Good day, ladies and gentlemen, and welcome to the Altair Second Quarter 2019 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Howard Morof, Chief Financial Officer. You may begin.

Good afternoon, welcome and thank you for attending Altair's earnings conference call for the second quarter 2019. I'm Howard Morof, Chief Financial Officer of Altair, and with me on the call is Jim Scapa, our Founder, Chairman and CEO. After market close today, we issued a press release with details regarding our second quarter performance which can be accessed on the Investor Relations section of our website at investor.altair.com. This call is being recorded and a replay will be available on our IR website following the conclusion of the call. During today's call, we will make statements related to our business that may be considered forward-looking under federal securities laws. These statements reflect our views only as of today and should not be considered representative of our views as of any subsequent date. We disclaim any obligation to update any forward-looking statements or outlook. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from our expectations. These risks are summarized in the press release that we issued today. For a further discussion of the material risks and other important factors that could affect our actual results, please refer to those contained in our quarterly and annual reports filed with the SEC as well as other documents that we have filed or may file from time to time. During the course of today's call, we will refer to certain non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in our press release. Finally, at times in our prepared comments or responses to your questions, we may offer metrics that are incremental to our usual presentation to provide greater insight into the dynamics of our business or our quarterly results. Please be advised that we may or may not continue to provide this additional detail in the future. With that, let me turn the call over to Jim for his prepared remarks. Jim?

