Ajei S. Gopal
President and Chief Executive Officer at ANSYS
Good morning, and thank you for joining us. Q2 was another excellent quarter for ANSYS, where we significantly beat our financial guidance across all our key metrics. I'm particularly pleased with our ACV performance for the quarter, which grew at nearly 23% in constant currency. Our growing momentum from Q4 of 2020 and the first half of this year gives us increased confidence in our business and in our ability to execute against our goals. It is also further validation of our strategy of pervasive simulation, where simulation is used throughout the product development process by engineers in every discipline. That strategy, combined with our best-in-class multiphysics products, our comprehensive go-to-market approach and our deep and lasting customer relationships, has paved the way for our consistent success.
The COVID-19 pandemic continues to evolve with the uncertainties of the Delta variant making headlines around the world. Despite these uncertainties, our customers are continuing to invest in innovation, R&D and product design to drive their future successes. As such, we are continuing to see demand for ANSYS simulation increase in the marketplace, and our pipeline for the remainder of 2021 is strong. As a result of that continued strength and our track record of execution, we are once, again, increasing our annual guidance for ACV, revenue, EPS and operating cash flow. Nicole will provide more details in just a few minutes. Looking at Q2. All our major geographies performed well, with the Americas leading the way. I'm very proud of our team in India, which came in above our internal plan, despite challenging COVID-19-related conditions in the country. From an industry perspective, high-tech and semiconductors, aerospace and defense, and automotive and ground transportation were our top verticals. We also saw ongoing strength with our enterprise customers. Following the trend of the past two quarters, we saw improved spending with small- and medium-sized customers. While these smaller customers have not yet returned to their pre-pandemic spending levels, the progress we've seen over the past several months gives me added confidence in the future.
One of the largest deals of the quarter was with a North American leader in semiconductors. This $39 million multiyear agreement ensures that the company will have the necessary capacity to run five-nanometer and eventually, three-nanometer designs on Ansys Redhawk-SC, our gold standard, powered noise and reliability sign-off solution for digital design. The company has also standardized on ANSYS multiphysics technology across chip, package and system to reduce power consumption, thereby increasing its competitiveness in the marketplace. We also closed a $30 million agreement with a long-time automotive customer. This leader in electric vehicle technology has expanded its use of mechanical, fluids and electromagnetic solutions and has adopted additional ANSYS technologies, including automated design analyses, multibody dynamics and process integration and design optimization. This customer is working with the ANSYS ACE teams to jointly develop workflows for noise and vibration analysis and topology optimization.
The company is also using ANSYS Discovery to decrease its simulation backlog and get products to market faster, all the while holding the line on development costs. Just a few weeks ago, we unveiled ANSYS 2021 Release two, which features advances across our multiphysics product line, from structured fluids and electromagnetics, to materials, photonics and embedded software. R2 includes a number of advancements in core physics, simplified workflows and integrated data management. Our solutions are based on our case of experience and cannot be easily duplicated, creating high barriers to entry for potential competitors. While I could spend the entire hour detailing each product's capabilities, today, I will focus on just one key differentiator, which cuts across our entire portfolio, namely scalability.
As customer problems become increasingly more challenging, the size of those challenges require simulation software that could scale to unprecedented levels. Throughout our history, ANSYS has been a leader in product scalability and we have extended that leadership in recent releases. Our ability to create high resolution, fluid mechanic simulations with practical turnaround times enables customers to solve next-generation challenges, ranging from rotating machinery, to external aerodynamics, to environmental simulations. four years ago, Ansys FLUENT scaled to nearly 200,000 CPU cores, enabling customers to solve challenging problems faster than ever by calculating billions of cells. To the best of our knowledge, that remains a record for commercial computational fluid dynamics code. This massive scalability has enabled our customer at the Technical University in Eindhoven to solve a complex aerodynamic problem with three billion computational cells with 20 billion unknowns.
The most recent advances in Ansys 2021 R2 have sped up parallel mesh generation by 20 times, removing what is often the bottleneck for detailed simulations of transient phenomena, which occur in aerodynamics and gas turbine simulations. That 225 times speed up over the last decade has enabled Ansys customers to reduce simulation time on a full thermal mechanical model from two weeks to 1.5 hours. And now with Ansys 2021 R2, those calculations could take just minutes, leading to improved product reliability as users run more simulations faster. That breakthrough was made possible by doubling the core counts, while reducing the memory required by 40%. In our latest LS-DYNA release, we have significantly improved performance, which enables customers to run transient behavior studies with 28 trillion calculated variables, and that's trillion with a T. That means safer cars and more reliable electronics. A global high-tech customer use Ansys HFSS and our new Ansys Mesh fusion to solve a previously unsolved integrated circuit and packaging problem by scaling across the multi-node HPC cluster with 18 terabytes of RAM and 576 cores.
In Ansys 2021 R2, we introduced the Phi Plus measure, which extends mesh fusion to deliver additional speed and capacity. Phi Plus has sped up meshing on PCB plus bondwire package models by 18 times, which will bring new innovations to the 5G, autonomy and industrial Internet of Things market. Ansys semiconductor customers are using next-generation distributed and grid computing techniques to model and solve chips with 2.6 trillion or more devices. Ansys RedHawk-SC set a capacity and performance record in Power Integrity sign-off last year by extracting 66 billion electrical nodes on the design of a GPU and solving it over 2,400 CPUs in a fully distributed manner.
In Ansys 2021 R2, our solver performance doubled, enabling customers to sign off even larger chip designs using the same compute resources and run time. Scalability is one of Ansys' many differentiators and is becoming increasingly important to our customers as they develop next-generation products. We believe that our history of product scalability, along with accuracy, ease of use and speed to solution create a difficult environment for any would-be competitor, while giving our users the functionality they need to solve the most challenging product problems. We are continuing to train the next generation of engineers in the use of Ansys solutions by expanding our free offering for students.
To date, nearly two million students around the world have downloaded our products. And just a few weeks ago, we launched an additional offering for students to download our electronics desktop and to enroll in Ansys innovation courses for training. These students now have access to our leading electronics products, including HFSS, Maxwell and Icepak to train them in developing the products of tomorrow. And thanks to our new partnership, Cornell University will design and develop online training courses with real-world applications from Ansys.
Moving to partnerships. I'm excited to announce that we have expanded our work with TSMC to include new certifications for Ansys RedHawk and Ansys Totem. These new certifications for power network extraction, power integrity and reliability, signal electromigration and transistor level custom designs enable joint customers to meet critical power, thermal and reality standards for next-generation product applications. Ansys continues to be recognized for our inventive approach to engineering technology. I'm proud that for the third year in a row, Fast Company has named us one of the best places to work for innovators. I'm even more excited that five of my colleagues have been recognized with the prestigious Women of Color STEM Awards. These awards showcase the outstanding scientific and engineering achievements of women around the world, and Ansys is proud of these pioneers who serve as an inspiration for us all. Turning to our Environmental, Social and Governance initiatives. I'm pleased that MSCI has upgraded our ESG rating to AA, naming us a leader in the software and services industry. MSCI cited Ansys' comprehensive talent pipeline relative to our peers, our focus on business ethics and our capabilities in helping customers to innovate in areas such as clean technologies.
To summarize, Q2 was another great quarter for Ansys and a further validation that our pervasive simulation strategy is resonating with the market. Our strong sales pipeline, our ongoing momentum with enterprise customers, the resurgence of small and medium businesses and our continued leadership across our product portfolio give me further confidence in our ability to meet our newly increased outlook for 2021.
And with that, I'll turn the call over to Nicole.