May 2, 2013
Executives
James E. Cashman - Chief Executive Officer, President, Director and Member of Strategy Committee Maria T.
Shields - Chief Financial Officer, Principal Accounting Officer and Vice President of Finance & Administration
Analysts
Richard H. Davis - Canaccord Genuity, Research Division Sterling P.
Auty - JP Morgan Chase & Co, Research Division Perry Huang - Goldman Sachs Group Inc., Research Division Steven R. Koenig - Wedbush Securities Inc., Research Division Ross MacMillan - Jefferies & Company, Inc., Research Division Jay Vleeschhouwer - Griffin Securities, Inc., Research Division Matthew L.
Williams - Evercore Partners Inc., Research Division Jason Rogers Steven M. Ashley - Robert W.
Baird & Co. Incorporated, Research Division Barbara Coffey - S&P Equity Research
Operator
Good morning, ladies and gentlemen, and welcome to the ANSYS First Quarter 2013 Earnings Conference Call. [Operator Instructions] This presentation is being recorded.
I would now like to turn the conference over to Mr. Jim Cashman, President and CEO.
Please go ahead, sir.
James E. Cashman
Okay. Good morning.
And again thanks, everyone, for joining us to discuss ANSYS's 2013 first quarter financial results. So again, some housekeeping.
Consistent with our standard protocol, all the information of the key topics relative to Q1's business performance and our updated 2013 outlook are included within this morning's earnings release and in the prepared documents that we posted on the homepage of our Investor Relations website this morning. So with that in place, I'm going to ask -- first I'll introduce Maria Shields, our CFO, and ask her to go through our typical Safe Harbor statement.
So, Maria?
Maria T. Shields
Okay. Thanks, Jim.
Good morning, everyone. I'd like to remind you that in addition to any risks and uncertainties that we highlight during the course of this call, important factors that may affect our future results are discussed at length in our public filings with the SEC, all of which are also available via our website.
Additionally, the company's reported results should not be considered an indication of future performance as there are risks and uncertainties that could impact our business in the future. These statements are based upon our view of the business as of today and ANSYS undertakes no obligation to update any such information unless we do so in a public forum.
During the course of this call and in the prepared remarks, we'll be making reference to non-GAAP financial measures. A discussion of the various items that are excluded and a full reconciliation of the GAAP to comparable non-GAAP financial measures are included in this morning's earnings release materials and the related Form 8-K.
So Jim, I'll now turn the call back over to you.
James E. Cashman
Okay. Thanks, Maria.
So before we get started with the Q&A, I'd like to briefly underscore a few important highlights regarding our Q1 results and our updated fiscal year 2013 outlook. So let me begin by saying that Q1 was a solid quarter on many fronts, but it also finished a bit softer than it started or than we had planned.
From my perspective, the most important aspect of our performance for Q1 is despite a variety of issues, including macroeconomic challenges and currency rates that were towards the lower end, and in the case of the yen, outside the range that we provided, we continued an important multiyear trend for us as a company and as a management team, we delivered on our earnings commitment. We managed the business in a disciplined fashion and finished with earnings above the range that we had guided coming into the quarter.
In addition, we achieved revenue growth in all 3 major geographies, as well as double-digit constant currency growth in both Europe and GIA, Asia-Pacific. Our recurring revenue was very strong at 74%.
Our operating margins remain slightly above guidance at 48%. Deferred revenue and backlog grew to an all-time high of $399 million.
We generated $95 million in operating cash flows, which is a 14% increase over Q1 of 2012. We welcomed EVEN, the company named EVEN, to the ANSYS family on April 2nd.
This is a company that actually gives us a very good positioning into the advancing world of composite materials in our simulation space. And on the hiring front, we netted about 50 employees.
So there were many positive aspects in the quarter, including relatively strong constant currency revenue performance in the United Kingdom and in GIA, most notably. But we also acknowledge that there were some pockets of sales ramp up issues.
For all those new hires that we talked about in previous quarters that impacted the quarter Q1. And they are top priorities for us in Q2 and the remainder of 2013 to continue to expedite that ramp-up.