Thank you, Howard, and good afternoon, everyone. Today we'll discuss our second quarter results and the outlook for the rest of 2019. We will talk about the ongoing good momentum of our business, the trending macro environment, progress with the Datawatch and SimSolid acquisitions and share some customer success stories. Our total revenue for the second quarter was $106.8 million, an increase of 14% from a year ago, powered by software product growth of 20%, well within our guidance range. We produced modified adjusted EBITDA in the second quarter of $7.4 million, at the upper end of our guidance. Billings, driven by software product momentum and adjusted for constant currency, grew by 18% over the same period a year ago. I'm often asked about the business environment, especially as it relates to the automotive industry. So I want to touch on this. Clearly, trade disputes with China and others is resulting in a stronger dollar and other macroeconomic challenges. Manufacturing companies are affected more than others by this. Since Altair has a substantial concentration of customers in manufacturing, we expect some headwinds to services and a slight impact on software growth for the rest of the year, especially since a healthy percentage of our business is international. Our software business continues to grow robustly, even in the context of the challenges mentioned above. We expect software growth for the year on a constant currency basis to exceed 20%, although there is a stronger shift to subscription licensing for Datawatch products than we anticipated which slightly reduces the revenue they contribute. Overall, we continue to be very positive about our software business and our ability to continue gaining market share. We expect a small decline in services for the year which will grow software revenue as a percentage of our total revenue and will modestly improve our gross margin, in line with our long-term goals. Our revised guidance, which reduces total revenues by approximately $10 million for the fiscal year incorporates our updated view of currency impacts, the more rapid than expected transition to a subscription model for our Datawatch software licenses and a modestly more conservative view of licenses due to potential challenges for our manufacturing customers. We are managing expenses prudently across the company to adhere to our near and long-term EBITDA targets, even in the context of the more challenging global outlook. However, it is important to know we will continue to hire sales people and technical experts, in particular skill areas such as computer science, electronics, systems design and data science, where we see growing opportunities. Regarding expenses, the stronger dollar brings some benefits. As our business operations are significantly international, expenses will be reduced as well. In addition, we have derived significant synergies of over 20% from the Datawatch operation. I'd like to focus now on our Datawatch and SimSolid businesses and then discuss our global progress more generally. We continue to be quite pleased with the Datawatch acquisition. The product teams and vision are clearly set now, and we have engaged with most of the customers who seem eager to work with Altair as their partner going forward. We've had a number of meetings with key banking, healthcare and financial services customers who see Altair as a strong new player in the data analytics market as we bring technical depth, strong customer service and a very compelling business model to market. Our manufacturing customers show strong interest in applying data science technology throughout their organizations. The implementation of Altair's units based subscription licensing model to data intelligence products is complete, and we are actively marketing units based licensing to traditional Datawatch enterprise customers such as banks and insurance companies as well as to our manufacturing customers in automotive, aerospace and elsewhere. We believe this will be very compelling. In past calls, I have focused on data prep and machine learning wins. Today, I would like to focus on the Panopticon products, our real-time data streaming and visualization solutions. As we continue to support a more global footprint for the Datawatch business, we are especially pleased to announce an important win with a European global banking and financial services company. They are integrating Panopticon dashboards into the bank's internal portal to support analytics for its electronic foreign exchange trading operations. A similar application and comparably size deal was won with a very large APAC bank, over $1.5 trillion in assets with an eye toward global deployment. With these positive signals, we are expanding the data intelligence sales organization globally and integrating it within our local country operations. The organization will maintain its focus on financial verticals while acting as an overlay support for Altair strategic account managers covering manufacturing customers. The sales teams are very engaged and motivated, seeing opportunities for themselves and the company. We are hiring rapidly into data intelligence sales, pre-sales and marketing around the world and expect the ramp-up and increased recurring revenues this year to carry us strongly into 2020. We are equally pleased with our SimSolid business. At the time we acquired the product, we believed it had the potential to disrupt the simulation market. Today, we are pleased to note that its growth is the fastest in our portfolio, with Inspire following in second place, demonstrating the significant opportunity for simulation with designers and design engineers. SimSolid's speed and accuracy, especially for complex assemblies, is remarkable and it continues to generate excitement within Altair and with customers. Renault recently performed a series of benchmarks, showing up to two orders of magnitude or 100 times lead time reduction with SimSolid over traditional simulation technology. I would like to relate a story from one of our energized account managers in Germany about how he sold SimSolid to a customer who initially did not even want to meet him. They had evaluated several CAE tools and planned to purchase Nastran. Apparently, the other products all had convergence issues and Nastran only required 40 hours to run the test problem. Our sales guys said SimSolid could solve the problem in 2 minutes and convinced the customer to take a demo copy of SimSolid. By the time our sales guy returned home from the meeting, he had an email from the customer, saying he had learned the software, set up and run his problem in less than 60 minutes and had accurate results. He also promised to tear up the PO for Nastran and write one for SimSolid. These wins support our decision to expand SimSolid's small but brilliant development team and we are working closely with several key customers who already use SimSolid extensively in their analysis departments and want us to automate some parameters settings before they set it loose in their design communities. We are responding quickly and expect to satisfy these requirements by year-end. The second quarter was strong with many wins and new accounts for our core engineering simulation and high performance computing solutions and growing momentum for our recently acquired data science products. Solvers continue to drive growth and gain market share, and SimLab, our multi-physics solution, is also growing, especially in the electronics and high tech markets. Companies across all verticals are rapidly shifting decision-making strategies and investments to apply more algorithms and math based technologies like simulation and machine learning to drive geometries and other key parameters in manufacturing, logistics, marketing and elsewhere to optimize their businesses. Altair is well positioned for this future with a platform and business model where customers can leverage our broad integrated suite of best-in-class solutions to create simulation and data-driven digital twins from concept to reality. Architecture, engineering, construction applications result in some of the most visually inspiring uses of simulation-driven design. We saw many strategically important wins in Europe in Q2, including well known players in Italy and Denmark for our structural simulation, CFD and optimization software and look forward to seeing the results in design work. Another interesting new customer for us is a home appliance manufacturer in Africa. They're using Altair software for structures, electromagnetics and fluids to accelerate their product development cycle. Our e-motor development initiatives are resulting in good revenue on a number of fronts. In automotive, we are working with a major European OEM to develop a new e-motor product portfolio. Two different e-motor suppliers in Asia have turned to our Flux product for their simulation needs. And in California, a small startup in the fast-moving e-motor space is using Flux for custom DC motor design. Our high-performance computing group made some great sales in the second quarter. As a reminder, we acquired Runtime in 2017 and expanded our ability to optimize the use of HPC for compute-intensive applications by adding technology relevant to the EDA and semiconductor market segments. In APAC, a longstanding defense client wrote a new 6 figure agreement for the full PBS Works suite. A longtime semiconductor customer in the U.S. also signed a 6 figure deal plus a major technology logo signed on for substantial software licenses to support hardware development. And in the largest HPC deal of the quarter, another well-known technology company signed on for a 7-figure contract. During the past few months, I attended our user conferences in the U.K., India and China. All were extremely well attended and like all our conferences and webinars this year, the number of participants is growing significantly. The level of energy I saw in our customer base for our solutions and business model was inspiring. I also came away impressed with the high level of interest in data intelligence. We had a very strong second quarter. We are thoughtfully managing expenses and positioning to grow through this period of macro uncertainty and take advantage of our strengths: customer relationships, product breadth, business model and technical prowess. Now I will turn the call over to Howard for details on our financial performance during the second quarter and guidance for the rest of 2019. Howard?

