of simulation. Results that are within 90%
aren’t good enough.
• Training. Users must be taught to use simulation tools,
thereby becoming comfortable using them for complex
design projects.
• Process. Developing products by using SDPD is a different
organizational development process.
The good news is that none of these hurdles is insurmountable,
but all of them take time. Importantly, neither price nor
distribution is a barrier. While price is always an issue, the ROI
of ANSYS software is extremely high. When engineers have
confidence in the results and organizations change their
processes, price is no longer a barrier.
Accelerating Adoption
Adoption will occur over time by eliminating the hurdles that
exist. ANSYS’ goal is to accelerate this process.
ANSYS thinks about growth along the following dimensions:
growing the number of users; growing the density of users; and
growing the intensity of usage. Actions can be taken along each
dimension to accelerate usage.
• Number of users. With only an estimated 2% to 8% of
engineers at ANSYS customer companies using simulation,
the growth potential even at existing customers is
significant. This is already happening as the number of
users at ANSYS accounts is growing faster than the
engineering headcount. Customers are using ANSYS tools
to amplify engineering resources.
Accelerating the number of users will be done by
democratizing simulation. This involves making products
more automated and easier to use—but not less
sophisticated—and offering services to assist users.
• Density of usage. At major accounts, usage has increased
as customers buy more modules and use them more
often, especially for systems‐level analysis of complex
smart products.
The density of usage will be accelerated with products that
accurately solve complex problems.
• Intensity of usage. One way that intensity is increasing is
through the use of high‐performance computing (HPC)
solutions, which is growing rapidly at advanced and lead
accounts.
Adoption will be accelerated through robust design that
delivers extreme innovation and provides design
confidence to more users.
Other accelerants include cost‐effective and scalable solutions,
along with an open collaboration platform.
Other Important Points
ANSYS academic program. ANSYS academic products are
currently used at over 2,400 institutions in 79 countries.
This has multiple benefits for ANSYS, including training
students in simulation, accelerating students’ capabilities,
building relationships, and gaining exposure to future
technologies to incorporate as part of ANSYS. Also, ANSYS’
presence in academia helps attract potential employees.
New release. ANSYS’ continued innovation is seen in the
newest release of the Company’s software, R14, which
occurred in the fourth quarter of 2011. This release was
on schedule and has been well received.
ANSYS 2012 Investor Day March 1, 2012 New York, NY
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Key Initiatives Driving Revenues Speaker: Joshua Fredberg, Vice President, Marketing
Overview
ANSYS is focused on five specific initiatives to drive the
adoption of simulation. These are: smart products, which
simulate complete systems and increase the density of usage;
amplifying engineering, which increases the number of
simulation users; product integrity through robust design,
which drives the intensity of usage; cost‐effective and scalable
IT; and an open collaboration platform.
These initiatives will not only drive penetration, they will also
affect ANSYS’ product strategy. In the future, ANSYS’ product
portfolio will simulate more of the complete system (including
single physics, multiphysics, multiscale, and multifidelity) while
also delivering high efficiency, productivity, and flexibility to
customers.
Context
Following Mr. Cashman’s ANSYS overview and discussion of
simulation adoption, Mr. Fredberg described five initiatives to
drive adoption. He then explained how these initiatives are
being translated into ANSYS’ product strategy.
Key Takeaways
Smart products are driving system simulation, which increases
the density of usage and provides a cross‐selling opportunity.
Smart products are everywhere. These are products with built‐
in intelligence that are able to react to the user and their
environment. Aerospace applications, phones, televisions, cars,
and consumer products are all examples of products that are
increasingly smart.
These products are extremely complex to design and build, as
they often incorporate thousands of electronic parts and
numerous systems that have to work together. Traditionally,
companies design each system and subsystem in separate silos.
Then, they spend billions of dollars on physical testing late in
the product design process.
But the design process is changing in many industries.
Companies began using single‐physics simulation to simulate
the design of individual parts. This evolved to simulation of
single components using multiphysics. Now, due to the growth
of smart products, engineers are simulating entire systems and
environments. Use of simulation decreases the costs of physical
testing and provides important insights early in the design
process. Also, companies are evolving from a siloed approach
to a comprehensive, enterprise‐wide design view.
“Simulation is not just about saving costs; it is about
getting insights earlier in the design process.” – Josh Fredberg
A systems‐level analysis approach comprises a number of key
requirements—which ANSYS uniquely provides. These include
multiphysics technology (mechanical, electromechanical, and
fluids physics simulation capabilities with automated and
interoperable coupling), multiple users (individuals and groups
working on the same project, either simultaneously or
sequentially), multiscale capabilities (physical model scope
ranging from parts to subassemblies to assemblies), and
multifidelity (3‐D detailed and reduced‐order models, as well as
combinations of both). These are all ANSYS strengths. The focus
on systems simulations increases the density of simulation
usage and presents cross‐selling opportunities for ANSYS. An
analysis of several key accounts shows that, in 2011, most
engaged in mechanical, electromechanical, and fluids
simulation. Growth in smart products with multiple complex
systems bodes well for ANSYS.
Because enterprises are under pressure to do more with their
existing design teams, they need to amplify their engineering
talent.
With good engineers being expensive and hard to find,
enterprises want to drive the efficiency and effectiveness of
their engineering resources. The opportunity for ANSYS is to
amplify current engineers’ output and increase the number
using ANSYS by democratizing simulation to the engineering
masses.