Our industry composition continued to be diverse while exhibiting strength in automotive, industrial equipment, electronics and the biomed sectors in particular. We added really a host of new logos and continued to see new sales and strong renewals in our existing account base.
Now as we look forward to the remainder of 2013, we are revising our full year outlook based on 2 primary assumptions. Well, first of all, we're expecting a continuation of the business climate similar to that which we experienced in the first quarter.
And secondly, we're adjusting our currency rate, most notably for the significant weakening of the Japanese yen. With this in mind, we've updated our full year outlook for 2013 non-GAAP revenue in the range of $855 million to $875 million and EPS in the $2.96 -- $2.96 and $3.04 range.
For Q2, we're targeting non-GAAP revenues of $206 million to $212 million and EPS of $0.69 to $0.72. Now, I'd also like to -- one thing I'd like to note is that our Q2 EPS guidance includes additional costs related to user group meetings that historically occurred in the second half of the year, but due to some product timing things, we've actually moved that forward into a Q2 thing.
So it will be non-comparable, but nothing surprising there. So netting this all out, we continue to focus on driving increased productivity from those recent sales investments that we talked about, while also balancing our investments for future growth against basically the realities of what continues to be a challenging macro environment which, in turn, leads to some fairly cautious customer sentiments.
So basically, that's the scoop. And with all that, I'll now open up the phone lines to take any questions you might have.
Operator
[Operator Instructions] The first question will come from Matt Lemonager [ph] of Robert W. Baird.
[Technical Difficulty] We'll go on to the next question which will come from Richard Davis of Canaccord.
Richard H. Davis - Canaccord Genuity, Research Division
Two quick questions. I saw you hired as, I think, Chief Product Officer a fellow named Walid.
Is there going to be any change in kind of product direction under his stewardship and thoughts there? And then just a more broad question, on the competitive front, have you seen any changes in dynamics?
James E. Cashman
Well, the first part is, obviously, any time we get new talent, we want to continue to add those new perspectives to that. However, the basic main line product direction and vision of that, that really isn't changing.
Now, some of the things -- you have to look at some of the benefits. First of all, we've gotten to the point where, obviously, the strength of the individual products continues to be important.
And that's been a major emphasis for us for many years. But also, there's increasing emphasis on that portfolio and having, basically, full-time attention [ph] to drive toward unifying those in a rational manner over a number of years and pick that right aspect is particularly good.
But also, bringing in some additional perspectives into the changing world of computing and delivery and interaction when you get from everything from mobile to cloud. We talked about cloud many times over the last few calls.
And there are certain short comings to the kind of computing we do with what cloud delivers. But those -- that's not a long-term kind of thing.
And so we're making sure that we're fully prepared for that. As well as, over the years, we've grown from, as everybody knows, we've grown from adding a couple of seats for customers and, in some cases, having thousands of seats.
And that gets us in a different form of enterprise computing delivery and, obviously, coming -- adding that background of computing delivery is an important aspect. Now you also -- I didn't know if you were pre-signaling your discussion about competition, or if that's -- the competitive environment or if that's your follow-up question, so I'm going to turn it back.
And if you want to repose the question, I don't want to let that one lie?
Richard H. Davis - Canaccord Genuity, Research Division
I just -- have you seen any changes in the competitive environment? Those are 2 questions.
James E. Cashman
No, actually, absolutely not. I mean over the last few years, as we've gained success and helped develop the market, that obviously will always bring in new classes of competitors.
And they ebb and flow during various aspects of that. The one thing that probably is the most telling and I mean, I want to really kind of couch this so it doesn't come off as any form of hubris, because it really is anything but that, but obviously, in any quarter, particularly in this environment, you have sales that slip out, sales that slip in and things like that.
So we actually did, since we were on the softer side of the range we had provided, we actually wanted to look at all the things that got in there and you can't -- we can't talk about the multitude of all of the major and minor sales. But of the large ones, the interesting thing was the ones that slipped, there were a couple of projects that just got canceled by the customer, but there were none that turned to competitive standpoint.
At least when we look at the -- at that top 100 classification. Which is one thing, obviously, we would have been turning an eye toward.