Thanks, Jim. We are very pleased with the performance of our business in the second quarter of 2019. As a reminder, our reporting and guidance for 2019 is under ASC 606 as are the comparative numbers from 2018. As we previously noted, our seasonal billings patterns, coupled with the treatment of revenue under ASC 606, results in heightened seasonality in revenue with higher revenues recorded in our first and fourth quarters of any given year. For ease of reference, we've included a table of results for 2018, reflecting summarized results for all 4 quarters on an ASC 606 basis in our most recent 10-K and within our press release information. While the conversion from ASC 605 to ASC 606 makes our quarterly results more challenging to predict, our annual recurring revenue units based licensing model does drive a high degree of predictability over annual cycles. In prior conference calls, we have noted that changes in certain currencies can have an impact on both our revenues and expenses, especially when those changes occur over relatively shorter time period or when currency changes are more pronounced over time. When this occurs, as it has for Q2 2019 compared to Q2 2018, it is meaningful to measure aspects of our performance on a constant currency basis. Certainly the current macro environment, coupled with our global presence, may increase the adverse impact currency exchange rates may have on our business for the balance of this year, and our updated guidance reflects in part our current assessment of those impacts. Our second quarter results were driven by very strong software revenue growth. For the quarter, software product revenue reached $84.4 million, an increase of 20% from a year ago, while total revenue equaled $106.8 million, representing growth of 14% from the second quarter of 2018. Adjusting for the adverse impact of currency fluctuations in Q2 2019, software product revenue grew by an impressive 23%, and total revenue grew by 18% compared to Q2 2018. For the 6 month period, software product grew by 21% compared to a year ago on a constant currency basis. Software product revenue was at the upper end of our guidance range, even as our conversion of Datawatch customers to recurring revenue licensing models was modestly ahead of our expectations. Software related services declined by 9% compared to a year ago as utilization declined due to the completion of certain projects and the delay of inception of new projects. We anticipate services revenue for the year to continue to be flat to slightly down as we focus on our growth strategies on higher margin software revenues. As mentioned last quarter, acquisition accounting requirements mandate an adjustment to historical Datawatch deferred revenue as of the date of acquisition. Upon acquisition, we adjusted deferred revenue down by $9 million, which would have been recognized during the 2019 year. Our guidance for 2019 included this acquisition adjustment for non-GAAP revenue and adjusted EBITDA which we refer to as modified adjusted EBITDA for this specific purpose. Including the impact of the acquisition adjustment, our constant currency software product revenue growth equaled 26% in this quarter. In the current quarter, software product revenue increased to over 79% of total revenue, up 350 basis points from last year, without any adjustment for currency or acquisition-related data point, continuing the important long-term trend of increasing prominence of software product revenue to total revenue. Our recurrent software license rate – it is the percentage of software revenue that is recurring continues to be strong and consistent with our past performance at 91% for the first half of the year. Our positive software momentum contributed to strong profitability in the quarter, with modified adjusted EBITDA of $7.4 million, at the upper end of our guidance range, which includes the deferred revenue adjustment mentioned a bit ago. The net impact from shifts in foreign currency imposed a $713,000 negative impact on our results for the quarter and $1.5 million for the 6 months. Second quarter calculated billings were $108 million, an increase of 17% from a year ago, indicative of the strong growth in our software product business. Currency shifts also impacted current period billings negatively by $914,000 and on a constant currency basis would have increased by 18% for the quarter. We tend to view calculated billings over longer time periods due to the impact variations in the timing of renewals, expansions and new customer arrangements can have quarter to quarter. I would like to turn to the balance of the P&L results, some of which are on a non-GAAP basis. A reconciliation of GAAP to non-GAAP measures has been provided in the earnings release we issued earlier today. Gross margin in the second quarter was 70.9%, substantially improved from Q2 2018 by 250 basis points as a result of the increasing level of software product revenue. The improvement in Q2 2019 contributed to year-to-date gross margins of 72.8% compared to prior-year gross margins of 71.7%. This improvement offset lower gross margins related to our software related services revenues, which were impacted by the lower utilization I mentioned as well as lower margins in our other segment. The higher cost of revenue for the other segments primarily toggled is due to the timing of sales price decreases compared to future reduced unit cost that we expect to achieve later in the year. These items are transitory in nature. For the quarter, non-GAAP operating