Good afternoon, welcome and thank you for attending Altair’s Earnings Conference Call for the Fourth Quarter and Full-Year 2022 ended December 31, 2022. I’m Dave Simon, After the speaker’s presentation, there will be a question-and-answer session. To ask a question [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Dave Simon, Altair’s SVP for Investor Relations. And with me on the call are Jim Scapa, Founder, Chairman and CEO; and Matt Brown, Chief Financial Officer. After market closed today, we issued a press release with details regarding our fourth quarter and full-year 2022 performance and guidance for the first quarter and full-year 2023, 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 the IR section of our website following the conclusion of this 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 earlier 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, Dave, and welcome to everyone on the call. Altair had an outstanding fourth quarter achieving record high software revenue, and showing exceptional momentum for the full-year. Software product revenue in the fourth quarter grew by more than 25% year-over-year on a constant currency basis, contributing to full-year software product revenue growth on a constant currency basis of 17.6% The strength in fourth quarter billings was led by software across all geographies and particular strength in our technology, automotive, and aerospace verticals. Software product revenue as a percentage of total revenue for 2022 continued a strong positive trend at 89%, compared to 85% in 2021, and our recurring software license rate remains high at 92% for the year. Even in a year in which exchange rates had a material negative effect on revenue and profitability, Altair continued to significantly expand our margins and cash flow. Adjusted EBITDA margin of the fourth quarter was more than 24% versus 17% in the prior year. Adjusted EBITDA grew 27% in 2022 to $108.6 million or 19% of revenue versus $85.3 million or 16% of revenue in 2021 This performance is clearly well above expectations and I am extremely proud of Altair's global team for their exceptional achievements. The full-year results demonstrate continuing trend of increasing mix shift towards software revenue and higher gross margins. Matt will speak about this and other areas we are focusing on to drive our increasing margin profile. Altair continues to evolve its product to position as the leader in computational science and artificial intelligence. Our vision for convergence and the technologies we brought together over the last 20 years in simulation, high performance, distributed computing, data analytics, and AI are maturing into a powerful and integrated offering. Altair One, our cloud innovation gateway is rapidly gaining traction with over 150,000 users signed up and already using the application marketplace and self-service support and documentation. Altair One capabilities will include tracking user activity through a digital thread, interactive applications in the browser, data anywhere, and on-demand compute. The single [pane of glass] [ph] approach allows customers to efficiently leverage elastic on-demand multi-cloud architectures to avoid vendor lock in and use Altair units for both software and hardware. Altair Rapid Minor, our data analytics and AI platform, is integrating all capabilities, including data preparation, data science, deployment, monitoring, code free, and code friendly development, and multi-language support, including the SaaS language. We also support multi or single tenant cloud instances and installation on premises. Altair HyperWorks, our design and simulation platform is built around our unity framework user experience with components of all three products, [indiscernible], SimLab and Inspire moving to a common data model and shareable components to build solutions tailored for specific markets and ultimately to run natively in the cloud. Our solver teams are integrating as well and focused on multi-disciplinary simulation and optimization and we are excited about our implementation of physics-based AI, which is releasing shortly. Altair HPC works, our HPC and cloud platform is similarly being componentized to deliver market focused solutions more efficiently, including workflow dependency management, software license costs, and allocation management, and storage cost and management. The automotive vertical had some notable fourth quarter wins, including exceptional performance specific to electric vehicles. At [one electric] [ph] vehicle manufacturer, the number of users more than doubled through 2022. This led to an 88% expansion in revenue. Hundreds of users of the company are now using Altair's tools for many applications, including noise and vibration, chassis design, vehicle systems, structures, manufacturing cell design and energy systems development. And at a second electric vehicle manufacturer, we saw a 7-figure expansion, representing 50% year-on-year growth, driven by a broad range of Altair’s simulation, high performance computing, and data analytics tools. In the automotive racing sector, we received a 7-figure commitment for our software technology. Focus areas for the team include both combustion and electric drivetrain development. We are especially pleased to be core to efforts of driving electric vehicle performance as the carryover effects from racing will help move broader electrification forward. The aerospace vertical, including commercial aircraft defense and space systems had a very strong fourth quarter for Altair. After extensive evaluation, a major European aerospace company, selected SimSolid as its best comp solution for stress engineers to greatly accelerate the evaluation of designs by performing structural analysis on fully featured CAD assemblies without the need for time consuming CAD cleanup and meshing. SimSolid's incredible speed, accuracy, and rapidly expanding solution types is why it was selected by this and other major engineering organizations