ANSYS’ platform strategy:
• Makes multiphysics easier. ANSYS simulation tools have
“connected the dots” and made multiphysics analysis
doable by mainstream engineers.
• Automates for a heterogeneous IT environment. ANSYS’
open and flexible platform amplifies engineering because
it works well in a wide range of customer IT environments.
• Allows for ANSYS® WorkbenchTM customization. ANSYS
Workbench can be customized to fit with an enterprise’s
existing environment and processes, making it easier for
more people to use it. ANSYS Workbench is an enabler to
grow the user base.
• Involves sharing know‐how. ANSYS knows a great deal
about simulation and shares best practices with customers
through training and services.
ANSYS 2012 Investor Day March 1, 2012 New York, NY
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“There is not a company on the planet that knows more
about simulation than we do . . . We are not just a product
company; we are also a service company. We help
companies work differently to increase their value from
simulation.” – Josh Fredberg
Cummins is a great example of amplifying engineering. The
company previously engaged in a great deal of physical testing,
but changed its culture and strategy to incorporate simulation.
This meant involving Cummins’ engineers early in the design
process by customizing for them. For Cummins, this resulted in
deriving important insights earlier in the design process and
decreasing development cycle times from one year to five
months. For ANSYS, the democratization of simulation resulted
in three times more Cummins users of ANSYS tools.
By using simulation for robust product design, enterprises
assure greater product integrity.
Enterprises engaged in product design are typically trying to
solve extremely difficult problems. There can be dozens,
hundreds, or even thousands of inputs into a design; some are
within an enterprise’s control while others are driven by
external factors. Variations in operating conditions,
manufacturing processes, and material properties create
uncertainty in the success of a product design.
ANSYS tools provide product developers with the ability to run
numerous scenarios and simulations to understand how their
product will perform along multiple dimensions in real‐world
conditions. Doing so results in a more robust design and greater
product integrity.
The path to robust design (below) starts with a single physics
solution, evolves to multiphysics, and then allows what‐if
studies. It continues with design exploration, optimization
based on a range of conditions, and then robust design, which
is an optimized design for a likely set of conditions.
When organizations move along this path, their usage intensity
increases. This is because hundreds of simulations may be
required for a robust design. The result for ANSYS has been
10% to 20% growth in revenue per user over the past three
years. Interest in robust design is also causing advanced
customers to look into and adopt ANSYS’ high‐performance
computing solutions.
Cost‐effective and scalable IT enables productive access to
simulation.
Within large enterprises, the customer’s IT department is a
strategic partner for ANSYS. This is because a scalable
infrastructure is necessary for democratization of simulation.
ANSYS is working with customers’ IT departments to scale up
high‐performance computing (HPC) to support more and bigger
simulation workloads. The other priority is working with
customers to create a centralized IT infrastructure that provides
effective remote access.
For smaller enterprises, the startup and infrastructure costs
have put simulation and HPC beyond their reach. New cost‐
effective IT environments, such as cloud computing, are needed
to open up the simulation market for smaller and mid‐sized
enterprises.
For ANSYS, HPC within large enterprises is an opportunity for
future growth, as are solutions that make simulation accessible
to smaller and mid‐market enterprises.
An open collaboration platform will change how organizations
develop products.
Not only do ANSYS simulation tools produce valuable insights
early in the design process and save testing costs, they give
organizations with distributed product development teams the
ability to change and evolve how they develop products.
An open collaboration platform, made possible through a
sophisticated IT environment, allows organizations to create
integrated teams across regions, share data, standardize on
best practices, and reuse data, processes, methods, and know‐
how.
The MANN+HUMMEL Group, a German firm with an R&D
center in India, used ANSYS technology to enable global access
to simulation data and standardize on simulation practices. This
collaborative platform increased productivity and confidence in
predicting product performance, decreased testing cycles,
improved audit trails, and decreased costs by reducing rework.
These initiatives will directly affect ANSYS’ product strategy.
The customer needs reflected in these initiatives include
systems simulation; optimizing design across a range of real‐
world operating conditions; amplifying engineering
ANSYS 2012 Investor Day March 1, 2012 New York, NY
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productivity; cost‐effective and scalable IT; and a platform that
enables collaboration.
Providing comprehensive solutions to address these needs is
reflected in ANSYS’ product strategy.
ANSYS takes a multidimensional view of engineering simulation,
which means simulating the complete system, not just single‐
physics simulation and coupled multiphysics (which is what
point‐provider competitors offer). As shown in the table, the x
axis shows the requirements for simulating a complete system.
Point‐provider competitors offer only single physics. ANSYS
simulates for the complete system, with capabilities that
include single physics, multiple physics, multiscale, and
multifidelity.
In addition, ANSYS’ product strategy focuses on effectiveness,
efficiency, and flexibility. It ranges from developing and
delivering best‐in‐class solvers to enabling a cost‐effective,
scalable modern architecture.
The table shows both ANSYS’ mature (dark blue) and emerging
(light blue) software capabilities. ANSYS’ distinctive product
strategy over the next few years is to have mature capabilities
in every section. The Company is well on the way to achieving
this strategy.
ANSYS 2012 Investor Day March 1, 2012 New York, NY
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Sales and Service Update Speaker: Frank Bernieri, Vice President, North American Sales
Overview
ANSYS has a proven sales model that provides a competitive
advantage. This model combines a geographically based sales
organization with industry marketing, product experts, and
local channel partners. This structure creates deep relationships
while also providing the industry knowledge and technical
expertise to customize solutions to meet customers’ specific
needs.