expenses, which excludes stock-based compensation, amortization of intangible assets and other operating income, were $74.1 million compared to $61.7 million a year ago. These expenses held tightly compared to Q1 2019, moving by only 1% in total. Operating expenses include the operations of Datawatch which are more skewed to sales and marketing compared to R&D with some incremental G&A expenses. As highlighted before, modified adjusted EBITDA for the quarter was $7.4 million, an increase of 40% compared to $5.3 million a year ago. Modified adjusted EBITDA margin in the second quarter was 6.9% compared to 5.7% a year ago. As Jim mentioned, we regularly evaluate the nature of our investments and will proactively realign those investments to respond to emerging opportunities or challenges. Considering the recent potential concerns across selected elements of our customer base with macroeconomic and trade matters, we are managing our expenses prudently in order to support our near and long-term goals, even as we continue to hire and invest in sales, marketing and R&D areas we see as necessary and opportunistic. Investment may include continuing M&A activities we believe are beneficial to our long-term growth prospects. Our focus is on driving growth in software product revenue as the key to improving our operating margins, while gaining economies of scale for our field organization and general and administrative operations. Turning to our balance sheet. We ended the second quarter with $251.8 million in cash and cash equivalents. We had $150 million undrawn and available on our U.S. line of credit as of June 30, 2019. On June 14, we announced the closing of a $230 million convertible debt offering, including the exercise in full of the underwriters' option. With a coupon rate of 0.25% in a 5-year, 30% conversion premium, we feel this was a judicious means of increasing our liquidity and cash reserve, providing substantial capacity to continue funding M&A activities without adversely impacting liquidity levels and without imposing a substantial cash interest burden on operations. Moving to our cash flows. Cash flow from operations in the second quarter was an inflow of $6.6 million compared to an inflow of $10.6 million for the second quarter of 2018. Free cash flow in Q2 2019 was an inflow of $4.5 million, consistent with our business cycle. For the 6-month period, our free cash flow equaled $25.2 million compared to $34.1 million for the prior year, consistent with the expected impact we noted during Q1 2019 for changes in certain working capital flows in Q2 2019. Our seasonal patterns allow us to realize a substantial portion of free cash flow in our first and second quarters of each year. I would caution against extrapolating free cash flow results on a quarter-to-quarter basis. With the impact of the shifting revenue mix and foreign exchange impacts driven by the factors Jim and I have discussed, we are adjusting our annual guidance for total revenue to now be $460 million to $464 million, a decrease of $10 million at both the top and bottom end of the range and for software product revenue to now be between $366 million to $370 million, a decrease of $7 million at both the top and bottom end of the range. Even with the slight reduction in revenue guidance, we are continuing to expect software product revenue growth of 20% to 22% this year and total revenue growth of 16% to 17%, notwithstanding the adverse impact of currencies or acquisition accounting adjustments. Our initial guidance for 2019 was impacted by fluctuations in currencies such as the euro and pound. Given the movements in these and other currencies compared to 2018, our guidance remains anticipatory of the negative impact on annual revenues of approximately $7 million to $10 million, with a $2 million to $3 million headwind to modified adjusted EBITDA for 2019. It is possible that continued shifts in foreign exchange rates for the rest of the year could increase the impact on our operations. For the 6-month period, the actual impact of currency fluctuations equals a reduction of $6.9 million for revenue and $1.5 million for modified adjusted EBITDA. We are maintaining our guidance for modified adjusted EBITDA at $62 million to $66 million as we believe that with positive impacts of currency exchange rates to our operating costs and the careful management of our expenses, we can mitigate the adjustment to our top line expectations. Our expectations for annual free cash flows remain unchanged from last quarter at $27 million to $29 million for 2019. To conclude, I would like to emphasize that for the full year 2019, we continue to be very pleased with our growth compared to 2018 and progress towards our long-term goals. Our updated expectations for growth are as follows. Software product revenue represents growth of 20% to 22% from 2018. Total revenue represents growth of 16% to 17% from 2018. Modified adjusted EBITDA increases by between 24% and 32%. As to Q3 2019, our expectations are as follows. Software product revenue to be between $79 million and $81 million, representing growth of 23% to 26% from 2018. Total revenue to be between $103 million and $105 million, representing growth of 19% to 21% from 2018. Modified adjusted EBITDA of between $3 million and $5 million. We are optimistic about our ability to drive exciting revenue growth, driven by software product momentum for the remainder of 2019 with solid profitability and cash flow for the year. With that, operator, we can now open the call to questions?

