James E. Cashman III - President, Chief Executive Officer & Director Maria T. Shields - Chief Financial Officer & Vice President, Finance and Administration.
Jay Vleeschhouwer - Griffin Securities, Inc. Anil Kumar Doradla - William Blair & Co. LLC Steve M. Ashley - Robert W. Baird & Co., Inc. (Broker) Sterling Auty - JPMorgan Securities LLC Steve R. Koenig - Wedbush Securities, Inc. Saket Kalia - Barclays Capital, Inc. Ross MacMillan - RBC Capital Markets LLC.
Ladies and gentlemen, thank you for standing by and welcome to ANSYS' Second Quarter 2015 Conference Call. 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. Well, good morning, and thanks to everybody for joining us to discuss our second quarter and first half 2015 financial results. But before we get started, I will introduce Maria Shields, our CFO, for our Safe Harbor statement.
Maria?.
Okay. Thanks, Jim. Good morning, everyone.
Our earnings release and the related prepared remarks documents have all been posted on our homepage at the Investor Relations website this morning, and they contain all of the key financial information and the supporting data relative to Q2 and the first half 2015 financial results and the business update, as well as our current Q3 and fiscal year 2016 outlook and our key underlying assumptions.
I'd also like to remind anyone that in addition to any risks and uncertainties that we highlight during the course of this call, important factors that may affect our future 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 throughout 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 related Form 8-K. So, Jim, I'll now turn it back to you..
first, increasing the number of users; second, increasing the density of usage; third of all, increasing the intensity of usage. Well, ANSYS 16.0 and 16.1 include significant advancements in our platform. And these releases, we think, substantially broaden the capabilities available to our customers.
They break down the barriers to adoption, and they help us drive growth from all of these dimensions.
So, even though we already have the deepest and broadest physics portfolio, we're committed to continuing to make significant investments in R&D to further increase our technological and competitive leadership advantages and to strengthen our position at the forefront of the industry.
So, with those brief comments, I'll turn it back over to Maria to discuss our Q3 and 2015 guidance before we move into the Q&A session..
Okay. As we outlined in this morning's press release, we've initiated our outlook for Q3 with non-GAAP revenue in the range of $232 million to $240 million, and non-GAAP EPS in the range of $0.85 to $0.89.
With respect to our previous guidance for the full year of 2015, while we've narrowed the revenue range, the midpoint of our revenue guidance for the full year remains essentially unchanged from our last call. And we've also factored in a slightly higher tax rate, further weakening of the Japanese yen since our last call and the acquisition of Gear.
So, all of that translates to our revised outlook for the full year in non-GAAP revenue in the range of $948 million to $964 million, and non-GAAP EPS of $3.37 to $3.45. And for 2015, we are assuming no significant changes, either way, in the overall macro climate.
And we also continue to see that our sales will ramp up later in the year as the new heads that we've brought on in Q4 of 2014 and the first half of the year begin producing, and as the channel initiatives that we've also announced also drive incremental sales.
Further details around currency rates and other key assumptions that have been factored into the outlook for both Q3 and the full year are contained in prepared remarks that we posted on the homepage earlier this morning. Also during the second quarter, we repurchased about 36,000 shares at an average price of slightly north of $85.
And for the first half of the year, we've repurchased over 1.5 million shares at an average price of $83.42. As of the end of June, we still have 4.4 million shares remaining in our authorized repurchase pool.
So, in addition to our ongoing M&A activities and consistent with what we've previously communicated earlier in this year, it's our intention to continue to return capital to shareholders through our share repurchase program. So, with that, Operator, we'll now open up the phone line to take some questions..
Thank you. We will now begin the question-and-answer session. And our first question comes from Jay Vleeschhouwer from Griffin Securities. Please go ahead..
Thank you. Good morning, Jim and Maria. I'd like to ask first about the results you've seen in your various end markets and your expectations for those.