I can't tell you below the 100 if there were like some spot tactical ones. But really, the competitive environment really hasn't changed.
So the main story here right now is twofold, one of which is the macroeconomics and I'll throw the currency volatility in with that. But the second part is, we talked about the investments that we were going to be making and ramping up the sales team.
We actually did that, but as we've also talked about in the first 3, 4 months, we don't get a ton of productivity even out of the quickest learners. And that's something that you tend to cultivate in the 6 to 12 months and then it kind of grows from that standpoint.
I don't know if there's anything else. That's kind of like the broad brush look.
Operator
Our next question will come from Sterling Auty of JPMorgan.
Sterling P. Auty - JP Morgan Chase & Co, Research Division
Looks like you did -- it looks like you had an increase in deals over $1 million. So it didn't look like big deals were an issue.
If I piece things together, it looked like North America paid-up licenses, deals under $1 million. So kind of the meat-and-potatoes business was the issue in the quarter.
If that's correct, just kind of curious what we can read into that and read into how that might come back as the year progresses?
James E. Cashman
Well, first of all, we'll give a little bit of qualitative aspects here. But again, the first thing I say is everything I tell you right now do not read a long-term trend, at least not yet.
There's not enough to indicate that would happen. But, yes, the fact is that first of all, with regard to the number of large sale aspects.
Keep in mind, those are additive with our major accounts but they also reflect the building up, accumulation of continually ramping up business with those. So it's not like a bunch of $1 million instantaneously appeared.
Some of that was renewal business, some of that was new business. Now if you look at -- I'd say the one thing about this economy is that, a, nothing happened in monolith.
So even though we talked about all the major geographies grew and we had the double-digit currents -- constant currency grow in Europe and in Asia-Pacific. But in each of those regions, it wasn't like they monolithically moved in one direction.
There were segments in each one of those that specifically performed very well and others that performed fairly softly. So Southern Europe, not a major part of the business but it was -- that was soft.
But other parts were particularly strong. We could go through each of the geographies.
Same thing, from a, you segment business as we also look at it, in major accounts and maybe the small, medium enterprise. But neither of those moved monolithically.
We had certain customers that -- major customers that actually held back and are very judicious on their spending, and others that went ahead. And likewise, at the small or medium end.
So again, but I wouldn't look at that as being trend. I view that as being more of a speaking to the individual excellence or foresight or whatever's going on individually in each company.
Now, there was also a slight -- this is one I don't want people to react to -- but there was a slight tweaking up toward lease versus paid-up. But again, I'm not -- these are not these wholesale repeat of 2009 type of things.
But as you mentioned paid-up versus -- yes, that was an element. We did see those particular things.
But we also see a growth -- why do we look -- what do we look for in the second part of the business? First of all is the basically, the maturation of the recently hired salespeople.
Second of all, we've got our baseline recurring business to build off. Third of all, we've got our major known customer engagements.
And then finally, if you look at some other statistics that we've looked at, we've been -- we looked at the things like what's happening and, just as a specific statistic, over the last 6 weeks, the gross pipeline in North America for instance has actually grown 10%. So it is starting to accumulate a little bit.
These are -- these aren't major -- and we're not expecting that -- we're certainly not expecting a major turnaround in the economy or major bumps there. We're assuming a little bit more of that going in.
But you put those factors, combined with the fact that the overall velocity through the pipeline, people are continuing their judicious spending pattern, they are continuing to be very guarded on that. As I mentioned, there are a couple of projects that were just actually put on the table in -- till 2014.
Now those are -- with the size of our customer base, we looked to other places to remove -- to actually overcome those things. And they're relatively minor in the grand scheme of things.
But those are the changes that we see moving forward. And really, the motivating force behind the guidance, after we sift through quite a bit of volatility in the currency and some things like that.
Sterling P. Auty - JP Morgan Chase & Co, Research Division
And then my one quick follow-up for Maria. Can you give us a sense the change in yen FX assumption?
How much did that contribute to the full year revenue cut?
Maria T. Shields
About $10 million.
Operator
The next question will come from Perry Huang of Goldman Sachs.