This model continues to work well, but the selling environment
for simulation software has grown more complex, influenced by
the new realities of the competitive global economy. To
continue to win and drive growth, ANSYS has sharpened its
sales execution strategy to elevate conversations about
simulation. It is investing to strengthen the skills of its
salespeople, and is improving the Company’s sales processes.
Context Mr. Bernieri described the changing sales landscape and
explained what ANSYS is doing to continue to win in this
environment. He provided detailed examples of ANSYS’
successes in the automotive, aerospace and defense, and
energy sectors.
Key Takeaways
The ANSYS sales model has proven successful and will be sustained.
ANSYS goes to market through a geographic sales, distribution,
and service model that allows the Company to build long‐term,
value‐based customer relationships. The geographic structure
involves a hybrid model that combines both direct ANSYS sales
representatives and channel partners who report to local sales
managers. This structure promotes cooperation.
“We focus on relationships, not individual transactions.” – Frank Bernieri
Geographic sales representatives are tightly linked with
industry marketing experts and product marketing teams.
Industry experts understand the context for each industry,
providing insights so solutions can be customized for each
customer’s situation. Product marketing provides deep
technical knowledge that helps customers apply ANSYS’
technology to maximize their value.
ANSYS’ technical support includes strong pre‐sale technical
support, post‐sale support, training, and consulting services.
This geographic‐based hybrid model with industry and technical
experts has been ANSYS’ model for years. It has worked well,
has created value for customers, has created a competitive
advantage, and will continue to be ANSYS’ fundamental model.
ANSYS’ sales model has yielded success across industries and geographies.
Case studies illustrate the success of ANSYS’ sales model in the
automotive, aerospace and defense, and energy industries.
While each of these industries is different, customers in these
industries share many similarities:
• They face increasingly global competition. Companies in
every industry must compete globally. They are focused on
competing in the stabilizing U.S. market and capitalizing on
opportunities in rapidly growing emerging markets.
• They emphasize innovation and product development. The
way companies in these industries win is by innovating to
develop sophisticated new products. As an example,
automobiles now have astounding amounts of electronics
on board, which comprise 35% of a car's cost. The
challenge that companies face is that innovation is often
slow and costly; they want to innovate more quickly and at
lower cost.
• They derive tremendous value from ANSYS simulation
software. The ability to conduct sophisticated simulations
incorporating multiphysics can improve the speed and
quality of product development, while dramatically
decreasing the cost. Examples in each industry show how
use of ANSYS tools has saved significant amounts (often
millions of dollars) in product‐development costs and has
reduced product‐development cycles, allowing these
companies to get to market quicker.
• They are the leading companies in their industries. In each
of these industries, ANSYS serves the market leaders, as
well as the leaders in each segment and subsegment.
• Their use of ANSYS simulation software often started small
and then grew. Customers often walk before they run.
Customers may start with one ANSYS license, gain
confidence, see value, and then broaden their use of
ANSYS’ software from one type of physics to multiphysics,
and from one user to multiple users. This is how ANSYS has
grown for over 40 years and plans to continue to grow.
ANSYS 2012 Investor Day March 1, 2012 New York, NY
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However, new realities are changing how customers buy.
Beginning in 2008, economic uncertainty has made customers
more conservative and cautious in making investments. While
simulation is playing a greater role in customers’ product
development processes—which is good for ANSYS—product
requirements are growing in number and complexity, and the
buying process is receiving more scrutiny. Within organizations,
more people are now involved in purchase decisions, making
sales cycles longer and more complicated.
At the same time, customers are increasingly self‐sufficient and
don’t believe they need sales help. In fact, research shows that
57% of sales transactions are done by buyers who conduct their
own research and don’t require a salesperson. In this
environment, finding ready‐made customers will lose out to
being able to “make” customers.
Success in this changing environment requires new sales strategies, sales processes, and sales skills.
To address these new realities, ANSYS is undertaking several
key initiatives. They include:
• Sales execution strategy. This strategy (shown below) has
three components:
‐ Secure. This involves strengthening technical relation‐
ships with existing customers so customers see value
in purchasing more ANSYS licenses.
‐ Extend. This involves leveraging ANSYS’ existing
relationships throughout an organization and using
more ANSYS solutions in more ways.
‐ Elevate. This is about elevating the importance and
value of simulation to the executive level. Doing so
produces long‐term strategic partnerships. When
elevation occurs, RFPs are no longer a requirement
and recurring revenues are more predictable.
“Data modeling, simulation, and other digital tools are
reshaping how we innovate.” – Frank Bernieri, quoting Procter & Gamble CEO Robert McDonald
(describing how simulation is on executives’ radar, including at firms
like his)
• Strategic account management. The goal of strategic
account management is to develop a consistent,
collaborative sales methodology that increases the depth
and breadth of penetration at the Company’s most
important accounts. ANSYS’ strategy of extend and elevate
at strategic accounts is paying off. In 2011, the number of
customers producing $1 million in sales for ANSYS grew by
10%, and sales from these customers grew by 20%.
• Improving sales performance. ANSYS defined the
competencies of high‐performing salespeople and
assessed each salesperson to see how their skills measure
up. Then, a plan was created for each salesperson to
develop the competencies needed. Also, the Company has
launched the ANSYS Sales Academy. This is an online
training toolkit to help individuals develop the necessary
competencies.
• Improved and synchronized sales processes. While ANSYS
has experienced tremendous growth and success, the
Company has not had one uniform sales process. To
improve overall sales performance, the Company has
created Sales Process 101, which is based on best
practices. This maps out all steps of the sales process. It is
supplemented by Sales Process 201, which includes tools,
research, and process insights to create and close new
sales opportunities.