to enable simulation driven design. Some of our other wins in the quarter included the following: a major aerospace company awarded Altair a 7-figure agreement for simulation and data analytics, representing 30% year-on-year growth in that account. A government aerospace agency committed to Altair's data analytics tools to help develop avionic subsystems, a defense and space contractor signed a 7-figure deal that represent an 86% revenue increase. An EMEA aerospace company committed in the quarter to an increase, which brings its annual Altair billings to more than a million euros. And finally, a space system supplier awarded Altair a 7-figure contract, representing significant expansion entered on using Altair unlimited appliance for a broad range of activities, including the development and production of satellites, base transportation systems, and defensive systems with a heavy focus on electromagnetic simulation. Furthering our aerospace industry relationships, we recently announced that Altair has become a partner of the Campania Aerospace District, one of [Middle East] [ph] and Europe's most important Aerospace District. [DAC] [ph] was established in 2012 with the objective of stimulating collaboration between research centers, universities, and companies in Campania to create business and growth opportunities. The Altair partnership aims to bring the reliable cutting edge technology solutions in digital twin and data analytics to support and empower the aerospace industry in Campania and around the world. In the BFSI vertical, our growth path continues to progress rapidly. We signed a new logo, one of the Top 5 insurance multinationals in EMEA to a significant purchase order to effectively leverage its existing SaaS language tools with Altair's modern and cost effective RapidMiner platform. Cost reduction and key business strategies included migrating data and analytics platforms to a third-party cloud provider providing an on-premise capability in parallel to accommodate transition to cloud and delivering democratization of data and analytics to business users with increased – which increased the value and efficiencies of self-service. Another 7-figure data analytics deal in BFSI converted an existing financial services customer from a named user licensing structure to Altair units. This allowed for significant broadening of portfolio applications and an enterprise-wide standardization direction for Altair's tools. We believe that as we continue converting data analytics customers to units based licensing, we will see a common theme of application expansion and user based growth. Our HPC business had some notable wins in EMEA in the fourth quarter, including two 7-figure deals, one with a major semiconductor company and another with a major material supplier. And we were excited to announce the U.S. Department of Energy, Argon National Lab, deployed Altair HPC works the fast track scientific discoveries on its supercomputing systems. Argon is utilizing the technology to help scientists find ways to slash greenhouse gas emissions through research into fusion energy, better biofuels, and safer, more reliable next generation nuclear efficient reactors. Altair has often been well ahead of market technology trends. This has consistently been true when HPC computer hardware innovations drive next generation computational science software. We recently announced a $10 million investment in Xscape Photonics, a Columbia University startup led by three of the leading researchers in the field of Photonics and advanced semiconductor design. Xscape is focused on commercializing innovative photonic technology for ultra-high bandwidth connections in high performance computing systems. The emphasis in HPC over the last 25 years has been on increasing compute performance. We believe significantly increasing data transmission speed and throughput is now essential as applications scale exponentially, especially in data science and AI. The traditional electronic method of moving vast amounts of data requires significant space and power and produces substantial heat leading to performance challenges. Xscape’s novel approach uses Photonics chip technology to drastically reduce power consumption and heat, while increasing speed. As part of our ongoing effort to strengthen our ties with educational institutions, we were pleased to announce that Altair and TU Delft signed a campus-wide license agreement. TU Delft is the Netherlands' oldest and largest public technical university with 30,000 students. This new agreement with TU Delft underscores our commitment to top level research and high quality education to prepare future engineers, data scientists, and developers for success. We are excited that the Americas family competition team, New York Yacht Club American Magic recently announced a major partnership with Altair to leverage Altair's technology for computational science and AI. Our work with them includes a predictive data analytics system to analyze and understand selling vessel performance and a custom made AI bot to enable the control and monitoring of sailboat simulations. The 2023 Enlighten Award honors the greatest sustainability and light-weighting advancements that reduce carbon footprint, mitigate water, and energy consumption and leverage material reuse and recycling efforts. This year, we established a new award category for Responsible AI to recognize exemplary use of data analytics and AI that delivers substantial sustainability benefits through the automotive value chain. 2022 was a year of extraordinary achievement for Altair as we navigated continued global uncertainty and foreign currency exchange rate headwinds. We entered 2023 with significant optimism for continued progress and a sincere belief that our work helps the world be healthier and more sustainable for everyone. Now, I will turn the call over to Matt to provide more details on our financial performance and our guidance for the first quarter and full-year 2023. Matt?