Perry Huang - Goldman Sachs Group Inc., Research Division
I wanted to ask a question about deferred revenue. I guess compared to last year, it looks like there may have been a mix shift between deferred revenue and backlog for both current and long-term.
Could you put out any more color here, especially for the current backlog piece? Perhaps whether the increase here may have been back to license revenue for the quarter?
Maria T. Shields
Yes, Perry, essentially what we did is we commented on this last quarter but we continue to work with our independent advisors relative to wanting to be in the mainstream from a GAAP perspective. So what they suggested we do to kind of get in line with other of our software peers is to leave on the balance sheet basically the current billing cycle.
And everything else has moved off and is now reflected as backlog. So if you take a look in the prepared remarks, you can see that the total of deferred revenue plus the backlog for the year -- for the -- at the end of the quarter is $399 million.
And that compares with a year ago, the same comparable number would be about $333.5 million.
Perry Huang - Goldman Sachs Group Inc., Research Division
Got you. Yes, that makes sense.
So there weren't any sort of any changes to contract terms?
Maria T. Shields
No. The contract terms haven't changed.
It's just the application of GAAP and wanting to be more in line with other peers who have billings of our nature that are a combination of annual, from the legacy business. But a growing amount of these multiyear leases that come as a result of Apache.
But also, as we have started to see, as we are cross-selling other products into that Apache base, they tend to like to keep that model of time-based licenses. And we're happy to work with them in any way that makes sense for them.
Whether it's having as part of their operating budget or, in other cases, as a CapEx.
James E. Cashman
And likewise, we've been trends -- it's not just the Apache account with historical. Historically, we always provided annual leases, and it wasn't like this was any master plan many, many years ago.
But it was just one that we flowed into when we found that there are a class of customers that actually like that longer-term perspective, but on a time-based or a release type of basis. So we've -- that's just one more way we've talked for years and we just want to provide the maximum number of avenues or remove the number of financial hurdles for customers to acquire the technology because it all works for us over the long-term with our recurring base and the growth elements.
Perry Huang - Goldman Sachs Group Inc., Research Division
Got it. That's helpful.
And I guess, for the follow-up question. Again, also on large deals.
I think, Jim, you just mentioned that some deals were canceled. Is there any more color you can provide here, for example, were these due to budget constraints?
Were these new engagements? Or were they relatively well-seasoned before they got canceled?
James E. Cashman
Well, first of all, when we talk about the big deals, none of those got canceled, okay, I mean, just to be really clear. And like I say off that bump up there, I mean, we have a number where continue with the high renewal rates, and then with additional businesses, companies tend to graduate up into that level.
I meant when I talked about the engagements, none of these were really major ones. Some of them are actually related to service engagements.
And in fact, it was the service revenue, a little bit down but particularly in Europe, where the stronger part of our service business is, the economic realities of what were going on there tended to affect that disproportion. Now, I know we're talking about a small portion of a small number, but it all speaks to the macroeconomic hypothesis under which we're using partially to rig the sales on this business.
Operator
The next question will come from Steve Koenig of Wedbush Securities.
Steven R. Koenig - Wedbush Securities Inc., Research Division
I'd like to take a look at your guidance reduction of about $25 million to $30 million or so. And so we know how much is from currency, kind of how much is organic, you've talked to that.
If we take the non-currency part of it, so call it $20 million or whatever, I'd like to correlate that with kind of 2 things. First of all, how much of that would you attribute to the macro environment versus the challenges with North American execution ramping that staff?
James E. Cashman
Okay. Well, first of all, I'd say that roughly, if you want to look at the Q1 shortfall, if you want to finger in the wind, it was probably mid-single digits.
It might have been around that $5 million, $6 million, $7 million, and that's the ramp-up thing related to the new wing [ph]. We talked about $10 million from -- $10 million, a little bit north of that maybe, from the Japanese yen currency.
We also talked about some of the other ones might soften a little bit. And then from that, you probably have another close to $10-ish kind of million that we think that, particularly in the 4 signs that we see in the environment, that we're gaining the business toward, if you look at the remainder of the year.
I mean, that's just -- that's kind of the way it breaks down. Of course one of those things I'd say is that there is like we've always said, we run the business based around those things.