When we take the percentages of revenue by end market that you've provided now for the second quarter, we see, for example, that automotive appears to have been down slightly year-over-year for the quarter, about flat for the trailing 12 months.
Aero and defense seems to have been down pretty materially year-over-year for the quarter and for the trailing 12 months. On the other hand, you did quite well it seems in industrial equipment, up pretty strongly for the quarter and for the trailing 12 months. And semis were up again pretty strongly which I assume is still Apache.
So, perhaps, you could talk about the varying trend that you are in fact seeing in those markets.
And do you foresee for example that either auto or aero and defense might begin to rebound after having some negative comps here lately?.
Yeah. Jay, I would say relative to auto and aero and defense, I think some of what you're seeing ties into the timing of some of those deals and renewals. So, I wouldn't focus on any given quarter as much as I would focus on the full year.
I would say no doubt one of the areas where we definitely felt pain is in the oil and gas sector, not only in North America but in other geographies where oil and gas displayed an important part. But I don't know of any, I would say, trends that we're aware of.
I think it's more around the timing of some of these larger deals in those sectors that you spoke of..
Okay. Secondly, could you comment on the likely direction of your operating expenses for the remainder of the year and perhaps into next year? When you look at your website, we see and count the number of job openings that you're advertising. There was a pretty significant increase from the last time we did that a couple of months ago.
In fact, it looks like the largest number of openings for the last few years since we began tracking this with increases in sales openings which is fairly consistent with your plan. R&D, up a lot, particularly in places like India.
So, I guess my question is are you perhaps over advertising the number of openings that you're looking to fill as you've sometimes done in the past or do you think you're about to embark on, in fact, some significant additions here to head count?.
Well we, you see the ramp-up of – in the last half of the year, I mean, we started to build to some of the run-rates that we guided to at the earlier part of the year. So, that's going to continue to drive up that.
Now, the other thing is we also – we're looking at – sometimes we don't always get precise skillsets in the exact primary geography that we look for. So, we may have secondary locations, and if that's the case you might see some redundant postings in there.
But in general, we're keeping a broad range because the long-term projections are that we will be adding staff, and we want to continue to find the best people and at least build up that portfolio as quickly as we can.
So, we'll continue to build up along those lines, but it is in – as we've alluded, we've seen improvement in Europe, but we've also kind of gotten into the double-digit range in both North America and Asia Pac.
And this is even in light of the fact that we expanded the sales force and alluded for the last couple of quarters that the ramp-up in training and acquisition of that talent would take time which is why we see the continuation toward the stronger end of the year, but that's a continuation of something that we'll want to carry into 2016 and 2017..
All right. If I could perhaps just squeeze in one more. You articulated a very interesting strategy and definition for what you call systems engineering.
Could you comment on any examples to-date of customers, who have in fact deployed your full vision or definition of what you call systems engineering and what requirements do you foresee in terms of having to your ramp up your services capabilities to support that strategy?.
Yeah. Well, the first of which is with regard to the mention of specific customers, that's something that we're going to actually be publishing on the website as we get those permissions and do it in the correct way.
The other thing I will say is that like many other things, I mean, early on when we were talking about design space more than a decade ago, or when we were talking about a workbench platform, none of those things existed before we did it.
So, we were talking about it and sometimes it was a year, or two years, three years before those things manifested themselves.
So, the fact is some of the things that we're doing in the systems simulation capability, there really weren't skill sets and organizations at our customer site really built around those because the tools didn't exist at that time.
But the, I would say if I can throw one breadcrumb out there, anytime you would see reference to a, some of the enterprise license agreements, which are starting to happen in increasing amounts, there's almost always element of the system simulation and strategy being involved there, but it will be an evolutionary sense for the customer to think in terms of how it fits their processes and how do they organize around that.
That being said, you're absolutely correct. Anytime you have a new technology services, which will help bridge the adoption of that, is very key. And that, again, that's something we've been talking about for the last couple. Now, if you recall, we did mention some of these at Investor Day. So, I think it's probably okay to mention those.