Thank you, Jim. Hello to everyone on the call and thank you for joining us. We are very pleased with our strong fourth quarter results, which capped off with one of the most successful years in our long history. Demand for our products continued to be strong and despite significant currency headwinds, we ended 2022 with record high annual revenue and adjusted EBITDA. Since our revenues and expenses are transacted in currency other than the U.S. dollar, our reported results may be significantly impacted by changes in foreign exchange rates. Therefore, throughout my remarks, I will make reference to growth rates in both reported and constant currency. Starting with Q4 numbers, calculated total billings for the quarter were 187.9 million, a year-over-year increase of 18.1% in reported currency and 23.2% in constant currency. The strength in billings was led by software across all geographies and with significant customer wins in our technology, automotive, and aerospace verticals, all leading to software product, and total revenue above the high-end of our guidance range for the fourth quarter. Software product revenue in Q4 2022 was 145.0 million, a year-over-year increase of 18.5% in reported currency and 25.5% in constant currency, compared to Q4 2021. Software product revenue growth was led by expansion in simulation and new customer acquisitions and high performance computing, while renewals continue to be strong across all product lines. Total revenue in Q4 2022, which includes services and other revenue, was 160.4 million, a year-over-year increase of 13.9% in reported currency and 20.6% in constant currency, compared to Q4 2021. Our recurring software license rate, which is the percentage of software product billings that are recurring, continues to be strong at approximately 92% for the year. Non-GAAP gross margin, which excludes stock based compensation and restructuring expense was 80.2% in the fourth quarter, compared to 78.1% in the prior year, an increase of 210 basis points. Software product mix helped drive this increase as our software revenue, which carries higher gross margin, increased as a percentage of total revenue. Software revenue was 90.4% of total revenue in Q4 2022, compared to 86.9% in the prior year. Over the long-term, we continue to expect a general mix shift towards software product revenue as growth there will outpace services and other revenue. Non-GAAP operating expenses, which excludes stock based compensation, amortization of intangible assets and restructuring charges were 92.6 million, compared to 87.4 million in the year ago period. Adjusted EBITDA in Q4 2022 was 38.7 million or 24.1% of total revenue, compared to 24.0 million or 17.0% in Q4 2021, an increase of 61.7%. This increase compared to the prior year quarter, as well as relative to our expectation was driven by the increase in software revenue in the quarter, combined with a disciplined approach to spending. Now, looking at the full-year, 2022 was one of the most successful years in our history and we made considerable progress towards our goal of 20% adjusted EBITDA exiting 2023. Calculated billings for the year were 607.6 million, a year-over-year increase of 12.5% in reported currency or 18.5% in constant currency. Software product revenue for the year was 506.5 million, a year-over-year increase of 11.6% in reported currency and an impressive 17.6% in constant currency. And total revenue for the year was 572.2 million, a year-over-year increase of 7.5% in reported currency, and 13.1% in constant currency. The strength in software revenue helped drive our non-GAAP gross margins for the year to 80%, compared to 76.9% in 2021, a 310 basis point increase and marking the first time our non-GAAP gross margins have reached 80% in any fiscal year. Turning to operating expenses, we invested in areas for growth, focusing on expanding our sales capacity by more than 10% year-over-year, and driving product development both organically and through strategic acquisitions. At the same time, we're continuing to reduce costs in select other areas. This helped to drive adjusted EBITDA for the year to 108.6 million or 19.0% of revenue, compared to 85.3 million or 16.0% in 2021, a year-over-year increase of 27.4%. We set out a vision almost two years ago of achieving 20% adjusted EBITDA margin exiting 2023 by driving software revenue growth and adding 200 basis points to 300 basis points of margin each year. I'm proud to say, we're well on our path to achieving that goal and beyond. Turning to the balance sheet, we ended the year with 316.1 million in cash and cash equivalents, a decrease of approximately 97.6 million from the prior year. Some of the larger impacts to our cash balance in 2022 include approximately 145 million paid for acquisitions, a 66 million payment for the existing litigation judgment against world programming that we assumed as part of our acquisition and 20 million in share repurchases, which were partially offset by a net increase of 32 million as a result of new convertible notes and partial retirements of old converts, and strong cash flow during the year. Free cash flow for the year was 29.9 million, which included the 66 million World Programming judgment. When excluding this acquired judgment, free cash flow was almost 96 million, an increase of 78% year-over-year. We're very pleased with our increase in profitability and our ability to generate significant free cash flow in 2022. Let's turn to guidance for Q1 and full-year 2023. We've provided detailed guidance tables in our earnings press release, including reconciliations to comparable GAAP amounts. We're continuing to see an FX impact relative to 2022 as foreign exchange rates change throughout last year. To provide more clarity on the FX impact to our expectations, we've provided growth rates in both reported currency and constant currency in our guidance tables. For Q1, we expect software product revenue in the range of 139 million to 142 million, a year-over-year change of negative 1.3% to positive 0.8% in reported currency and an increase of 3.7% to 5.9% in constant currency. For full-year 2023, we expect software product revenue in the range of 550 million to 560 million, a year-over-year increase of 8.6% to 10.6% in reported currency and 9.5% to 11.4% in constant currency. Beginning in January 2023, we discontinued reselling a non-strategic lower margin product line resulting from a prior acquisition, which contributed approximately 7 million of software product revenue in 2022, and therefore the discontinuance impacts 2023 growth rate by slightly more than 1 percentage point. We expect services and other revenue to stabilize in 2023, compared to the sharp declines we saw in 2022. Though still slightly down year-over-year, particularly in the first half of the year. As a result, we expect total revenue for Q1 2023 in the range of 155 million to 158 million, a year-over-year decrease of 3.0% to 1.1% in reported currency, and an increase of 2.0% to 3.9% in constant currency. For the full-year 2023, we expect total revenue in the range of 613 million to 623 million, a year-over-year increase of 7.1% to 8.9% in reported currency and 8.0% to 9.7% in constant currency. From a cost perspective, we've been successful in our disciplined approach to spending and expect to carry that approach into 2023. For Q1 2023, we expect adjusted EBITDA in the range of 34 million to 36 million or 21.9% to 22.8% of total revenue, compared to 46.6 million or 29.2% of total revenue in Q1 2022. For the full-year 2023, we expect adjusted EBITDA in the range of 120 million to 130 million or 19.6% to 20.9% of total revenue, compared to 108.6 million or 19% of total revenue in 2022. And finally, for the full-year 2023, we expect free cash flow in the range of 108 million to 116 million, which represents a substantial increase year-over-year. As a reminder, our cash flow expectations are sensitive to billings and collection patterns, which fluctuate seasonally. In particular, our historical pattern has shown a larger free cash inflow in the first half of the year, primarily from collections on billings from Q4 and Q1 and a smaller free cash inflow in the second half of the year. We're expecting that pattern to continue this year. With that, we'd be happy to take your questions. Operator?

