Ansys Earnings: Firm Assures Strong Momentum With Unwavering Annual Contract Value

Ansys delivered solid second-quarter results that came ahead of our expectations as well as management’s, thanks to broad-based growth across all verticals. While the firm guided to a weaker third quarter due to a mix of license types that generate upfront recognition, management assured this is a temporary headwind, and increased its full-year revenue and annual contract value, or ACV, guidance. Given the strength we see in simulation demand paired with Ansys’ robust research and development channel, we expect revenue acceleration in 2023, and our long-term outlook is unchanged. With this, we are maintaining our fair value estimate for the wide-moat firm at $262 per share. While shares are down around 6%, we view current levels as overvalued and suggest investors wait for a better entry point to invest in this high-quality name.