But Cummins, Ferrari and....
Ford..
...Ford were – those were the, I think, the three that we mentioned..
They were there....
Yeah..
...right, telling their own systems story..
Yeah. That was during the World, Simulation Congress....
Yeah..
... that was concurrent with the Investor Day. So, and we'll probably have more of those because, as we mentioned, the enterprise engagements have been noticeably ramping up over the last, probably three quarters..
Okay, thanks very much..
Okay. Thank you..
The next question comes from Anil Doradla from William Blair. Please go ahead..
Hey, guys. A couple of questions. In the quarter, you had about, what, 18 customers, sorry, with $1 million revenues and you talk about some commentary in the second half.
But, Jim, can you talk about how many of the customers are very close to that $1 million number?.
Well we, I mean, if you're talking about in the high six-figure amount, you know, think of it, it's not like there's a vast wasteland. There's actually like a pyramid building up below that ramping up. So, we probably have easily 70 customers to 100 kind of customers in that next tier of range.
But we also see that some of those percolate very quickly and some of those might be on a protracted thing. But they're all ones that we have to develop.
And keep in mind that's pretty consistent with the strategy that we talked about both at Investor Day and at – on previous calls here in terms of why we have gone more toward addressing that growing market with more of a name to count strategy versus the old territory thing..
Very good.
And with all the good stuff that's happening on the sales front, the new initiatives that were kicked in, one of the questions that we get from investors is, if we were to look at when we would see it from an inflection point of view in your business, when would that quarter be? I mean, granted – since the new head of sales has come onboard, it's been what, over a year.
It takes about 15 months, 20 months to get many of these new strategies in place.
So, if you were to pick and choose, maybe around what time we should start seeing the business getting inflected by these great initiatives, any color on that front?.
Yeah. Well, first of all, in terms of what I call an inflection point, I need to break that between two things. There's one of which is related to sales capacity.
But there's always the longer term one that we talked about in terms of both the creation of enabling technology and customers' ability to adopt it, and that's not just an increased amount of sales engagement. Because even though we've got the leading technology, it needs to progress a lot more.
Just think in terms of – again, I've used this analogy a lot – but think in terms of where the home PC was in 1980 and what happened over the next 15 years, 20 years. All the components were there in 1985, and there were leading providers there. But a lot of things had to happen before you saw the inflection point in computing.
Same thing really holds for the simulation software. Now, getting back to the sales one, I wouldn't think in terms of what some people think in terms of a massive dislocation. I think what you're going to see is quarter-upon-quarter – adjusted for seasonality, of course. You throw Q3 in the mix, and Q3 doesn't compare to many other quarters.
But as you see that, you're going to see a continuing ramp-up. And, in fact, I think that's what we saw in Q2 versus Q1 and some of the early comparables where now you've got a couple of areas that have ramped up into the double-digit. Right there, we need to increase and sustain that.
There may be blips up and down, original quarters, but you should see a longer term and that should continue to ramp up as we go through, if you will, the bell curve of training requirements of all the new salespeople. So, I don't think you'd see like a step-function increase or a massive dislocation.
I think you'll see numbers of people raise up, and you'll see continued up pressure on the growth curve. And as we mentioned before, where we were a little bit slower in terms of the sales up ramp which we were addressing, was in Europe. But you even see some of the early returns in Europe; of course, Q3 in Europe is well chronicled.
So, there we've got that factored into our guidance also. But, so, I think in terms if you're talking about inflection points or major movements, I think you see one – I think you will see one when the – on the technology side, but we've always talked about that being a multiyear kind of transition.
But in terms of taking care of the sales capacity, I think that's one where you see a kind of a steady continued ramp-up..
Great. Thanks a lot..
Thank you..
Our next question comes from Steve Ashley from Robert W. Baird & Company. Please go ahead..
Thanks. I would just like to ask about the third quarter guidance and actually, Marie, I don't know if you have an answer to this, but when we look at it in constant currencies, you've been growing here constant currencies kind of 8%, 9% recently.