Thank you. [Operator Instructions] And our first question comes from the line of Ken Wong with Oppenheimer. Your line is now open.

Great, fantastic. Solid quarter guys. Matt, maybe the first one for you, I just wanted to maybe check on whether or not you saw any abnormal pull forward into Q4, such a strong print and given the lighter Q1, just wanted to check if anything we should be aware of?

Yes. Thanks Ken for your question. No, we didn't see a significant amount of pull forward, but we try not to look at one quarter in isolation, right? So, when we step back for the year, thinking about the [key room] [ph] guide relative to the full-year, sometimes due to the seasonal nature of our quarters, we can – you can get to a situation where we're looking at one quarter at a time can look a little bit strange. But when we look at full-year last year, we were super happy with where our software revenue ended up coming in 17.6% year-over-year growth in constant currency. So yes, very strong. And when we look at full-year 2023, we're also feeling very confident. So, hence the guide there in constant currency at 9.5% to 11.4% of growth. So again, I mean, you can get, sort of some strange year-over-year results on a particular quarter. We actually saw that a little bit in Q3 last year, but that was again under – within a year where we saw really, really nice growth. So, I would just say, we don't always – we can't always perfectly predict when deals are going to close in one quarter or the next, but we feel really, really good about both our 2022 results and our guide for 2023.

Got it. Appreciate it.

Could I add?

Oh, go ahead please.

Sorry. Hi, Ken. This is Jim, obviously. We just as a habit, we don't have a habit of trying to pull deals forward because that tends to go along with giving bigger discounts, but I mean if deals are closing and the pipeline is clearing out a bit, we just ended up with a very, very strong quarter. No question about it. And a lot of momentum really coming into this year. So, nothing unusual that we've [found here] [ph].

Got it. No, perfect. Really appreciate the color there. And then Jim, just a follow-up. Good to hear some solid customer traction on the data business in your remarks. One of the things you highlighted was just as you get more on the units model, you expect that kind of utilization to drive more growth, how far along would you say we are in kind of converting that installed base? I know you guys were making that push with, sort of equal pricing to, kind of drive people lower. Would love to get an update there.