But in the short-term, if the economy would pick up and demand picks up, we have no problem e-mailing new keys to customers with existing software. There's about 50,000-plus of them out there.
And so we can definitely harvest that one, but we want to make sure we don't lean too far out over the edge if in fact there is something over the horizon on that. That's kind of the reasons why when we were a little bit soft on the Q1.
We still had the decent earnings performance, actually above, and the like. So that's really the way that we kind of dissected the issue.
Long-term, no real concerns apart from you don't want to see this kind of macro environment continue, it's been several years and to have it continue on for several more wouldn't be to our liking, but we'll adjust accordingly.
Steven R. Koenig - Wedbush Securities Inc., Research Division
Okay, it makes sense. It's -- I don't think anyone would ever describe your planning as not being prudent.
I do want to ask though then, of that, of the stuff that's non-currency-related that you broke down for us, when you correlate that with your quantitative analysis, how does that fit with your quantitative analysis about assumptions concerning closed rates or pipeline? What are the quantitative factors that link to that reduction in guidance?
James E. Cashman
It will -- keep in mind, as I mentioned before, the pipelines are actually growing. Now part of that is because they're actually growing and part of it is because if it doesn't come out the spigot in the current quarter, it accumulates.
So there is an accumulation but there is an actual growth involved in that also. But the overriding factor is the overall velocity of that pipe.
If you look at closed rates, the closed rates over a longer period of time are about as good as they've been. However, they are slower.
So if you take rate as the proportion that closes, no problem. If you look at the rate at which they close, that's the part that slows down.
That's the part that's totally related to customer sentiment. Does that cover you?
Operator
The next question will come from Ross MacMillan of Jefferies.
Ross MacMillan - Jefferies & Company, Inc., Research Division
I just want to go back to something you said earlier and it's in relation to hiring the Chief Product Officer. You said certain shortcomings to applied delivery model exists, but that's not a long-term thing.
And maybe I'm reading too much into it, but this year was a dot release on the ANSYS product, 14.5 rather than a 15.0 release. I don't want to get ahead of ourselves, but I'm just curious as you think forward, do you think that there's a chance that we could start to see ANSYS introduce products that are delivered in a different way?
Perhaps more cloud-centric offerings? And if that's possible, what would you have us think about in terms of time frame?
James E. Cashman
Well, keep -- first of all, I want to clarify one thing. On the cloud thing, it's really the concept between the typical cloud applications are scatter-gather.
And with ours, you have tightly-linked co-processing with thousands of processes. You've got issues of bandwidth, you've got issues of latency and things like that.
That's why the model works perfectly well in an internal cloud environment, behind a firewall, and our customers -- many are using that model right now. For us to take it out to the broader range, which would make it much more accessible to a broader range of users, those are ones where there's going to be some technological advances in the general industry that's going to facilitate it.
What we want to do is we want to take basically about a 12-year -- a 12-year running software-as-a-service offering that we still have right now. But now bring that up to the new realities of modern computing.
And we want to be prepared for that. Now what that all translates into is, I think, is more of an overall growth model where it won't signal a fundamental shift in the way we deliver software, but it will signal a significant augmentation or flexibility to the way we do it.
And that flexibility may be, as an entry-level point for people who might just have never entered, it's a relatively low-cost way to try or buy, which they can use our software, the service offering for right now. It also can be a way for companies to build up a certain level.
But also very easily, switch to, if I can call it this, surge capacity for either unforeseen or temporary major increases in the usage pattern. So it's really one more kind of aspect of you buy it, sometimes you buy it, sometimes you short-term rent it, sometimes you long-term lease it.
It provides a broader span of being able to buy that. The other thing that we've also seen that I think is going to be interesting adjunct is, obviously, while we have a good leadership position in each of our individual product lines, one thing that's very appealing long-term is the long -- is the basically, the co-utilization of that by customers.
And we talked about that being a longer-term trend, but it's one that takes a long time for companies to absorb, reorganize, adjust processes to. And this is 1 model that makes it very easily for companies that may have centered on a subset of our technology to either experiment, expand or slowly wade into some of those other forms of simulation that they've had an interest in, but they just haven't gotten over that threshold point of using it.