Does the third quarter guidance kind of assume that kind of similar growth rate, constant currency?.
Constant currency for Q3, that ranges 5% to 9%, Steve, and....
Okay..
...what we are factoring in is what Jim alluded to in the previous question is the reality is Q3 for us is iffy relative to Europe. A third of our business doesn't really get back into the groove until after Labor Day. And so, whether or not some of those deals that are in the pipeline make it into Q3, we're just putting in a little bit of caution..
Perfect. That's very helpful. And in terms of the evolution of the sales go-to market, lots of different things happening there, one of the things you wanted to happen were named account reps starting to engage with a VP of Engineering, someone at a higher level.
Have we started to see some anecdotal evidence that that is beginning to happen?.
Oh, absolutely on that one. Now, yeah, again, just having a visit with a VP and checking the box, only time will tell on that. But if I look at the number of engagements, it's probably about a four-fold increase at least. Now again, that's anecdotal and I just have from the number of meetings.
The other thing that I think is particularly interesting that the sales team has done is sometimes when you have the VP meetings, you have to have a lot of reach. We've actually started a series of executive virtual town halls. And I know that we've had several hundred people just on the first couple of those sequences going in.
So, at least, if we don't get a full chunk of a day with senior execs, we do have introductory things to introduce them to concepts and we've actually had some very interesting customer presentations that were co-presented with those things. So, the overall, at least, introduction and entrée has increased quite a bit.
And for certain, the focus has been more along those lines, which, in turn, are necessary steps as we see some of these increasing amounts of some of the enterprise engagements because those do not happen at a grassroots level..
Great. Thanks..
Thank you..
Our next question comes from Sterling Auty from JPMorgan. Please go ahead..
Yeah. Thanks. Hi, guys..
Hi..
In the prepared remarks, talking about the deals over $1 million and the 18 number, there was a comment in there about the pipeline for the second half.
And I guess the way it was worded, it made me wonder, did you see deal slippage in this quarter in terms of some of those large deals? And, maybe you could tie that into what you saw in terms of the linearity.
Was the linearity any different than typical?.
Linearity is about the same. In terms of any major slips, there are some that pull forward. I mean that's the natural motion in there. But there were no aberrations, nothing out of the process.
The thing is, keep in mind, when you're dealing with some of these larger deals, they can tend to take longer because the number of cycles, the number of the – the amount of scrutiny that they're put in there, but there was nothing that was there. And as for comparables, the only thing I'd say is that again these deals tend to be multi-year.
So, in general – that's why we're tending to look at these characteristics of what happens to the overall deferred and backlog because the timing of multi-year deals, by definition, they don't very often renew the next year. So, they're out. They're in the denominator but not in the numerator. So, that's just more of a numbers reality..
Got you. And this has been asked a couple of different ways. I just want to ask this question in this structure. When looking at the guidance for the second half, in the first half at conferences and meetings, you've talked about the increased hiring in trying to accelerate the growth.
If I look at the guidance for the second half it feels like it's really kind of flat or maybe even a little bit of deceleration that's factored into the second half guidance and I'm wondering how much of that is the FX that you talked about in terms of the yen or other versus macro demand, versus anything else..
Well, first of all the Q4 constant currency growth is right up in that thing where double-digit gets in the range and continues kind of the path. So, I don't buy into the premise of deceleration. There's no doubt that the currency has a little bit of impact on that and then also some of the things we factor.
I think maybe one of the key things you have to realize is that we talked about some of these ELAs and I would not be surprised – I mean keep in mind, they've – when they come in, they typically are multi-year. They typically are time based which means you do not get a lump of revenue.
However, you do see the long-term prospects significantly increase as best evidenced by the growth in the deferred in the backlogs.
So, I think even when you factor those things, it's a fairly impressive growth that we're targeting in light of all of that for the end of the year and it's tending to build off of what we said from the very beginning of the year and it's continuing to inch up even with the time-based element and the strengthening of the long-term book of business..