ANSYS will continue to drive growth by adding salespeople,
increasing productivity of the sales organization, defining and
disseminating best practices, improving sales processes, and
strengthening the skills of everyone in the sales organization.
ANSYS 2012 Investor Day March 1, 2012 New York, NY
13 © 2012 ANSYS, Inc. PROPRIETARY & CONFIDENTIAL Created for ANSYS by BullsEye Resources
Apache Design: History, Market, & Potential Value of ANSYS/Apache Speaker: Andrew Yang, Ph.D., Vice President and General Manager; President, Apache Design, Inc.
Overview
With a laser focus, Apache has staked out a leadership position
in low‐power solutions for designers of semiconductor chips.
Apache sells to all leading semi and fabless semi companies.
And, with power efficiency increasing as a strategic priority for
semiconductor designers, the power analysis category is
primed to grow—with Apache leading the way.
As successful as Apache and ANSYS each have been over the
past decade, joining together provides greater growth potential
for both. The companies share a similar vision of convergence
and have complementary product lines, and ANSYS’ sales
organization, channels, geographic reach, and diverse customer
base all represent new opportunities for Apache.
Context Dr. Yang described Apache Design’s products and the problems
the company solves, the shared vision that brought Apache and
ANSYS together, and new growth opportunities for Apache
based on aligning with ANSYS.
As background, Apache was founded in 2003, is headquartered
in San Jose, California, has 300 employees, and was recently
acquired by ANSYS.
Key Takeaways
A renaissance is under way in smart engineering, driven by powerful tiny chips.
Smart mobile devices have become entrenched in consumer
society, and the trend of smart technologies is only going to
accelerate. There are now smart TVs, smart cars, smart homes,
smart grids, and smart technologies used for health and
wellness.
These smart technologies are made possible by
semiconductors, which are the tiny chips that act as the
electronic brains of these technologies. The performance of
semiconductors has improved exponentially over the past 30
years, as predicted by Moore’s Law. According to Moore’s Law,
the speed of semiconductors will double every 18 to 24 months
as the density of transistors on a chip increases and the cost per
transistor decreases.
A new measure and basis for competition is emerging for semiconductors: power efficiency.
Historically, the key metrics for semiconductors were
performance and price. And, conventional wisdom was that
when the speed of a semiconductor increased, energy
consumption also was expected to increase.
But this is changing. Over the past six years, as semiconductor
speeds have increased, power consumption requirements have
decreased. This is critical because it has implications for the
battery life of smart devices and the amount of heat produced
by these technologies. Power has become a new metric for
semiconductor competitiveness, and a new rule has emerged:
the 3P rule. According to this rule, semiconductor companies
now compete on performance, price—and also power.
Companies will have to pick their 3P strategy and decide
whether they will attempt to focus on power, performance, or
price.
“This 3P rule basically redefines the survival strategy of the
semiconductor companies . . . Companies will need a clear
strategy for the 3Ps to stay ahead. Those that don’t, in the
next two to three years, will be left behind.” – Andrew Yang
Chip designers today face three key challenges related to
power efficiency:
• Increasing power budget gap. Consumers are addicted to
using more and more power‐hungry applications. In fact,
forecasts indicate that over the next decade, power
consumption demand will increase by 10x. But while
demand is expected to grow by 10x, battery technology is
rather fixed, and the supply of power is expected to be
largely constant over the next decade. This gap between
expected demand and supply is the “power budget gap,”
expected to increase dramatically. The power budget gap
is the greatest challenge for power‐efficient chip designs.
• Power delivery integrity. Power is precious and can’t be
wasted. So, chip designers want to deliver exactly the right
amount of power to the right place at the right time so a
chip can perform at its desired speed, without wasting any
power.
• Power‐induced noise. Whenever there is a flow of
electricity there is unintended and unwanted interference
or noise. This could be in the form of cross‐talk,
electromagnetic interference, or heat, which can affect a
product’s quality, reliability, safety, and/or performance.
Apache’s industry‐leading solutions help chip designers maximize power efficiency in all design phases.
Apache offers a full suite of power products that customers use
throughout the chip design process. These tools are:
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• PowerArtist™. This product focuses on the early, micro‐
architectural stage of design. It helps customers to manage
power consumption and identify wasted power early in
the design process. Helping engineers make their chips
10% more power efficient can give customers an edge. (An
analogy is looking at every block and every building in a
city to see what lights are left on and where power is
wasted, so that lights can be turned off and power saved.)
• Totem™. This is for customers designing custom IP or
macros, in which power is also important. Totem is used to
analyze power behavior down to the transistor level and
generate a customer power model.
• RedHawk™. This is Apache’s flagship product, the industry
gold standard for power delivery. Almost all leading‐edge
chips are developed using RedHawk to validate the chip’s
power delivery network. This product helps customers
identify hotspots (or red hotspots), which are places on
the chip or geometries that could potentially have a power
supply collapse. RedHawk identifies these hotspots early in
the design process so customers can resolve power
delivery issues. (In a way, a chip that provides power for
multiple applications is analogous to a household where
appliances are constantly turned on and off, causing
changes in the power demanded and possibly resulting in
instability of the power supply.) RedHawk works in concert
with PowerArtist to manage power delivery.
• Sentinel™. This product helps analyze noise, including chip‐
to‐chip noise and I/O noise.
These four products span all design processes from the early micro‐architecture stages, to finishing the chip, to packaging.