Ross MacMillan - Jefferies & Company, Inc., Research Division
That's helpful. Maybe 1 follow-up.
Maria, can you just remind me Esterel, roughly speaking the mix of revenue between Europe and other regions? And then, just on the EVEN acquisition, anything to think about there in terms of revenue contribution?
Maria T. Shields
So on Esterel, they're still largely -- the majority of theirs is European in nature.
James E. Cashman
Well, keep in mind, it was also a very small number, which is like -- kind of like pretty inconsequential. Small companies start near where they can build so being a European-based company that was their major outreach.
I'm sorry, go ahead, Maria.
Maria T. Shields
Yes. And then on the EVEN side, there's not going to be much change.
If you read some of the language describing EVEN, they actually were a partner of ours. And we've been basically their channel for revenues.
So not -- neither material nor is it going to have a significant change on the reported results. You're basically going to have the same volume of revenue and you'll have, instead of royalties, we'll have an increase in R&D expense.
Operator
Your next question will come from Jay Vleeschhouwer of Griffin Securities.
Jay Vleeschhouwer - Griffin Securities, Inc., Research Division
A clarification on what's going into your guidance for the quarter and for the rest of the year. When we look at your direct and indirect revenue splits for the first quarter, looks like your indirect revenues were, in absolute terms, were about flat year-over-year.
So what's your thinking in terms of the progression of indirect for Q2 and the rest of the year? And as well, last year in the second quarter, you had quite sure on growth in your perpetual revenues, up 16% year-over-year and Q2 of '12.
Does your guidance for the current quarter encompass the possibility that perpetual revenues might be flat to down in the second quarter?
James E. Cashman
Well, first of all, I'll back up a little bit first part. First of all, again in this environment, with the turbulence and in particular areas where the currencies was most volatile, yes, the indirect channel did feel it a little bit more in Q1.
It was probably not flat, but it was a net lower -- lower mid-single digits kind of -- lower single digits kind of range. So that part is absolutely correct.
Now on the issue on the perpetual thing. Perpetual, likewise, it should be -- we're projecting it will be up in Q2, but still probably subdued in -- still in the below-double-digits range.
So you're like in the single-digit kind of range also. So that means -- but that's already incorporated in.
Some of that's related to macro. Some of it related to the slow, but continual upgrade or up ramp of the maturation of some of the new sales structures that we put in place.
And if there was another aspect to that question, I'm sorry, I lost it. So you can repose it, I'll try to cover it.
Jay Vleeschhouwer - Griffin Securities, Inc., Research Division
No, that was it for the first question. As follow-up, but staying on the subject of license mix, when you look at your business by either vertical market dimension or by your 3 business units, MDU [ph] and so forth, are there any appreciable mix difference in terms of perpetual as a percentage of revenue, either by business unit or by vertical, if you could?
James E. Cashman
Okay. Well, by vertical -- by vertical, really no substantial change.
And really from product line, no real change, particularly if you segment the electronics business where the contour of the Apache business stayed about where it was, and the contour of the slightly different business model mix of the rest of the electronics simulation product stayed about where they were. And I guess, when I talk about the dimensions of the fact that geographies weren't monolithic, that company size wasn't monolithic, and for the large part, really, industries weren't monolithic.
Even the industry variations we had weren't that supreme. Really they were weren't -- there weren't those kind of tie-ins either with our major product lines.
So it -- I think there was some confluence of the natural concentration of industries within different regions of the world. And therefore, we'd see different physics lines that might have a greater predominance in different areas.
But all of the physics lines were pretty much on par, but there were different levels of strengths across geographies and across industries in that.
Jay Vleeschhouwer - Griffin Securities, Inc., Research Division
Okay. If I could just cheat a little and ask one more just to clarify your comments on employment.
You mentioned you hired about 50 people in the quarter, or added 50 people in the quarter. And you're now focusing on sales productivity.
When we look at your website, as of today, you're looking to hire about half as many sales-related positions as you had open 3 months ago in your report of Q4. Is that reduction in the open positions for sales, mostly a function of your having filled many of the prior positions and you are now focusing on productivity?