Got you. Last real quick one.
The Gear acquisition, what's the contribution to revenue assumed for the year?.
It's minimal. That was really not the reason. There's some there but it's not much and that's really not the reason. The main thing we were looking there, it was really key technology, and quite frankly, as was mentioned before, we're always looking for talent and we got that in multitude with this particular one.
What we're looking to do is actually continue to strengthen that position, building off of the foundation that we had with Apache but take that into the next few years of development for us..
Got it. Thank you..
The next question comes from Steve Koenig from Wedbush Securities. Please go ahead..
Hi. Good morning, ANSYS. Thanks for taking my question. I'll do the first one and then I've got one follow-up. In the prepared remarks, Jim, there was reference in discussing the European performance to commodity oversupply and a slowdown in China affecting not only Europe but also North America.
There's also a comment about oil and gas, and that comment's pretty clear.
But can you give us some more granular view of the impact of the slowdown in China and the commodity oversupply, like what verticals is it impacting?.
Yeah..
How is that going through your forecast? What's your outlook as well based on what we're seeing?.
Yeah. With China right now – and we view this as being temporary because we still view that as being a good long-term market. We saw a little bit of slowness in some of the state-owned enterprises.
And I think you saw that there was a lot of macro environment things going on with China, and there's the stock market, and some of the things that the state was doing in terms of that. That's really kind of the primary part of it. Oil and gas, pretty straightforward. But those are really the only ones that really stand up.
We talked for a couple of quarters about Germany. I mean, as Europe was coming up even with – as I mentioned, Eastern Europe and Russia, being continuing to be pretty underwhelming right now, is that Germany has always been a big bellwether for us and one of our top three markets perennially.
And, we had talked about some of those things and some of the things we put in place and that's probably one of the leading elements we had coming out..
Okay.
And just for clarity in the commodity oversupply, what's that? How is that impacting you?.
Well, it's just – if you remember when oil and gas and copper and anything was driving mining and other commodity-related industries, as a result of the slowdown in all of those sectors, obviously, some of those are our end customers, so they tend to either result in those businesses realigning themselves for the realities of the current economic situation and slowdowns..
Yeah. And, I mean if you look at it, I mean, the most notable ones over the last few years, the mining in Australia, which was largely to support the Asia Pacific. And if you look at also the mining and oil in South America. And Latin America was one of the areas, where we saw probably the lowest performance.
I mean, even that being said, we wound up at the pretty high-upper end of the revenue guidance.
So, it wasn't like it had a major impact, but we're always trying to note those various perturbations we see, not that any one signals a megatrend, but they tend to be a number of things that we're looking at just as we continue to project out the next couple of years..
Got it. And if I may squeeze in a follow-up, just one on the sales initiatives. There have been some questions about the impact of the sales hiring. I'm curious to get your read on how is the – the creation of an – the enlargement of the named accounts group and the account assignments by named counts.
When might – are you seeing progress with that? And when might that have a more significant impact? And then just on the sales hiring. I don't want to repeat all the questions that have been asked but I think given the rate of sales hiring, we might have expected a more significant impact than what you've included in your guide.
Is it – would it surprise you to see some pretty good upside from your guide? Is there potentially some conservatism there or is it more of a time lag as these people get productive?.
Well, I'd say it's conservatism. And I say it is, it is a time lag because any time you get people involved, it is a big issue. Keep in mind, we did a very major thing and the management and absorption of that is important. The, quite frankly, I don't know anybody who hits 100% on all the sales hires.
We've got a really good percentage but you've got some of that factoring in. And again, we're still hitting what we had projected at the beginning of the year for the year-end. And, that's even taking into account that we're absorbing an increasing number of these ELAs.
And, like I mentioned, we're close to $0.5 a billion now in the deferred and backlog elements. So, the business is building along those lines.
