Altair Engineering

ALTR · NASDAQ

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The case for and against

Updated Mar 27, 2025

Bull case

Altair Engineering Inc is expected to experience total revenue growth in the low-teens range, driven primarily by strong performance in its high-performance computing (HPC) and data analytics businesses, as well as steady organic growth in its software segment. The company reported Q4 revenue of $192 million, representing a year-over-year increase of 13.8% in constant currency, and showed healthy software product revenue growth of 16.5% year-over-year with improved gross margins at 84%. Furthermore, there are positive forecasts for future performance, with anticipated revenue growth of 7.6% for FY24 and an expected EBITDA margin expansion to over 20% in the mid-term, suggesting a solid upward trajectory for Altair Engineering's financial health.

Bear case

Altair Engineering Inc is facing a negative outlook primarily due to anticipated weakness in its automotive vertical, which could lead to a deceleration in growth for the software segment that constitutes the majority of its revenue. The company also faces significant risk from a competitive landscape dominated by well-capitalized vendors, along with challenges related to high valuation multiples within the enterprise software sector and macroeconomic uncertainties, including potential impacts from rising interest rates and government debt. Additional risks such as pricing pressure from larger competitors, integration challenges from M&A, and changes in strategic sales approaches further compound concerns regarding Altair’s long-term profitability and market position.

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