Or you're just taking the gas off -- your foot off the gas anyway?
James E. Cashman
I'm sorry, your original hypothesis is correct. It was through the filling of those.
And as we recall -- if you recall, we even signaled that we were going to actually be doing it before the start of the year. And of course, that didn't mean that we filled every one before the start of the year.
But in fact the reduction there is largely related to that. And then the other thing is, what I'm saying is, we're not putting on the brakes but we don't have -- we're not pedal to the metal either on the acceleration based on things we're seeing.
Operator
The next question will come from Matt Williams of Evercore Partners.
Matthew L. Williams - Evercore Partners Inc., Research Division
Just real quickly, you touched on it in your remarks but I guess, is there any more commentary around sort of linearity in the quarter? And if there was anything specific to what you're seeing in North America relative to the other geos, just around linearity?
James E. Cashman
Okay. Well, around different -- regions had different performances.
But linearity, slightly skewed a little bit. Because like we said in the remarks, and I'm just trying to be totally open on this, that it wasn't as high -- like I said, it wasn't as high as in our initial range or what we saw.
So it did tend to soft -- the softening manifested itself more in the latter half, even the latter 1/3 of the quarter, okay. So that -- those are things that continued.
So we definitely did see that and it was really just a stretching out of the cycles that happened there.
Matthew L. Williams - Evercore Partners Inc., Research Division
Okay. And then I guess just quickly, we've touched on it a little bit, maybe more so on the Esterel side, but just talk a little bit about the Apache performance and Esterel in the quarter, and any change to your outlook relative to those 2 acquisitions over the rest of the year?
James E. Cashman
Okay. The first thing I'd say is that -- and if I may just put a binary statement out there.
The performance of those 2 were kind of right on target, as to what we said. Now the one that I always talk about for over a decade on this is the manner in which we go about the integration tends to now blur the lines of what was specifically one and what was specifically the other.
So some of the things we did in terms of -- you've heard us talk maybe about combining our other offerings with Apache to do a comprehensive chip package system kind of simulation. So there are some blurs as to how things get -- how they get scored vis-à-vis the old methodology.
But in aggregate, they were pretty much on target, pretty much on expectations.
Operator
The next question will come from Jason Rogers of Great Lakes Review.
Jason Rogers
Looking at your guidance through the quarter or the year, does that include any future share repurchases and what are your thoughts on the share repurchase, given your large cash balance and the current level of the stock?
Maria T. Shields
Jason, we've always said and we'll continue to say that to the extent there is a pullback in the stock price and it's attractive, we are absolutely going to use the cash to return shareholder value via share buybacks so...
James E. Cashman
It's not assumed.
Maria T. Shields
Yes. I don't think we've assumed it but I think if you look at our behavior historically that we'll see how things shake out today and to the extent that there is a pullback, we're definitely going to go in and use some of that cash.
James E. Cashman
Yes. But it wasn't built into -- it's not predicated on doing x million shares.
Jason Rogers
All right. And as a follow-up, the 50 new sales people that you added...
James E. Cashman
50 total people, not just new sales people, some were added in Q4, I mean, just to clarify, but go ahead.
Jason Rogers
Well, are they mostly towards the quarter end or spread out throughout the quarter?.
Maria T. Shields
Spread.
James E. Cashman
They were spread. They were spread.
Operator
The next question will come from Matt Lemonager [ph] of Robert W. Baird.
Steven M. Ashley - Robert W. Baird & Co. Incorporated, Research Division
Well, it's Steve Ashley. So I was just going to ask, in terms of -- you mentioned the linearity that towards the last half or 1/3 of the period, things started to slow.
In what geos did you see that slowing as the period came to an end?
James E. Cashman
All of them, most notably, Asia Pacific. But and then Europe, North America, little bit.
It was everywhere. So and I'm talking about really shades of distinction here.
So it was pretty much across-the-board. But if you had to kind of put a photo finish on it, I'd probably say the overseas locations were just -- were slightly more tilted.