“PowerArtist and RedHawk provide state‐of‐the‐art power
methodology for the semiconductor industry today.” – Andrew Yang
Apache’s strategy has resulted in a leadership position in a growing market.
There are four key aspects of Apache’s strategy:
• Innovation‐driven R&D culture. This is the most important
aspect of Apache’s strategy. Ten years ago when others
involved with the semiconductor industry were focused on
timing, Apache was focused on low power. Apache was
ahead of everyone else in this area and has continued to
innovate with first‐in‐class technologies that have been
turned into best‐in‐class products.
• Foundry ready. Apache’s technology leadership and close
relationships with foundries such as Intel, TSMC, and
Samsung have created a high barrier to entry.
• World‐class support. Customers see Apache as a trusted
partner with deep domain expertise in power. They don’t
just invest in Apache for software; they work with Apache
due to domain expertise and support.
• Product leasing model. From day one, Apache has offered
only a time‐based license model, which has proved
extremely successful. The renewal rate is over 99%; the
only customers that haven’t renewed have gone out of
business.
As a result of this strategy, Apache is the leader in the power
analysis market. Currently, all of the top 20 semiconductor
companies use Apache, as do all of the top 15 fabless
semiconductor companies. In addition, industry leaders in
mobile phones, cars, and systems manufacturers who haven’t
previously invested in chip development are beginning to do so
to differentiate their products—and are using Apache tools.
While the timing and place and route segments are predicted
to decline, the power analysis market is expected to grow. So,
Apache is well positioned in an attractive market.
Apache and ANSYS share a common vision.
As shown below, over the past 10 years ANSYS has expanded
from structural mechanics to fluid dynamics to
electromagnetics. During this time, Apache has expanded from
system on chip (SoC) power to package/PCB power, to RTL
power, and now to chip‐package power. As chip‐package‐
system convergence occurs, Apache and ANSYS share a vision
of system‐level simulation.
“The vision that drove the two companies together is this
vision of convergence.” – Andrew Yang
Previously, because of the complexity of the electronic product
design process, design typically took place sequentially and in
silos, with each silo designing independently. But with today’s
more complex products and the need to design according to a
company’s 3P strategy, companies have to break their silos and
ANSYS 2012 Investor Day March 1, 2012 New York, NY
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change design processes. The best companies are looking for
tools to break silos, foster collaboration, and allow
organizations to work on models simultaneously. The tools
provided by Apache and ANSYS make this possible.
In combination, ANSYS and Apache offer an end‐to‐end chip‐
package system for the chip, package, board, and connector.
This set of tools allows customers to design for low power,
performance, and safety, which are the primary needs for chip‐
package systems. Instead of designing in silos and testing late in
the cycle, the use of simulation with the tools from ANSYS and
Apache can improve the design process.
By combining with ANSYS, Apache has a host of new and exciting growth opportunities.
These opportunities include:
• Getting OEMs to “pull” Apache. Apache sells to
semiconductor companies, which then sell their products
to OEMs. ANSYS enjoys strong relationships with OEMs. By
working together, Apache and ANSYS can develop an
ecosystem in which OEMs use ANSYS simulation products
and demand that their semiconductor suppliers use
Apache products, since Apache provides a chip power
model. This will pull Apache and increase use.
• Targeting new segments. In combination with ANSYS,
Apache sees attractive opportunities in the aviation and
defense market, as well as the automotive market. By
working with the ANSYS direct sales and sales channel
model, Apache can better reach customers in these
segments.
• Targeting new geographic markets. Apache has not had a
strong presence in geographies such as India and Latin
America. Again, the ANSYS sales channel provides the
potential for growth by selling to new and existing
customers in these areas.
ANSYS 2012 Investor Day March 1, 2012 New York, NY
16 © 2012 ANSYS, Inc. PROPRIETARY & CONFIDENTIAL Created for ANSYS by BullsEye Resources
Financial Update Speaker: Maria T. Shields, Vice President, Finance and Administration; Chief Financial Officer
Overview
2011 marked another strong year for ANSYS as the Company
performed well on all major financial metrics. The 2012 outlook
is for sustained growth. ANSYS will continue to make
investments in people and infrastructure to grow the core
business. It will consider strategic acquisitions that create long‐
term value. As the industry leader in engineering simulation,
with a sound business model, ANSYS is uniquely positioned to
build on its success and take advantage of the tremendous
growth opportunities that exist.
Context Ms. Shields reviewed the Company’s 2011 results and discussed
the outlook and key assumptions going forward.
Key Takeaways
2011 was another strong year of growth for ANSYS.
The past year was another milestone year as ANSYS delivered
strong performance on all key financial metrics: non‐GAAP
revenue, earnings, operating margin, and operating cash flow.
The Company’s revenues were evenly distributed among North
America, Europe, and GIA, and 68% of revenue was recurring.
This is a testament to the Company’s long‐term customer
relationships and provides great visibility going forward. ANSYS
finished the year with a record $270.3 million in deferred
revenue.
Continued growth is expected in 2012.
The outlook for 2012 is positive, with continued growth
expected in non‐GAAP revenue and earnings.
Among the key assumptions for 2012 are:
• Relative macro‐economic stability. The assumption is that
with economic stability, ANSYS’ customers will continue to
invest in their own businesses.
• Continued investments for the long term. ANSYS will
continue to invest in its own people, infrastructure, and
facilities. Investments in people include hiring and training
salespeople so they are equipped to extend and elevate
relationships with customers.