Yes, I think among the more significant customers, we're pretty – we're really making good progress over 50%, but with some of the smaller customers, it's probably down under 40% or something. So, it's a mix, but we're feeling very positive. The entire sales force is completely bought into the units model, which took us a couple of years, now they're completely all-in and we're just seeing it. Every deal, every new deal certainly is going with units. And we can see the potential now as we're harvesting. We have thousands of customers many of which are really substantial. I mean, really big name companies that spend let's say 50,000 to 150,000 with us on one of the data products and as we move into units and as our portfolio has really expanded the SLC product, a lot of customers have a lot of SaaS, you know SaaS technology running. There's a lot more interest in exploring what the opportunities there are. There's a lot of interest coming from the system integrators as well to start working with us and seeing how they can move it forward. So, just a lot of [Technical Difficulty].

Got it. Great. Thanks guys.

Thank you. One moment for our next question. Our next question comes from the line of Matt Hedberg with RBC Capital Markets. Your line is open.

Yes. Thank you. Appreciate it. This is Matt Swanson on for Matt. I'll add my congratulations on the strong quarter. Jim, you just mentioned system integrators, and as we've seen the channel kind of start to ramp the last couple of years, could you talk about a little bit about that strategy and maybe are there any more concerted efforts in 2023 to build out that line of business?

Yes, for sure. I think in the data analytics business, particularly as we sort of taken to that next step now. System integrators and resellers are really fundamental to the whole business. They have domain expertise, they have the scale to really drive major implementations. And so, we are very, very focused. We have a number of smaller system integrators, but we've now signed some of the larger system integrators. I don't remember what's been announced. Out of India, for example, and we have a lot of really good ongoing discussions with some fairly important names. So, it is an absolute focus for us. We think that the combination of all the solutions that we have, RapidMiner technology and how that's really evolving now, bringing the ML Ops technology inside a RapidMiner from SmartWorks and the SLC technology really gives us a very, very differentiated position that is very appealing to system integrators and we're just seeing – we're seeing the interest on a whole new level now. So, it's important. Thank you.

Yes, that's really helpful. And then, I think maybe this goes hand in hand with the system integrators, but when we think about expanding data analytics, like all the success you've had out to more verticals, is that more about product advancements or is it more about go to market and educating customers?

I mean, it's both, but I think most important is actually the go to market, to be honest with you. Our mantra this year is execute to achieve, and we feel pretty good about the product portfolio and now we have to really execute well to make things happen. I think we're very, very well situated to do that.

Alright, appreciate the time.

Sure.

Thank you. And our next question comes from the line of Dylan Becker with William Blair. Your line is now open.

Hey, gentlemen. Congrats here on a terrific year and great to hear about, kind of the broad based strength in demand commentary. Jim, I was maybe wondering how should we think about the pipeline mix and interest you guys are seeing maybe more so from the core, kind of expansion of that core simulation base versus incremental adoption of tools, kind of like Inspire, SimSolid, etcetera that's targeting that less technical design area and maybe addressing a net new pool of users and introducing them to your tools?

Yes, I mean, I think we're making really good progress there. The SimSolid product is really core there in my estimation. It's a very, very unique position and a product that a lot of customers are beginning to finally see the potential that they can actually displace a lot of what they've been doing traditionally, especially in the mid-market, upper mid-market. And where the design/simulation is sort of one guy who does everything. So, I think that's very, very important. The Inspire product, we've been pouring investment into it to add more and more geometry capabilities. There's a lot of new stuff coming this year that I think is going to surprise people. And also on the simulation side and of course manufacturing simulation capability, all built-in. So that product, I think, continues to get tremendous traction along with SimSolid. And our sales team is really learning to sell the entire portfolio And that's very, very fundamental for us because historically they may have been a little more selling point solutions, but there's really been a transformation happening. And that includes, by the way, the data products. I don't think a meeting is happening anymore where our sales guys who traditionally were selling engineering solutions are talking and selling the data analytics products. And I think RapidMiner has – coming into the fold is really – and the team that came along with that has really made an impact for us. So, it's an interesting transformation.

Yes, that's super helpful. Appreciate that color there. And maybe, kind of a comment [indiscernible] that convergence that you've talked about around kind of simulation and data and HPC. There's been a lot of emphasis on, kind of what the digital twin opportunity can look like. Maybe wondering if you can elaborate a bit on some of the early used cases and adoption areas you're seeing here and how you're thinking about the prevalence of digital twins, kind of serving as a springboard for those broader data analytics efforts, kind of due to the streaming needs of those types of solutions as well?