[Operator Instructions] Our first question comes from Bhavan Suri of William Blair.

I guess I wanted to touch first a little bit on the commentary around macro here. The software product numbers are pretty good. You're still highlighting pretty solid product growth for the year. I guess just a little color on sort of what are you seeing from customers. Is it EMEA? Is it the U.K.? Is it China? And sort of – it's reflected, some of it in services, which is fine, but more importantly, sort of – what do you see on the product side in terms of fewer units – HyperWorks Units? Or is it just slower additions or due to the hiring? Help us understand a little bit of what's going on and what the customers actually telling you.

Sure. So, when we are talking about the macro side, I mean, honestly, I'm seeing or sensing, if you will, slowdown in the automotive industry, globally for sure. We're not actually seeing an impact to the strength or pull for software actually out of that market. It's more a little bit of conservatism. But most of that conservatism that you see and just making the adjustment is more around Datawatch and services, quite frankly. We actually thought about being more conservative and just – we're just not seeing a change to the core business strength yet, and so we actually didn't effect that, believe it or not. But you can't help but notice what's happening in the auto industry. And the auto industry is cyclic and we certainly do have a higher amount of exposure there. So, just being careful, I guess is the right answer I think.

Got it, okay. And then, you're talking about sales investments. When I look at the products, Inspire, and sort of the whole idea around that displacing some of the legacy products, whether it from Dassault, SolidWorks, whatever and then SimSolid, are they getting a disproportionate part of the investment? Or is it the sales investment across the board and everything from Computational Fluid Dynamics to SimSolid to the solidThinking? Just love to understand sort of how you think about where that sales investment is going.