• Revenue composition. ANSYS expects a 65/35 split
between licenses and services and expects recurring
revenue to represent 66% to 67% of all revenue.
ANSYS 2012 Investor Day March 1, 2012 New York, NY
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ANSYS will deploy capital to continue to drive long‐term value.
The Company’s capital deployment plans are largely unchanged
from those of 2011. Capital will be deployed to create value
over the next three to five years by investing in:
• Organic growth of the core business. ANSYS will invest to
deepen relationships with customers, accelerate the
democratization of simulation, add new users, industries,
and products, and continue channel expansion.
Investments will also focus on R&D investment in areas
such as high‐performance computing, which is a significant
opportunity.
• Strategic acquisitions. ANSYS plans to continue to invest in
acquisitions that fit with the Company’s vision, strategy,
culture, and product direction. Keys to potential
acquisitions include proven technology, experienced
talent, the ability to integrate with the ANSYS Workbench
platform, synergy with customers and channels, and being
financially accretive in a reasonable timeframe.
Capital will also be used to repay debt and for opportunistic
stock repurchases.
ANSYS’ future is extremely attractive.
ANSYS is uniquely positioned to continue to grow. After 41
years in the engineering simulation market, ANSYS is the clear
technology leader. ANSYS has a breadth of products with
competitive advantage, has strong diversification, tremendous
customer loyalty, and a consistent long‐term focus. Still, after
years of consistent performance, there remains tremendous
upside potential.
“We’ve been doing this for over 41 years and we have
barely scratched the surface. There is so much future
opportunity ahead of us.” – Maria Shields
ANSYS’ future growth is predicated on the Company’s sound
business model. This model has a solid recurring revenue
stream, sustainable top‐line growth potential, hybrid
distribution, and strong operating leverage. Earnings have
consistently grown and will continue to do so. The Company
has a good balance sheet and strong cash flows. The business
model will continue to be built as the Company focuses on
realizing the significant upside potential that exists.
ANSYS 2012 Investor Day March 1, 2012 New York, NY
18 © 2012 ANSYS, Inc. PROPRIETARY & CONFIDENTIAL Created for ANSYS by BullsEye Resources
Questions and Answers Moderator: Annette N. Arribas, Investor Relations and Global Insurance Officer Speakers: Frank Bernieri, Vice President, North American Sales
James E. Cashman III, President and Chief Executive Officer Joshua Fredberg, Vice President, Marketing Maria T. Shields, Vice President, Finance and Administration; Chief Financial Officer Andrew Yang, Ph.D., Vice President and General Manager; President, Apache Design, Inc.
Overview
Attendees were quite interested in the factors that will drive
ANSYS’ future growth, including the penetration rates of
simulation technology and multiphysics. There was also much
interest in all aspects of the Apache acquisition, including how
Apache fits with ANSYS’ sales organization and channels.
Context Members of the ANSYS management team fielded questions
from attendees on a wide range of topics including adoption,
drivers of growth, and integration of Apache.
Questions & Answers Q. Can you talk more about the expectation that worldwide
R&D spending will increase?
A. Multiple third‐party sources project that worldwide R&D
spending will continue to rise. Even the most bearish
assessments are that dollars spent on R&D and headcount will
grow. The reason is that in up or down markets, companies
believe that R&D is the key to differentiation. Companies have
so much at stake and see so much opportunity that investing in
engineering‐driven R&D is a necessity.
Q. You showed that penetration in major accounts is 2% to 8%.
Why do you think that someday penetration will be higher?
A. There is anecdotal evidence at certain accounts in which use
of simulation has spread pervasively throughout the entire
engineering organization. These organizations provide
examples of what we can expect in the future as other
organizations catch up.
Q. What is the adoption rate of multiphysics among your
customers?
A. Many customers purchase multiple modules; the question is
how many actually implement and use multiphysics. An
estimate is that currently fewer than half of all customers use
multiphysics, perhaps 25% to 40%. But the use of multiphysics
is growing rapidly and ANSYS is taking steps to accelerate it.
Q. What percentage of engineers work on CAD versus other
areas?
A. Ten years ago the simulation market was much smaller than
the CAD market as most engineers used CAD. At that time, the
people doing CAD were typically not the people doing
simulation. The way to think about it today is as an overlapping
Venn diagram. There are some people who are using both CAD
and simulation, but many people use one or the other.
Longer term, the simulation market may become larger than
the CAD market. This is because a CAD user is creating one
thing at a time. With simulation, a person can be running a
large number of simulations simultaneously. Also, increasingly,
a CAD draftsman may not be an engineer, but almost any
engineer could use simulation.
Q. It was mentioned that the drivers of growth are number of
users, intensity of use, and density. Is one of these drivers more
significant than the others?
A. In 2009 and 2010, growth was not based on new users being
added. At that time, it was coming from greater density and
intensity of usage. However, during more normal times, all
three factors are fairly balanced in driving ANSYS’ growth, but
number of users is probably the greatest growth driver. The
second‐greatest driver of growth right now is high‐performance
computing (HPC), which is growing about double the rate of
some other products. Density of usage probably ranks third, but
it is not insignificant. Usage density is the amount of time an
engineer is actually using the software. Ten or 15 years ago,
engineers used simulation software for perhaps a few months
and then didn’t use it for a while. Today people are using
simulation much more regularly.
Q. Do you see the ordering of growth drivers changing over
time?
A. They could change over time, but how they might change is
unknown. With high‐performance computing, people can do
more simulation without necessarily increasing the number of
heads, so this might be an even greater driver of growth in the
future.
