positioned to capture a highly attractive market opportunity · 2019-12-06 · source: total...

ANSYS Confidential©2019 ANSYS, Inc.

Sin Min YapVice President, Strategy

September 12, 2019

Positioned To CaptureA Highly Attractive MarketOpportunity


Cautionary Statement Regarding Forward-Looking and Non-GAAP Financial Information

9/10/2019

This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that provide current expectations or forecasts of future events based on certain assumptions. Forward-looking statements are subject to risks, uncertainties, and factors relating to our business which could cause our actual results to differ materially from the expectations expressed in or implied by such forward-looking statements. Forward-looking statements may use words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “likely,” “may,” “outlook,” “plan,” “predict,” “project,” “should,” “target,” or other words of similar meaning. Forward looking statements include those about market opportunity, including our total addressable market. Risks, uncertainties, and factors that could cause actual results to differ materially from those implied by these forward-looking statements include: adverse changes in global economic and/or political conditions; declines in our customers’ businesses resulting in adverse changes in customer procurement patterns; uncertainties regarding demand for our products and services in the future and our customers’ acceptance of new products; plans for future capital spending; investments in complementary companies, products, services and technologies; political, economic, and regulatory risks and uncertainties in the countries and regions in which we operate; impacts from tariffs, trade sanctions, export license requirements or other trade barriers; the effect of changes in currency exchange rates and changes in interest rates; potential variations in our sales forecasts compared to actual sales; the volatility of our stock price; failures or errors in our products and services; our industry’s rapidly changing technology; the quality of our products, including strength of features, functionality and integrated multi-physics capabilities; lease license volatility; the investment of more resources in research and development than anticipated; increased pricing pressure as a result of the competitive environment in which we operate; our ability to recruit and retain key personnel; our ability to protect our proprietary technology; cybersecurity threats or other security breaches; disclosure and misuse of customer data whether as a result of a cybersecurity incident or otherwise; implementation of our new IT systems; investments in global sales and marketing organizations and global business infrastructure; dependence on our channel partners for the distribution of our products; increased variability in our revenue due to the adoption of Accounting Standards Codification 606; our reliance on high renewal rates for annual lease and maintenance contracts; our ability to complete and successfully integrate our acquisitions; catastrophic events which may damage our facilities or otherwise disrupt our business; operational disruptions or the failure of our technological infrastructure; periodic reorganization of our sales force; the repatriation of previously taxed earnings in excess of working capital and capital expenditure requirements; a loss of revenue if contracts with the U.S. government or foreign governments are canceled; the outcome of contingencies, including legal proceedings and government or regulatory investigations and service tax audit cases; uncertainty regarding income tax estimates in the jurisdictions in which we operate; the effect of changes in tax laws and regulations in the jurisdictions in which we operate; changes in accounting principles or standards; the uncertainty of estimates relating to the impact on reported revenue related to the acquisition accounting treatment of deferred revenue; and other risks and uncertainties described in our reports filed from time to time with the Securities and Exchange Commission. Forward-looking statements speak only as of the date they are made and we undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and we caution you to not place undue reliance on our forward-looking statements.We include non-GAAP financial information in this presentation. Reconciliations for such financial information may be found in our presentation, in these slides including in the Appendix, in other materials on our corporate website, and in our SEC filings. This information supplements our GAAP results and should not be viewed in isolation from, or as a substitute for, GAAP results. We believe that this information and the related reconciliations may be useful to investors, analysts and others to help understand and evaluate our financial results, and with respect to adjusted metrics, because we believe they better reflect the ongoing financial results and trends of our businesses and increase comparability of period-to-period results.

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Agenda

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Total addressable market Promising adjacenciesEmerging high-growth

solutions


Positioned In Large, Growing Addressable Market

4Source: Total addressable market (TAM) and compound annual growth rate (CAGR) information throughout presentation is based on third party study completed by Evalueserve Inc. in 2019 commissioned by ANSYS. Study was based on customer and industry expert interviews and review of industry analyst reports and commentaries. Refer to Cautionary Statement for a discussion of factors that could impact future financial results.

2022 2026

New Adjacencies

Emerging High-Growth Solutions

Foundation

8-Year CAGR to 2026

~32%

~21%

~8%

$2.7B-$5.5B

$3.8B-$5.4B

$9.3B-$9.7B

2026 TAM$15.8B - $20.6B

$9B – $9.5B

ANSYS TOTAL ADDRESSABLEMARKET FOR SIMULATION

~9%CAGR

~$6.6B

2018

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Industry reports

Thought leader articles

Research by consulting firms

Executive surveys

Industry analyst commentaries

Expert Network

Technology trends

Existing market solutions to address customer challenges

Market penetration & differentiation

M A R K E T A S S E S S M E N T M E T H O D O L O G Y

How We Calculate Total Addressable Market (TAM)

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Customer Interviews

Overall R&D spending

R&D spending in high-growth solutions

Key customer challenges

Percentage spending on simulation

Industry Trends


Agenda

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solutions

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Emerging High-Growth Solutions Are Expanding At An Attractive Rate

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$1.6B - $2.3B

$1.3B - $1.8B

$0.6B - $0.8B

$0.3B - $0.5B

$3.8B - $5.4B

8-Year CAGR to 2026

~21%

Emerging Solutions

~20%

~26%

~16%

~20% Industrial IoT

Electrification

Autonomy

5G

$13.1B - $15.1B

$8.4B – $8.8B

~$6.2B

ANSYS ADDRESSABLE MARKET FOR SIMULATION IN DESIGN & ANALYSIS

2018 2022 2026


Foundation

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Companies Are Racing Toward Electrification

