Ajei S. Gopal
President, Chief Executive Officer and Director at ANSYS
Good morning, everyone, and thank you for joining us. Q2 was yet another excellent quarter for ANSYS, where we once again beat across our key metrics including revenue, ACV, operating margin and earnings per share. That, coupled with our healthy pipeline, gives us further confidence in the business and has enabled us to raise our full year guidance on ACV and revenue in constant currency. Nicole will have the details in a few minutes. Our largest contract of the quarter was a 3-year, nearly $25 million agreement with an international electronics brand. This new contract includes ANSYS solutions for semiconductors, electronics, fluids, as well as our learning hub to make users more familiar and productive with our software. By standardizing on ANSYS solutions, this customer expects to increase its products yield while decreasing verification time for signal and power integrity. Another multimillion-dollar agreement in Q2 enables an international automotive OEM to expand its usage to include ANSYS solutions for enterprise-level materials intelligence, electromagnetic interference and autonomous driving. This customer has already realized up to 5 times improvements in aerodynamics and thermal engineering productivity, a reduction of more than 40% in material properties acquisition costs and a 10% improvement in hydrogen storage for its fuel cells. From a geographical perspective, we saw strong revenue growth from Asia Pacific and EMEA and the Americas came in as expected. Our 36% constant currency growth in revenue in Asia Pacific was thanks to several large contracts, including one with Murata Manufacturing, a Japanese company that specializes in electronic components. With Murata, the multiyear agreement spans our multiphysics portfolio and provides the company with an important thermal aware system simulation flow for radio frequency modules. This solution is expected to provide faster thermal sign-off by reducing the number of redesigns and by improving the ease of use of ANSYS products through a single interface. From an industry perspective, the high-tech and semiconductor, aerospace and defense and automotive and ground transportation sectors were again our largest contributors. We also saw continued strength in the energy space, reflecting a mix of traditional and renewable use cases as well as in the industrial equipment sector, where we recorded a number of multiyear agreements from companies around the world. For example, longtime customer, WEG, a global leader in electrical engineering, power and automation technology signed a multiyear contract in Q2 to standardize on ANSYS simulation. This new agreement will help the Brazilian company rethink its product development process by creating and implementing digital twins of its motors.
This agreement will drive WEG's electrification and green energy initiatives. Now I'd like to briefly mention a different kind of customer success story. I would like to congratulate NASA and Northrop Grumman on the success of the James Webb Space Telescope. We have all seen the stunning images that have come from this largest and most precise optical instrument ever developed, and we are proud here at ANSYS for the role that we played in its creation. Naturally, it was impossible to physically test the entire mission before launch. And given the unforgiving environment of space, the mission had to run as expected the first time. Any error would have cost billions of dollars in expenses with perhaps an even greater scientific loss. That is why the team developed the rocket, the telescope and the entire mission in part using ANSYS simulation. With ANSYS, engineers overcame a number of unique challenges, including folding a structure of the size of a tennis court into a rocket, and then unfolding it. And then understanding how perpetual solar radiation would affect its operations. Engineers use ANSYS mechanical to identify solutions to ensure the satellites' connected segment and mirror would behave the same way of monolithic mirror would. Our optical solutions were used to design and test each step in the mirror alignment process from the initial segment search to the final phasing. In addition, mission planner has used our digital mission engineering solutions to test variables that impact how the satellite is launched and to determine how to keep the satellite stationary one million miles from Earth. And the results, well they're simply out of this world. Turning to our leadership in solutions to multiphysics simulation. Our customers now have access to ANSYS 2022 Release 2, a comprehensive set of solutions and capabilities that cross physics, engineering disciplines and industries.
Included in this release are machine learning techniques in our core products, which are automatically optimizing repetitive processes, predicting workflows and enhancing user productivity. We have also delivered artificial intelligence technology that enables customers to perform massive design optimization studies to arrive at an optimal design in a fraction of the time once required. This release also provides new high-performance computing capabilities and custom workflows for industry-specific applications, which will help more users address computationally complex problems by examining the impact of multiple physics at the same time. This added functionality is extending our multiphysics leadership, while enabling customers to make their next-generation products a reality. I am also excited that TSMC recently certified ANSYS' power integrity software for its industry-leading N4P and N3E process technologies. The certification for ANSYS RedHawk-SC and ANSYS Totem enables next-generation silicon designs for machine learning, connectivity and high-performance computing applications. I'm also pleased to announce that ANSYS has joined the Intel Foundry Services Cloud Alliance. Our electronics and semiconductor suite, which includes ANSYS RedHawk-SC, ANSYS HFSS and ANSYS RaptorX, are available as part of the design flow that will help enable Intel customers to enhance their productivity. Rounding out our partner updates, Samsung Foundry has announced that it is using ANSYS' industry-leading multiphysics solutions to develop designs on the most advanced chips, nodes and process technologies. Using ANSYS, Samsung Foundry will deliver a comprehensive design flow with greater capacity, speed and integration capabilities for the company's most advanced semiconductor technology to boost high-speed connectivity while helping to reduce design error and risk. On our last call, I discussed the role that ANSYS solutions are playing in our customers' sustainability initiatives, including for increasing fuel efficiency, in driving electrification and in decreasing the rate of emissions. We have recently created a cross-functional Center of Excellence composed of members of our development and consulting teams to advance sustainability initiatives for our customers and partners. Our subject matter experts are focused on how ANSYS simulation can help accelerate the creation of new, more efficient and lower-impact products beginning at the design and development phase. As part of our own sustainability endeavors, ANSYS is committed to reducing our environmental footprint.
To that end, we have announced that we have set a 15% reduction of Scope one and Scope two emissions by 2027. To hit that target, we are implementing projects identified in energy audits, including lighting enhancements and on-site renewable energy. We recently submitted to the Carbon Disclosure Project for the third year in a row, and continue to enhance our task force on climate-related financial disclosures. I am also excited to announce that Fast Company has recognized several ANSYS employees with its world-changing Ideas Award for the ANSYS Minerva template. This template is built in our Minerva solution for simulation process and data management, and provides an FDA-guided approval process for medical devices to speed potentially life-saving products to patients more quickly. I'm also proud that ANSYS has been certified as the Most Loved Workplace by the Best Practice Institute. This honor was bestowed on ANSYS because of our collaboration, our corporate values and practices as well as the outcomes we drive and demonstrates why we are an employer of choice. Next week, we'll have an opportunity to discuss ANSYS' longer-term business and financial goals as part of our investor update. I'm looking forward to further explaining the expansive role that simulation is playing in product development and sharing with you how ANSYS has become a trusted business partner with some of the top brands around the world. To summarize, Q2 was another excellent quarter for ANSYS, resulting in us beating our guidance across all key metrics. Our business momentum, our expanded product leadership and the ongoing strength of our customer pipeline gives me even more confidence in our ability to meet our outlook for 2022. And with that, I will turn the call over to Nicole. Nicole?