Okay. Sales investment I think is going on across the board. Still it's not particularly focused. There is an increase in marketing, I would say, investment around SimSolid a little bit, just trying to bring attention to something that is just clearly – really special, and we are beginning to ramp up marketing on the data intelligence products as well. But in general, I think the sales investment is across the board. We are also growing the sales force for Datawatch products or data intelligence products as well. So we've kind of stabilized through the year. We've done are assimilating of the business and now we're in sort of growth mode and we're adding sales guys pretty aggressively around the world for the data intelligence products where we really needed to put people in place and also pre-sales.

And our next question comes from Sterling Auty of JPMorgan.

A lot of moving parts between ASC 606, FX, acquisition accounting, etc. What's the best way to think about the kind of normalized growth in basically buying from your customers on a year-over-year basis in that software line?

I have to admit, I don't think I understood your question, Sterling. Could you maybe restate it unless Howard did? Yes, try again. I apologize, but try again on me.

No problem. So, if we think about you've got the acquisition accounting impacts of moving to ASC 606, constant currency or you have the FX impacts given the fluctuation and then you have the accounting impacts to Datawatch, etc. I'm just wondering if we just try to take a step back and think about what the growth in your software business is net of all those impacts. What does it look like? Or what should we be looking for going forward?

It's probably in the mid-teens, basically. A little below. I'm going to say 13%, 14%, kind of range.

Perfect. That gives a good understanding. Thanks, Jim.

We're talking about the core piece of the business.

Yes, when you look at just the software product alone, the current quarter on a constant currency basis, 606 to 606, so it's really apples to apples, 23% year-over-year, and for the first half, 21% year-over-year. So a little bit of acceleration from Q1 into Q2, which is –

But he is trying to net out – he is trying to net out the acquisition and so trying to net that out. I think it's probably in the range of the 14% to be honest with you, which I think is right.

I think that's fair. And then one follow-up. When you talk about managing expenses for the EBITDA targets, where is the greatest flexibility for you to manage those expenses without jeopardizing the growth moving forward?

You probably realize there's just a lot of leverage in our business. We're pretty sizable, and as we scale, we're going to continue to grow margins relatively easily. So we're just across the board a little bit, tucking in and it's just very, very easy for us to do. It's not a huge pain.

Okay. One more point on that, Sterling, and that is currency. We are obviously substantially global. So while there may be currency impacts on the top line, those same shifts have a positive offsetting kind of natural hedge on certainly a fair part of our expenditures outside of the U.S. as well. So some of that is just kind of a natural FX hedge against top line as well.

And our next question comes from Hoi-Fung Wong of Guggenheim Securities. Hoi-Fung Wong: I just wanted to drill into the Datawatch business a little more. You talked about how most of the cut seems to be coming out of that business. And I guess on the surface, my thinking is that the exposures to the end markets are more financial services and some healthcare, less the traditional manufacturing base that you guys have. So is the cut coming from that existing Datawatch base? Or is it just expectations for slower adoption from your core? Just help us kind of unravel that a little bit.

It's actually, I think a couple of things. One of the biggest things is that it's been – we really pushed hard to shift the model from a perpetual model to a subscription model, and I would say that that's going a bit faster, which is mostly good, okay? And it's great for how we're going to enter 2020. But it just – on balance, it has a little bit of an effect on the actual number for the year. So, a lot of it is really just the shift in the model, but some of it is also the fact that we have some moving parts here. We're moving to this units-based model. We're finally done doing that. Even today we quoted a very large customer with the units model, and we're beginning to experiment with that. And it looks very promising for us. But that also is a shift. So, shifting to subscription, shifting to this units based model a bit, not in every case, not in every sale, but we're beginning to try and look at enterprise level customers that way. And I think it's currency as well, I guess. Hoi-Fung Wong: Okay, got it. And on that first point about shifting from perpetual to more subscription, I mean, to the extent that's moving faster, any rough quantification of how that might be a headwind to numbers? Because I think optically the $7 million probably isn't as bad if that really is part of what's going on here.