Yes, I think we've built out the perfect portfolio basically starting from the system modeling side of the fence where you can do these very detailed system models with, sort of different levels of fidelity and then integrate together with machine learning models as part of it that brings sort of data into the home mix. And every one of the customers is actually interested in deploying digital twin technology. The other place that I think may surprise people is, we have some really interesting digital twin technology for electronics because most of the products whether it's an automobile or an aircraft or a machine that moves equipment around or boxes around in a warehouse, they're just filled with very, very complex wire harnesses and electronics going every which way. And we have technology that essentially builds a digital twin of all that electronics and then lets you auto generate, for example, service drawings lets you actually explore where you may have problems in there and really test the design and different approaches and then also use it once it's in service. So, we have basically a solution that's, kind of going across really all these multi-physics domains that is just starting to gain traction and get interest from the customer base. So, I'm not sure I answered your question perfectly. I hope you got something out of that.

Yes. No, no, very helpful, Jim. Appreciate it guys and congrats again [on all the success] [ph].

Okay, thank you.

Thank you. One moment for our next question. And our next question comes from Andrew DeGasperi with Berenberg. Your line is open.

Yes. Thanks for taking my question. I guess the first one in terms of the RapidMiner wins that you had in terms of also just generally the expansion success you've had with your existing customers, is it a function of just having a more product now? I think you said that last quarter and that people are finally able to use their units? Is that really what's driving a lot of the expansion opportunity right now? And then maybe just in terms of the AI and data analytics, I mean, clearly you're mentioning it more and more in these earnings calls. Just wondering if that's like a big driver right now for the unit usage going forward?

So, all this stuff sort of comes together. So there is – we've had a lot of effort over the last five years in essentially using machine learning models and we've been experimenting significantly over the last five years and we think that we have some really unique technology that we'll start releasing here later this year, built into our HyperMesh and HyperWorks solutions to do physics based AI. So, we see it really tightly integrated into our engineering and simulation solutions. Not sort of the standalone off to the side thing that you're going to run. It's going to be a very natural part of what an engineer is now capable of doing similar to the way we put the design explorer inside of these tools as well and all of this is, sort of coming together. I'm not sure if I completely – tell me what else you wanted me to answer there and let me see if I can give you a better view here.

No, just more of the question is, you've given – you're mentioning RapidMiner, for example, which you only [provided] [ph] months ago. And the fact that you're already driving a lot of sales up with that tells me that there's been, kind of an inflection point, I guess, when it comes to adding a product very quickly into the market.

So, it is the product because I think the product is extremely strong, but it's also the uses cases. This team came in with very strong manufacturing experience. And so that really crossed over nicely with our historical manufacturing base of business and just the experience that they had as well. And so, it's really connected well with our historical go to market team and our technical teams, but it's also all the work we have been doing I'll say at a more sophisticated level is also coming together now. And so, and the customers are really interested and excited to try and leverage this kind of technology and kind of make an impact for what they're doing. So, product for sure experienced, used cases, great case studies that we can use from one customer to the next. And we're learning as well because the deployment is really challenging on these projects. I had a call with pretty major RapidMiner customer maybe two months ago, and they're already – I think they've already built something like 1,500 machine learning models that they're deploying. And the challenge is the deployment being able to – they want to get to 5,000 or 6,000 and they have every department in their company. This is a pretty major rapid minor installation. And actually all of our HPC expertise and technology is going to play very significantly. I can see it. And so, when we talk about that convergence, I think some people see it as market. I think but it's actually real. And you see it with the Altair One stuff that we're doing now with our digital thread technology that's coming. These technologies are really truly converging. And I think Altair is uniquely positioned because of our strength in all of them.

Very helpful. Thanks, Jim.

Thank you. One moment for our next question. Comes from Charles Shi with Needham & Company. Your line is open.

Hi. Thank you for taking my question. I have more like a modeling question here. It looks like your – given your guidance for the first quarter software revenue and for the full-year, I just wonder how we get from the first quarter number 140-ish million to [555] [ph]? If I look at your historical numbers for software revenues since like second quarter, you tend to have a double digit Q-on-Q decline and the second half tend to be like single-digit lower than the first half, but your guidance seems to imply that if we get double-digit decline in Q2, the second half will be a lot stronger than the first half. So that seems to be a deviation from your historical seasonality. So, can you kind of break it down for us? How should we think about the progression of your software revenues through this year? Thank you.

Yes. Hey, Charles. Thanks for the question. So, you're right. So, given where the Q1 guidance relative to full-year, what we're expecting actually is what we had seen last year in a pretty significant trough in Q2 and Q3, due to seasonality is that that will be a bit more steady this year. And so, the seasonal nature of our quarters will continue to be so. We're still going to have our biggest quarters in Q1 and Q4, but the drop down in Q3 and Q4, our expectation is that it will not be as pronounced as it has been at least in the last couple of years. And that's what accounts for that Q1 guide relative to full-year.