Now, keep in mind, when you go to the named accounts as somebody mentioned earlier but I'll reiterate, we had, first of all, you find them; second of all, you train them; third of all, you have to then engage with the customer and we are getting that increased engagement.
Somebody mentioned, alluded to the VP kind of access, and that is, on a market uptick but it isn't like the very first time that you meet the VP they write you a check. I mean, we're talking about planning out, if you will, 2-year through 10-year type of adoption patterns.
So, there is that natural, but that natural latency was built into the very guidance that we gave at the beginning of the year, and if you will, we're maintaining it even against some of the additional headwinds, and also the benefits of the longer-term nature of the enterprise license agreements.
And even though we're only on the very beginning of the ANSYS enterprise cloud usage, we've gotten a lot of interest there now. That'll be time before people change their overall usage patterns also.
But those are all fairly positive things, but I think they're also fairly much in line with the guidance that we've been giving for the last few quarters..
Okay. Got it. Thanks, Jim. Thanks, Maria..
Thank you..
Our next question comes from Saket Kalia from Barclays Capital. Please go ahead..
Hey, guys. Thanks for taking my questions here..
Hey, Saket.
How are you doing?.
Good, Maria. How are you? Let me just start with just a high-level and then I've got a follow-up. Jim, can you just talk about the U.S. macro backdrop for your customers? We all see the manufacturing PMI. And, it seems like it's affected at least one other design company.
If you look at the more established sales reps that you have, what are they seeing in terms of their pipeline and their close rates in the U.S.?.
Well, I'm going to have to try to process the closure rate. The pipelines are markedly up.
And I'd say, in general, you look at the manufacturing index and things like that, those are some bellwether, but I think what we've always gauged more toward is the R&D and, if you will, the innovation measures because essentially, that's where our software is used, not primarily on the manufacturing and inventory side of things.
So, as a result, we've seen a range of companies continuing to try to drive new innovation into their products, first and foremost. Second of all is they're starting to figure out what, for instance, the industrial Internet or Internet of Things might mean in terms of how they evolve or retrofit their products to fit in with that kind of environment.
We've talked about the overall electrification of traditional industries, the automotive being one of the more notable ones, but being able to go into that one. So, with those type of things, we still see a lot of innovation. In keeping with our global presence, we do see a fairly broad-based globalization.
But amidst there, there are increasing amounts of fits and starts that continue around the globe as everybody seems to be recalculating things. But at the end of the day, we don't really see an end of interest in new innovative products or basically flat-lining on the new design level..
Got it. Got it.
And just for my follow-up, can you just remind us, do customers on lease and maintenance get access to the suite of tools under ANSYS 16.1 or do you think the product could maybe generate incremental revenue from your existing customer base?.
Well, it can create incremental revenue because essentially if somebody is on a lease basis, they basically get enhancements to the products that they've leased, but they don't get those generally across the portfolio.
Now, some of that starts to enter in a little bit more, as we discussed, with the Enterprise license agreements, where there's an increased flexibility that helps people predict over a multi-year period usage patterns that they might not be able to predict but allows them to flexibly meet that, which gives them the confidence to kind of, I would say, move forward instead of doing an exhaustive study to determine exactly what they need and when.
So, we'll have some of that. But in answer to that is, what we've usually said, if it tends to bend the curve up, maybe that's a bad expression these days, but it bends the curve. It doesn't dislocate the curve traditionally, but we do see that increased usage from the capability.
But keep in mind we've had a normal cadence for the last decade of almost every six months having a fairly significant feature release and it's continued to be one of those things that has helped propel us to this point. And we think it's essential for keeping that progress going over the next couple years..
Makes sense. Thanks very much..
I think also, the other thing I'd mention of course is that as a testament to that, you also look at the historical renewal rates, which continue to be historically strong.
And that's one of those things – it's really that vote of confidence in getting continued access to those capabilities, I think, that keeps those strong on both the lease and the service side of things..
Understood. Thanks again, Jim..