Steven M. Ashley - Robert W. Baird & Co. Incorporated, Research Division
Perfect. And then you talked about the new sales recruits and maybe some disruption around that.
Is that due to accounts being reassigned and the people getting new account coverages? I'm just trying to get a little color around that.
James E. Cashman
Well, I mean, first of all, whenever you add new salespeople, you have to put them in certain areas. And yes, there were -- those accounts were covered before.
So obviously anything they get addressed to there will be some new sharing on there. But the lion's share of it is just how quickly somebody can build that personal relationship, make the first contact, actually effectively communicate things.
And on top of it, the same thing. We had salespeople that had actually proven themselves and they've grown into sales management positions.
And so you actually have a little bit of newness there, people who were very good at doing and now they have to help others do. And if those others are a mix of new and veteran people.
And again, nothing non-standard here. This is just a normal maturation of a growing standpoint, but it was something that we could measurably and demonstrably see.
Steven M. Ashley - Robert W. Baird & Co. Incorporated, Research Division
Terrific. And then just lastly, can you comment on the renewal rates you saw in your maintenance and license business?
James E. Cashman
Basically no fundamental change.
Operator
The next question comes from Barbara Coffey from Standard & Poor's.
Barbara Coffey - S&P Equity Research
Yes. I have quick questions.
I'm trying to get my arms around sort of the slowdown at the end of the quarter. Was it industry-specific, where there's sort of bigger projects just getting pushed off or stalled?
You kind of spoke to a little bit of that, but could you give us some more color?
James E. Cashman
No, well, I mean, there wasn't any geographic specificity. I mean you can look at some things.
For instance, in India, there's a lot of turmoil around the -- let's say, the government versus legal versus industrial and all will be -- all the things that are going on there. But I mean, those are all spot kind of occurrences.
So no there really wasn't anything that tracked along those levels. Like I said, none of these things were monolithic and we saw evidences, different threads, if you will, in each aspect, whether we were looking at industry or geography.
Barbara Coffey - S&P Equity Research
Okay. And were there any sort of hold-out industries that just continued to execute through everything?
Maria T. Shields
Electronics in certain geographies.
James E. Cashman
Well, again, but that wasn't monolithic either. I mean...
Maria T. Shields
No.
James E. Cashman
So yes, in general, the industry that we talked about, it wasn't like they monolithically moved. And in fact, the separation between them and the lesser-performing industries wasn't as great as previous times.
But automotive continued to push, electronics continued to push. And we mentioned biomed plus a relatively smaller but growing aspect of what we're moving on.
But we also -- we saw, and this might have been counterintuitive, but in the industrial equipment side, we saw a number of decent things. But that was also more tightly tied to, if you will, the Pareto 20% of companies as opposed to everybody in the industry.
I don't think we saw any industry where it was kind of like just by virtue of being in that industry, it automatically implies that they were going gangbusters.
Operator
And ladies and gentlemen, this will conclude our question-and-answer session. I would like to turn the conference back over to Mr.
Jim Cashman for his closing remarks.
James E. Cashman
Okay. Thanks, Denise, and thanks, everybody, for -- I know we went for a long time on the Q&A, but we also want to make that time available to you guys.
So basically I'll just say, in closing, I'll say the emphasis for Q2 and the remainder of 2013, like we've said throughout this call, is it's going to be on continued growth, customer development and really improved execution across all aspects of the business, including that ramped up maturation of the sales engine. So no doubt, there's still a tremendous amount of long-term optimism here.
It's driven by continued positive customer receptivity to our vision. But we also -- keep in mind, even with all the stuff we've talked about, I think we've demonstrated yet one more chapter of our resilient business model.
And, of course, a major hallmark of that is that we've got great, loyal customers, good partners. Obviously, we've got superior technology and as we've mentioned, a growing base of exceptional employees.
So -- however, in the environment, we're balancing this with the short time -- short-term kind of caution that we've talked about. So thanks to all those people that have participated in getting us to where we are and where we're going.
And thanks to you for this call and we'll see you all next quarter.
Operator
Thank you. Ladies and gentlemen, the conference has now concluded.
We thank you for attending today's presentation. You may now disconnect your lines.