I think what we're going to see is with the sales force expansion that we're doing this year and coming into the year with a higher percentage of subscription, we're going to see very, very strong growth for the data intelligence business in 2020. We're feeling good. Hoi-Fung Wong: Got it. And then maybe the next thing – just on FX. Can you give us a rough sense of what that incremental headwind looks like on revenue and EBITDA compared to what you guys had modeled for currency rates last quarter?

We're not going to put tight bookends around that, Ken. But I think we certainly saw $7-ish million of constant currency negative impact in the first 6 months of this year versus last year. I'm trying to really project out where FX will land across all of the currencies that we navigate across is – could it be a similar amount? Who knows. I mean, but remember, last year towards the back end of 2018, the U.S. dollar strengthened relative to the front end of 2018. So it might not be as pronounced and so on. For us, again, kind of a key point is, if there is an impact on the top line for us, there is much less of an impact on the bottom line, given the natural hedge considering how global we are. I'm not saying there isn't an impact, but there is definitely kind of a natural hedge there. So I don't want to say we don't care because we certainly do. But it's not that much of an extreme impact.

And our next question comes from Gal Munda of Berenberg Capital Markets. Francois Yoshida-Are: This is actually Francois on for Gal. We just had a question about the lowered guidance. Is there any way you could quantify or roughly speak about how much of the decrease is coming from each of the factors: the lowered currency, subscription transition and conservative views on manufacturing? And I just have one more follow-up. Thanks.

The short answer is, we're more comfortable with kind of a collective view rather than pegging a dollar amount to each of those particular factors. But clearly, there is anyhow a significant element of each that we bake into the guidance. But I think it's important to note that notwithstanding the contributing factor or factors to a reduction in the top line, the fact that we continue to maintain our guidance for modified adjusted EBITDA is an important counterbalancing factor there based upon how we can manage the business and the – for example, a natural hedge on some of the currency stuff as well.

I mean, we still feel great about the business. Just want to make that point. We're growing like crazy and the EBITDA is growing somewhere between, I don't know, 25% and 30-some percent for the full year in our plan. So from where we sit, we're having a great year. Francois Yoshida-Are: And just one more follow-up on SimSolid. Could you give us a little bit more color about how that adoption is going? You did mention that it was one of the fastest growing segments. Is it a material contributor to growth right now? And just a little bit more color on that would be appreciated.

Thank you. It's actually making that shift I think now. What we do is we actually measure usage, and the usage over the last 5 months has grown about 10x, which is pretty amazing actually. Inspire, actually is growing really fast too. It's about a 2x growth over last year. But when we look at SimSolid, it's – we actually rank the positions of the different products, and it has moved from essentially nowhere – if you think of it like a pretty significant position. It's not in the top three but it's still in a pretty important place among a lot of the software products. So it is really taking off. And we had one aerospace customer, well-known name, who – we looked at their usage and their usage is just absolutely skyrocketing as well. And it's serious numbers at this point. Serious number of users, serious numbers of hours that are being – and numbers of runs that these guys are making. So it's catching fire, and it should. It's really – it's a difference-maker.

And our next question comes from Rich Valera of Needham & Company.

This is [indiscernible] on for Rich. So, you've touched on sales force a bit already. But I do have a question for you, Jim. On last quarter's call, you had mentioned that sales force had been historically more ad hoc. But you recently began integrating some sales data to work on prediction and improve your targeting. And so I was wondering if you could highlight any developments here.

Yes, that's continuing. We're implementing a new system across the board. We've been training. I think we've probably trained almost 100% of the sales force in how we're qualifying prospects and all that and how we bring them in. So there's just a lot more process to what we're doing. So we're feeling really great about the mechanics of how the sales force is actually operating. I'm not sure I'm answering your question.