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$430B+R&D spend thru 2025*

$1.6B-$2.3BTAM BY 2026

30%xEV fleet**

50%On battery tech*

~20%8-year CAGR (2018-2026)

~60%Simulation Applications

Safety & NVH

Acronyms: xEV – 48 V, Hybrid, Plug-in Hybrid, Battery Electric; NVH – Noise, Vibration and Harshness

Simulation OpportunityTrends & Investments Grand Challenges

Range anxiety & fast charging

xEV light-weighting

Reducing battery cost

Reference: *Third-party study commissioned by ANSYS, **McKinsey Energy Insights 2019

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Leveraging Virtual Driving To Accelerate Autonomy

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8.8+Bmiles of driving required to validate

the virtual driver algorithm**

$1.3B-$1.8BTAM by 2026

~26%8-year CAGR (2018-2026)

2XIncrease in spending on

simulation by 2025*

$240B+R&D spend thru 2025*

~75%Simulation spending on sensing,

perception, prediction & planning


Functional safety and security

Prediction and planning in real-time

Validation of virtual modelswith real world

Reference: *Third-party study commissioned by ANSYS, **Rand Corporation

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Simulation Is Critical To Making 5G A Reality

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$0.6B-$0.8BTAM by 2026

$26BR&D spend on 5G in 2018*


Network performance for missioncritical applications

5G standards and security

Antenna design and placement

10%-15%Growth by 2026*

~16%8-year CAGR (2018-2026)

$200B+Annual investment in 5G

from 2020 to 2035**

99.999%Reliability a key requirement of 5G devices – simulation imperative for

design and validation***Reference: *Third-party study commissioned by ANSYS ,**IHS Market Report on 5G economy 2017, **Thales Group


Agenda

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solutions

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Promising Adjacencies Have A Sizable Market Beyond 2026

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~$6.6B

$1.4B - $2.0B

$1.2B - $3.3B

$0.1B - $0.2B

$2.7B-$5.5B

8-Year CAGR to 2026

~32%

Adjacencies

$15.8B - $20.6B

Digital Exploration

Digital Twins

AdditiveMfg.

2030

$10B-$30B

$4.0B-$9.0B

$5.5B-$20.0B

$0.5B-$1.0B

~26%

~44%

~15%

ANSYS ADDRESSABLE MARKET FROM NEW ADJACENCIES

$9B – $9.5B


Foundation

New Adjacencies

2018 2022 2026

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Upfront Simulation Benefits Every Engineer And Every Product Decision

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5-100XCost to fix defects identified later

in the development cycle*

$1.4B-$2.0BTAM by 2026

~26%8-year CAGR (2018-2026)

10:1Design engineers to simulation analysts

75-85%Of cost committed in early

design stages*

~8 millionTarget engineers for early stage

simulation**


Speed and interactivityof simulation

Enabling digital design exploration

Ease of use for non-expert user

Reference: *Systems Engineering Handbook;** NAFEMs – CAASE18-2018

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Digital Twin Expands Simulation Usage From Engineering To Operations

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$80B/YrInvestments in Industrial IOT*

$1.2B-$3.3BTAM by 2026 (Manufacturing only)

~44%8-year CAGR (2018-2026)

50%Of Industrial companies will use digital

twins by 2021**Of all industrial asset value captured

by digital twins run times


Physical accuracy to drive accuracyand decision making

Accurate simulation in real-timeavailable on IIOT platforms

Predictive maintenance ofindustrial equipment

0.1 to 0.4%

1.65 BIndustrial assets under condition

monitoring by 2025*

Reference: *Third-party study commissioned by ANSYS , **Gartner

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M A R K E T A S S E S S M E N T C O N F I D E N C E

R&D Is A Strategic Corporate Priority

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Increase R&D budgets compared to previous year

Treat R&D as a source of competitive advantage

Create new products and services to take advantage of competitors’ weaknesses

High performing companies were X2 as likely to:

Source: McKinsey & Co. Quarterly 2009 Global Survey Results (from 494 senior executives around the world specialized in management of R&D)

…and outperform pragmatic companies by almost four

percentage points in sales and more than three percentage

points in earnings.

Source: HBR – March 2010 issue – Roaring out of Recession by Ranjay Gulati, Nitin Nohriaand Franz Wohlgezogen

Innovative firms continued to invest in R&D during the recession, while non-innovative firms cut down their R&D investment.

The world’s top 2000 R&D investing companies have been growing their R&D investments by around 6% annually, during a period of generally reduced net sales growth and squeezed margins.

Source: Arthur D Little – How to manage your return on investment in innovation by Michael Kolk & Rick Eager, Prism 2014

Source: R&D investment and Capital Markets – PhD research thesis – Dec 2015 - University of York

https://hbr.org/2010/03/roaring-out-of-recession

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• Strong foundational growth

I N S U M M A R Y

Well Positioned To Capitalize On Growth Potential

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• Emerging high-growth solutions will accelerate growth

• New adjacencies provide substantial long-term upside

• ANSYS’ simulation solutions well positioned to address grand challenges


Sin Min YapVice President, Strategy

September 12, 2019

Positioned To CaptureA Highly Attractive MarketOpportunity

positioned to capture a highly attractive market opportunity · 2019-12-06 · source: total...

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