ANSYS 2012 Investor Day March 1, 2012 New York, NY
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Q. Is the key to growth making the software easier to use?
A. Ease of use is a factor, but first the key is solving a
customer’s problem and delivering accuracy so the customer is
confident about the solution. This requires enough computing
power to solve hard problems. Once there is adequate
computing power and simulation provides an accurate solution
in which customers are confident, then ease of use is a factor.
Improvements to ease of use include using automation to
simplify certain steps.
Q. Does simulation have the potential to disintermediate
physical test equipment?
A. Yes. Simulation is an alternative to physical testing that
enables companies to develop new products faster, better, and
less expensively. Changing how companies develop products
and replacing physical test equipment are absolutely a source
of ANSYS’ long‐term growth.
Q. Could ANSYS’ growth be greater than 10% to 15%?
A. When all of the drivers of growth kick in and adoption
increases, these factors may compound one another. When this
happens, it is possible that the growth rate could be greater.
Q. When would you anticipate an EPS growth rate that is at
least in line with revenue growth?
A. Long term, ANSYS would like to see bottom‐line growth that
closely ties in with the top line. But ANSYS is currently at a
unique time. The greatest opportunity for long‐term
shareholder value is to invest in the business because it is
underpenetrated. The Company doesn’t want to underinvest in
the business and miss the opportunity that exists.
That said, when ANSYS outperforms on the top line (as
occurred in 2011), because of the natural leverage built into the
model combined with spending discipline, revenue
outperformance disproportionally flows to the bottom line.
Q. With dividends being currently in vogue, what considerations
has ANSYS’ board given to paying a dividend?
A. The board believes that the best use of the Company’s cash
is to invest in the Company’s business, primarily by accelerating
the product roadmap as well as investing in strategic
acquisitions.
Q. Why have the average revenues per user increased?
A. This is driven by people who were using a single level of
physics who are migrating to multiphysics to solve tougher
problems with greater accuracy. Also, as this occurs within
organizations, existing simulation tools become tied up so
organizations need to add more. (An analogy is a library in
which all copies of a book are checked out. For simulation
users, this isn’t acceptable; because of high utilization,
companies add additional copies.)
Q. Could you comment on your pricing strategy?
A. Before addressing the pricing strategy, it is important to keep
in mind that ANSYS’ overall business strategy is focused on
building long‐term trusted customer relationships. ANSYS does
periodically increase prices. The Company also may increase
prices to capture demonstrable value created by the
Company’s software. But ANSYS doesn’t modify prices in the
short term in relation to market fluctuations. ANSYS doesn’t try
to squeeze a bit more out of customers in the short term, even
when this might be possible, and the Company’s discounting
didn’t change a bit in the turbulent conditions of 2009. ANSYS is
focused on long‐term relationships and value creation.
Q. When ANSYS does acquisitions of smaller companies, do they
tend to think about pricing differently?
A. No. ANSYS isn’t acquiring a bunch of older products to
engage in rampant discounting. ANSYS acquires companies that
are technological leaders and successful ongoing concerns. An
acquisition may have a slightly different philosophy that reflects
differences in the amount of licensing and leasing, but there is
nothing inherently broken in these companies that requires
changing how they price.
Q. Does ANSYS see risks related to Europe or related to defense
industry budgets that are under pressure?
A. Obviously, the overall economic climate is important
because sinking tides can sink all ships. While the situation in
Europe is somewhat tumultuous, especially related to
government programs, the areas in Europe where ANSYS tends
to do best are continuing to invest.
In the United States, most of the defense cuts being discussed
are on programs that were already developed and in
maintenance mode. Defense funds are being shifted toward
unmanned vehicles and other types of new technologies that
are R&D intensive. This actually could help ANSYS.
Q. Is the sales organization currently equipped to sell across
ANSYS’ entire portfolio of products?
A. Yes. The Company is well into training the entire sales
organization to sell the entire portfolio of products. Training is
also under way on Apache to equip everyone to sell it.
ANSYS 2012 Investor Day March 1, 2012 New York, NY
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Q. How has the sales process evolved for Apache since ANSYS
acquired it?
A. Related to the acquisition of Apache, one basic principle is
“do no harm,” and a second principle is to present a single face
to the customer. While doing the latter, there are some areas in
which Apache has the greater strength and relationships, and
other situations in which ANSYS is stronger. So, the Company
has made decisions based on who is the best person to manage
the relationship. In general, the ANSYS and Apache sales forces
are collaborating. Account representatives are managing
relationships, and industry sales specialists and technical
specialists are brought in for support as necessary.
Q. How would you characterize the opportunity for the channel
with Apache?
A. ANSYS’ basic philosophy is that it is not a given that the
channel will sell Apache. Channel partners must first present a
business plan that lays out how they will grow. Channel
partners have done a great job of this over the last decade, but
they must continue to do so with Apache. In addition, they
must go through a rigorous certification process that ensures
that they can provide the level of support that ANSYS expects.
This takes time, commitment, and investment from the
channel.
Q. How much of Ansoft has penetrated the channel?
A. ANSYS is entering its fourth year with Ansoft, and probably
25% to 30% of the channel has been certified.
Q. Can you comment on keeping Apache’s management team
and key employees?
A. Apache has a list of the top 150 people that are important
for sustaining the business. Since the acquisition was
announced, the turnover rate among these individuals has
been just 1% to 2%, which is within the range of natural
attrition. Apache’s acquisition by ANSYS actually has provided a
greater sense of stability for the people working at Apache,
who view ANSYS as a great company.