Yes, no, that's helpful. And then is it possible at all to quantify the success rate or efficacy of any of the initiatives that you have going on in the sales force?

I think it's a little bit early. Probably next year, we're going to start to see much more – we hope certainly, much more effect from this. But perhaps also later in the year.

And then just switching gears back to Datawatch. So there has been a number of comments already made, but I just did want to revisit some of the challenges noted on the Q1 call, namely expanding footprint and the cultural differences, and I was wondering if you could expand on how any of those progressed throughout the quarter.

I think we're pretty much over most of that, to be honest, and I think the teams are pretty assimilated. It's certainly not 100%, but we are feeling really positive about the teams, and I think we're understanding each other significantly better. And we're basically in growth mode now. I think most of these guys are feeling like they're part of Altair, they understand the culture, they are beginning to experiment with the approach that we take and the business model that we take. And we've hired some new people on to the marketing side, focused on the data intelligence products as well and kind of getting that going as well. So I would say that we're past those growing pains and now sort of just moving forward.

[Operator Instructions] Our next question comes from Matt Hedberg of RBC Capital Markets.

Jim, I wanted to just circle back one more time on the macro because obviously you incorporated into the reduction in guidance, but to me it seems like it's more of a precautionary tone. And I just wanted to confirm, you're not really even seeing any change in buying behavior yet, it's more precautionary. Is that fair?

Actually, that's true. We're still seeing a lot of strength in the market. We do sense, though, that the auto industry is beginning to slow down. There's just no doubt about it. And we could stick our heads in the sand and ignore that. But that isn't how we run our business. One other thing is that during these periods, where, if you will, you have these downturns a bit, a lot of these companies actually begin investing more in technology, in new technology, and that tends to play for us. The other thing that tends to happen is, they consolidate a bit. And we're actually very well positioned. We were last time in '09 as well, which was, okay, much more serious. But we tend to gain market share and gain power during those periods and then come out really just rock and strong. So, yes, right now we're not actually – other than a little bit on the services side, I would say, we're not really seeing any impact to the pull for our products, if you will, for software products. A lot of the pullback is a little bit currency and then frankly the Datawatch is shifting a bit to more subscription than what we had expected.

Okay. And you mentioned auto, which is obviously your biggest end market. I'm curious, though, about like aerospace and others. I mean, is there – are those still, I know we talked about it a little bit on the last call, but maybe just touch on some of the other key kind of – well, I guess that one in particular.

I mean, I think with all the trade stuff going on. I think manufacturing in general has some turbulence with tariffs and currencies and all of that. Aerospace in particular, no, it's really pretty stable. Again, I am talking about their industries as they may relate to us in the future. The reality is actually the strength of our own business is still, especially the core business, is really very solid. It's almost perplexing.

Yes. If I could just one more, just on Datawatch to Howard. If I recall, I believe when you acquired Datawatch, I believe about 60% of their revenue was recurring. I'm wondering if you could kind of give us a sense for what that mix looks like today. I mean, is it 100%. That's sort of the end game?

Well, obviously, we love for 100% to be the end game because that's certainly the goal. Even within the non-Datawatch business at Altair, we're not quite 100% recurring. We have a little bit of perpetual. But the intent and the objective through taking them to recurring revenue model and getting them now plugged into the HyperWorks Units model is to really move the needle, and the good news is we're being very successful about that and the customer base is being very receptive to that. So, it bears out what we believe, which is that these types of technologies will lend itself very well to our type of business philosophy and strategy that we think is very customer centric and customer friendly and customer beneficial.

Thank you. And ladies and gentlemen, this does conclude our question-and-answer session. I would now like to turn the call back over to Jim Scapa for any closing remarks.

I just want to say thanks to everybody for their interest and attention. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone, have a great day.