Can you kind of provide a little bit more color why is that – why is it more steady? Why is it less seasonal this year? Is there any particular vertical or some customers there in terms of their behavior, contract renewal or those kind of things are? The timing of those a little bit changing from prior years?

Yes, there isn't a particular vertical or a particular geo. I think what I can say, what I think is really important is that we're not seeing any – it's not as if we're looking at Q1 and seeing some delay in deals or sub pushout or elongation of sales cycles. We're actually seeing a really robust pipeline and demand is strong throughout the year. So again, I think it just comes down to seasonality changes a little bit quarter to quarter from one year to year. Q3 was a good example last year, for example, where we saw relative to Q3 of 2021, we saw relatively slower growth, but then more than made up for it in Q4. So again, we try not to focus on one quarter, one particular quarter at a time. We try to focus on what the year looks like and we're feeling really good and feeling like we've got great momentum coming off of a really, really successful year.

I think it's obviously a very, very good question. I think some of it – I mean, we simply roll things up and we're very conservative about how we do it actually Charles. But I think a lot of them, we probably need spend more time looking ourselves even. But it's the mix of our business is really changing. In terms of how much is traditional simulation with the highest end customers only versus basically a lot of business in the technology sector, a lot of business in banking and financial services a lot of data analytics business a lot of HPC business. And it just seems that the way things are spreading for us through the year is just starting to shift a bit.

Got it. So on that topic, maybe this is as a brief follow-up. General or math, can you kind of give us a sense, your key major verticals, automotive, aerospace at the [IFS Tech] [ph], what's the expected to grow this year in 2023 relative to your corporate guidance, either the software revenue guidance, roughly 10% year-on-year or the total revenue guidance 8% year-on-year which ones may be outperforming a bit, which one may be underperforming a bit this year, especially the off-market? Thank you.

Right. So, the largest vertical is still automotive, although it shrinks as a percentage of the total every year slightly. And it also grows the slowest as a percentage. The percentage growth is the slowest. We don't usually tell you the percentages, so sorry about that. The number two vertical for us now is actually technology believe it or not. And then number three and four is banking and aerospace. All of them are relatively substantial at this point. And I would say tech and banking have sort of in the last year or so been growing a bit faster and I think that's going to continue pretty strongly this year. I think aerospace is going to have a very strong year in 2023 as well.

Thank you very much.

Sure.

Thank you. One moment for our next question. Our next question comes from Blair Abernethy with Rosenblatt. Your line is open.

Thanks very much, and great to hear guys. Jim, just on – one more on RapidMiner if we could. Can you just give us a, sort of status update on where you're at with product integration, harmonization of the GUI with the other Datawatch and world program. Just sort of a sense of what we can expect to – where we are today and what we can expect to see in 2023?

Yes, I mean, I think during 2023, we're obviously trying to bring all these things together. So, the technology that we have in knowledge studio, for example, we're trying to bring that inside a RapidMiner. Similarly, the ML Ops technology we've built in SmartWorks we're pouring investment there and integrating that into RapidMiner. So, for example, at a Knowledge Studio, we had really best-in-class we think and most of the customers agree decision-tree technology and [score-carding] [ph]. Our guy wrote the book literally on some of that stuff. And so, that's very important that we bring that in. Very nice connectivity to the [Monarch Technology] [ph] as well, we think is going to be important. And the SLC technology needs to be completely integrated so that you can have the ability to use mixed mode, if you will, in the RapidMiner environment. So, I think throughout 2023 that's all going to get done. Even without it all being completely integrated because of the way we go to market with our units model, customers can still run Knowledge Studio, you know to do the decision tree technology. Our model is powerful that way and when we talk about whatever it is 10 months to get some of the stuff done and it's along the way things are [leasing] [ph]. It's sort of a blink of the eye. So, we feel really good about product. We're not feeling like the product is what's going to hold us back, not even close. We had a customer RFQ come in recently. And they were super pleased that Altair was, and this is a data analytics opportunity and they were pleased to have Altair involved, but they said, what are you going to bid? And the sales guys said, we're going to bid RapidMiner here and he said, oh, you're working with RapidMiner and the sales guy said, no, we own RapidMiner and he was just so happy and excited because the combination of Altair, a company that our customers really trust together with basically what people perceive as best-in-class technology for data science is really fantastic. And so, I think RapidMiner in a standalone mode is, kind of – if the [tough business] [ph] is a big market, we're cresting bigger revenue numbers now and the growth numbers look really strong. You have to have some scale to be in that data analytics business and really play seriously. And I think Altair does. So, we're – the product is not the issue. The challenges to get the indirect channels right to get the system integrators on board, to get everybody across the enterprise, the entire sales team selling and knowing how to sell. And I think we're really well positioned to do that. And the integration with – even with the engineering technology on the physics AI technology and all of that is super exciting. So it's just a great moment we think.

That's great. Thanks for the color, Jim. Second question was just, we haven't talked much about high performance computing on this call. I just kind of want to get a sense from you, sort of what are the trends that you're seeing there in Enterprise HPC and how is the increasing, the use of cloud for high performance computing workloads? Is that creating more of an opportunity for Altair? Just kind of give us a sense of how you're seeing that part of your markets?

I think that it is going to create more and more opportunity for us because the customers, you know cloud is a challenge, right, it is a challenge for Altair. I'm going to ask Matt because the big number on his budget is cloud spend. And he's like how do we get control over that? And that's what every customer is challenged with. If you just turn the thing on and let your engineers or data scientists to, sort of go nuts, you're going to get some really big bills every month, so that the technology that we're trying to bring to market is technology to really help customers to decide where and when they want to run to try and establish this is the performance I need or this is how much money I'm willing to spend and let the scheduling technology and all of that figure out where and when you're going to be running jobs. And also, the storage part is really challenging because you can put your data up in the cloud, but as soon as you want to bring it back to your system, it's super expensive to do that. So, figuring out all of that is part of what Altair is trying to deliver to customers in a very, very natural way so that basically they can use all these different pieces of technology so that it sort of maximizes and optimizes how they spend their money and how they get their results that they need. So, I think we're coming along here. We had several pieces of technology. There was some overlap in the technology that we had. We've componentized a lot of technology now. And we're starting to bring all of that together. And then we have some completely next generation stuff that's coming that is considerably more performance with some real innovation that I think we're uniquely positioned to be able to do. So, I think it's a great time and we did that unusual thing we made. We had a lead investor on [Xscape] [ph], people might question that, but for Altair, first of all, we see it really important to understand Photonics, but we also understand that just getting the CPU to be superfast is not enough anymore because the amount of data on the data throughput that's really required is really the bottleneck at this point. And so, we're super excited about what those guys are doing. There are several companies doing similar things, but we think what these guys are doing is really uniquely positioned. So, it's a big learning experience. We'll find out how that one goes as well. But I think the technology for HPC is very central to the technology for computational science. We have to be, sort of right in the middle of what's going on with hardware in order to be really leading edge with the software elements as well. More than you wanted. Sorry.

No. No. That's perfect. Thanks. I really appreciate your insight into that sector. I guess the last question, if I could slide one is, if you were to sort of look at your product, constant currency product expectations this year, sort of 9.5% to 11.4% growth. Of the three areas simulation, data analytics, and HPC, how would you kind of rank the relative growth rates this year in your expectations?

Well, I mean, we're going to grow fastest with data, second, fastest with HPC and simulation. The slower piece of that, but you also have to look at the scale of these businesses as well. It's kind of like the auto and the technology. So, the absolute growth is pretty substantial still in simulation.

Yes. Okay, great. Thanks very much guys. Great quarter.

Thank you.

Thank you. One moment for our next question. Our next question comes from Mark Schappel with Loop Capital. Your line is open.

Hi. Thank you for taking my question and nice job on the quarter and the year. Just one question for you, Jim. With respect the sales force. I was wondering if you could just talk about any planned changes to the sales organization this year? If I recall there was some talk about maybe restructuring or reorganizing the sales force around specific industries, random products. I was just wondering if there's been any movement on that front?

We have reorganized a bit so that we have teams that are focused on our four largest verticals globally. And very, very focused on particularly on specific accounts in these verticals, but it's very integrated with the regional team and surprisingly for me, it's going really well. There's a lot of challenges that go into doing something like that, but actually it seems to have stimulated tremendous amount of energy and really in a very positive way. In the cross pollination of selling data for example, into, for example, the auto or the arrow or the technology vertical is just really on fire, which is kind of what we were hoping to see. So, yes, we have made some changes. They're not overly dramatic, but we, sort of took a step forward in that direction. I think it's very natural for us over time to evolve more and more to a more vertically oriented go to market.

Great. Thank you. That's all from me.

Sure.

Thank you. And at this time, I'd like to hand the conference back over to Mr. Jim Scapa for closing remarks.

Closing remarks or thank you to everybody on the call and thank you to my team really for just a fantastic year and very, very excited about this year coming in front of us. So, thank you all.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.