Q. What is going on with Apache’s relationships and joint
ventures?
A. Apache has not seen any adverse effects on its relationships
from the acquisition. In fact, because ANSYS is a bigger
company, there are even more compelling reasons for
organizations to want to partner with Apache; the acquisition
actually helps with partnerships, including partnerships with
CAD and eCAD vendors.
Q. It was mentioned that Apache believes the acquisition by
ANSYS will cause OEMs to demand Apache from semiconductor
producers, which will cause “pull” for Apache. Why wasn’t this
happening prior to the acquisition?
A. It was happening. But because ANSYS has strong
relationships with OEMs that purchase semiconductors, the
acquisition of Apache by ANSYS should help accelerate this.
Q. How do ANSYS and Apache think about services?
A. Both companies think about services similarly. The goal is not
to become a services company, but to use services to overcome
obstacles, to help generate license sales, and to help customers
with best practices so they can use the technology to derive the
greatest value.
Q. How does ANSYS think about the competitive landscape?
A. There is not a lot of pure competition today, particularly at
the enterprise level. There are some point solutions that might
be loosely coupled, but none that offers the degree of
multiphysics that ANSYS offers. Longer term, some of the
smaller companies may grow larger and some may be acquired
by larger companies.
ANSYS 2012 Investor Day March 1, 2012 New York, NY
21 © 2012 ANSYS, Inc. PROPRIETARY & CONFIDENTIAL Created for ANSYS by BullsEye Resources
BIOGRAPHIES Annette N. Arribas
Investor Relations and Global Insurance Officer
Annette N. Arribas has been the ANSYS Investor Relations and
Global Insurance Officer since November 2007. Prior to joining
ANSYS she was the Vice President, Investor Relations,
Compliance and Treasurer of an electric utility in Maine. Ms.
Arribas also held various positions in banking with KeyCorp and
assisted in the establishment of a de‐novo bank. Ms. Arribas
holds a Bachelor of Arts degree in Management and a Masters
of Business Administration from the University of Maine, and is
a Certified Treasury Professional.
Frank Bernieri
Vice President, North American Sales
Frank Bernieri joined ANSYS in September, 2010 as the Vice
President of Sales for North America. Frank brings a wealth of
large company sales experience to the leadership team. Prior to
ANSYS, Frank spent sixteen years at ADP, most recently as a
Division Vice President of Sales in their Major Account Group.
Prior to ADP, Frank spent fourteen years at IBM progressing
through various sales, product management and sales
management responsibilities. Frank has a B.A. in Economics
from Upsala College and an MBA in Marketing from the Cornell
University Johnson School of Management.
James E. Cashman III
President and Chief Executive Officer
James E. Cashman III has been ANSYS’ Chief Executive Officer
since February 2000 and President since April 1999. Mr.
Cashman served as Senior Vice President of Operations from
September 1997 to April 1999. Prior to joining the Company,
Mr. Cashman was Vice President of Marketing and
International Operations at PAR Technology Corporation, a
computer software and hardware company involved in
transaction processing, from May 1995 to September 1997.
From September 1994 to May 1995, he was Vice President of
Product Development and Marketing at Metaphase
Technology, Inc., a product data management company. Prior
to joining Metaphase, Mr. Cashman was employed by
Structural Dynamics Research Corporation, a computer‐aided
design company, from 1976 to 1994 in a number of sales and
technical positions. Mr. Cashman is also a Director of the
Pittsburgh Technology Council and a Board Member of the
Carnegie Museum of Natural History.
Joshua Fredberg
Vice President, Marketing
Joshua Fredberg joined ANSYS in 2009, bringing a rich, diverse
background in engineering and technology to the leadership
team. Before joining ANSYS, Fredberg was Senior Vice President
of product and market strategy at Parametric Technology
Corporation (PTC), where he worked on industry strategy,
marketing and business development. Prior to joining PTC, he
held leadership roles with both ARIBA and Andersen Consulting
Strategic Services. He holds a B.S. in electrical engineering from
Tufts University, an M.S. in systems engineering from the
University of Pennsylvania, and an M.B.A in finance from The
Wharton School.
Maria T. Shields
Vice President, Finance and Administration, and Chief Financial
Officer
Maria T. Shields has been ANSYS’ Chief Financial Officer and
Vice President, Finance and Administration since September
1998. Previously, she served as Corporate Controller since
September 1994 and as a Vice President since May 1998. Prior
to joining the Company, Ms. Shields held various positions as a
CPA with Deloitte and Touche LLP, including that of Audit
Manager. Ms. Shields holds a Bachelor of Science degree in
accounting from Pennsylvania State University.
Andrew Yang, Ph.D.
Vice President and General Manager; President, Apache Design,
Inc.
Andrew Yang joined ANSYS in 2011 when the Company
acquired Apache Design, which Yang founded in 2001. Prior to
his work at ANSYS, Yang was an active entrepreneur and EDA
investor, founding Anagram and serving as Chairman and CTO
until its acquisition by Avant! Corporation. Yang also served as
lead investor in several successful technology companies
including CADMOS Design Technology (now Cadence Design
Systems), InnoLogic Systems (now Synopsys), Ultima
Interconnect Technology (now Cadence Design Systems), and
Mojave (now Magma Design Automation). A former tenured
professor at the University of Washington, Yang holds a B.S. in
electrical engineering from the University of California,
Berkeley and M.S. and Ph.D. degrees from the University of
Illinois.