Altair’s Debut Keeps Up Tech IPO Momentum

The computer-aided engineering software company's shares surged 41% on their market debut, with 12 million shares being sold to raise $156 million.
Matthew HellerNovember 2, 2017

Shares in Altair Engineering, a supplier of simulation software for computer-aided engineering (CAE), jumped 41% on their market debut in another sign of investor appetite for tech IPOs.

The surge in Altair’s Class A stock in trading Wednesday took the share price to $18.31 from the issue price of $13, which was at the high end of the initial public offering range. Altair sold 12 million shares to raise $156 million.

In trading Thursday, the stock fell 1.75% to $17.99, but the offering still appears to be keeping up the recent momentum for tech IPOs. Companies such as ForeScout Technologies, MongoDB, and Switch have all performed well since going public though Blue Apron and Snap were disappointments.

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Altair, which was founded in 1985 and is based in Michigan, sells software that allows engineers to simulate, predict, and optimize how physical products will perform in the real world under a range of operating conditions. Its main competitors include Dassault Systèmes, Siemens, Ansys, and MSC Software.

“Altair’s engineering and design platform offers a wide range of multi-disciplinary CAE solutions which we believe is one of the most innovative and comprehensive offerings available in the market,” the company said in its prospectus.

The CIMdata Report has forecast the CAE market will exceed $7.8 billion in 2021, with an 8.1% compound annual growth rate. Altair’s revenue grew to $313.2 million last year from $294.1 million the year before and the company posted net income of $10.2 million last year and $10.9 million the year before.

It claims to have about 5,000 customers worldwide, with 60% of new software revenue from existing clients.

“We see a huge opportunity in simulation,” CEO James Scapa told MarketWatch. “Math-based tools are driving everything now, so we’re in the right place at the right time with a strong model. This is only going to get a lot bigger.”

SeekingAlpha noted that Altair stands out among software IPOs this year because it is a slow grower — revenues rose only 4% year-on-year in the first half of 2017 — but is profitable.