Thank you..
Our next question comes from Ross MacMillan from Royal Bank of Canada. Please go ahead..
Thanks a lot.
Hey, Jim, how many ELA deals did you sign this quarter and can you remind me how many you've signed to-date?.
Well, the one thing I want to mention is sometimes ELAs are really covered under – I mean you can kind of draw a proxy by those seven-figure deals that we talk about, because ELAs are always in the healthy side of that. But I will tell you that sometimes the kind of agreements that we have here, we're not even allowed to really mention some of those.
So, I will tell you the one that we're able to kind of put through there and you'll see – you'll be able to get at least a windage and elevation on that – from that.
The other thing is that – the other thing is tendency ELAs, they tend to more often happen beginning and end of year as people are synchronizing on their various calendars and budget cycles..
Well, maybe I could ask it this way.
Is it trending in line, above or below your expectations?.
Above..
Okay. And, Maria, two for you if I could..
By the way, when I say above, I won't say 2x above, but it's significantly above..
Great..
I'm just trying to give you a little bit more color on that..
Yeah. That's helpful.
And then, Maria, do you have the FX impact to deferred sequentially this quarter?.
Hang on a minute.
Where did you get...?.
Yep, hold on – yeah, plus $2.5 million..
Plus $2.5 million?.
Yep..
Great. And, Maria, just curious, your perpetual license constant currency has been growing faster than lease constant currency this year and that's despite more ELAs that are time based and therefore, would go into deferred and backlog and ultimately I think be recognized through the lease line..
Yeah..
Why is that? Why are the perpetuals growing faster?.
So, Ross, on, I think it was the last call someone asked about are we going to trend our model kind of line with what other people in our industry are doing relative to moving to everything subscription. And, I had commented that historically, we've tended to have models that are flexible and meet the needs of many of our customers.
So, if you looked at the commentary around geography, if you look at the performance of Asia Pac, for example, Asia Pac, places like India, China, Korea, when they're growing very fast, they are really perpetual license buyers.
They are not subscription license buyers predominantly, particularly in those major accounts that we have in those geographies. So, the reality is while in some geographies, ELAs and subscription is becoming more of an acceptable norm.
In other parts of the world, they are still perpetual buyers and we're going to continue to offer them perpetual licenses..
Understood. Just one quick one, last one if I could.
What was the consideration for Gear?.
$30 million..
Great. Thank you so much..
Having no further questions, this concludes our question-and-answer session. I would like to turn the conference back over to Mr. Jim Cashman for any closing remarks..
Okay. Actually, I'd like to thank you all for your participation in our call today and for your ongoing support and coverage of ANSYS. So, we're proud of what we've accomplished in the first half of 2015. But as we've discussed on the Q&A session here, we've got a lot of work ahead of us to deliver on our goals for the full year.
So, with that, in addition to thanking you, I'd like to thank the entire ANSYS team for their commitment to driving the results that we've had and that we're moving toward. And, I'd also like to welcome the Gear team to the ANSYS family. So, in short, we feel that we're very well-positioned to continue to drive the growth.
I'd probably cite two very significant reasons. First, we have increased visibility from some of the larger multi-year Enterprise opportunities that are in the pipeline for the back half of the year, and also the general growth in the pipeline that we've alluded to on this Q&A.
Secondly, we've been successful in the more aggressive approach to sales hiring that we reference on the last couple of calls. And, of course, we've discussed that here. So, in short we have unparalleled production offerings.
We've got a great long, lived record with our customers, extremely high recurring revenues and the opportunity to augment our growth through new features and the kind of the exciting technologies from acquisitions as well as our own internal R&D innovation. So, continued sites in the near-term. We're growing our direct sales force.
We have a renewed focus on our indirect channel. I think you saw some of those results in Germany where we're, have a very hybrid model. And we're committed to driving solid financial results to generate continued value for our shareholders. So, with that I'll sign off. Thank you very much and talk to you again next quarter..
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect..