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Investors in high-tech industries often seek out stocks that will expose their portfolios to fast-growing markets like robotics, semiconductors, 5G, and space exploration. One company helping power all of these industries is Ansys (NASDAQ:ANSS), a maker of simulation software. Ansys is the largest engineering simulation company in the world, and it has delivered returns of almost 12,000% for shareholders since its IPO back in 1996.

Let's investigate why this company is so special, and consider whether you should add it to your portfolio today.

Founded more than 50 years ago, Ansys provides software simulation tools for engineering departments, both academic and commercial. Its offerings include tools for simulating designs in an array of engineering niches, from mechanical to fluid and electrical. Its clientele comes from the automotive, semiconductor, space, and robotics sectors, among many others. Its software is even used by top Formula One team Red Bull to simulate and improve the performance of its racing cars.

Image source: Getty Images.

Research and development departments around the globe license Ansys software to test their designs before building products in the real world, which saves them time and money. And Ansys reinvests almost 20% of its revenue each year back into its own R&D projects, further increasing the value of its software to its customers.

After decades of improvements, Ansys's tools are light years ahead of the competition. That's one reason it's able to charge a pretty penny to access its products -- customer sources say the price of a single license can cost anywhere from a few thousand dollars to $50,000 (depending on the product). The combination of its pricing power and its expanding end markets has allowed Ansys to steadily grow its financials over the years.

Ansys has steadily compounded its revenue over the last few decades. In the first quarter, its top line hit $362.2 million, up 19% year over year. Revenue has grown consistently since its IPO, from less than $50 million in 1996 to the $1.74 billion it logged over the past 12 months. Ansys is also highly profitable and has been for a long time with $538 million in trailing-12-month free cash flow.

Data by YCharts.

This steady growth is due in part to the company's reliable customer base. R&D departments put in thousands -- sometimes tens of thousands -- of hours working on complex engineering problems using its software, and it would be costly and time-consuming to switch to a competing tool. Given the high switching costs, many of its customers sign long-term contracts, giving Ansys a large backlog of deferred revenue. At the end of the first quarter, this number sat at $936.5 million.

Given Ansys is a leader within its niche and has been for some time, it's no surprise its shares are trading at a pricey valuation. With a market cap of about $30 billion, its price-to-sales ratio (P/S) is 17.3, and its price-to-free-cash-flow (P/FCF) ratio is 55.8. Both of those figures are well above average, even among its software and technology peers.

Ansys boasts a high free-cash- flow margin of 31%, which it will likely have trouble expanding, especially if management remains committed to spending approximately 20% of revenue on R&D each year. This isn't necessarily bad for the company (it's actually quite impressive Ansys can have such strong free-cash-flow margin while simultaneously spending so much on R&D), but it shows the limits to growing free cash flow through increasing profit margins alone.

Its technological advantages and high switching costs give Ansys a wide moat. This combination has helped it consistently produce market-beating returns over the years, and it should keep profit margins durable. But because the stock is trading at such a premium valuation, it is staying on my watch list for now. There's no reason to sell shares you already own, but for the time being, there are better opportunities out there for investors.

This article represents the opinion of the writer, who may disagree with the official recommendation position of a Motley Fool premium advisory service. Were motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Does This Top Simulation Stock Belong in Your Portfolio? - The Motley Fool

Apple today released tvOS 14.7, the seventh update to the tvOS 14 operating system that initially debuted in September 2020. tvOS 14.7 comes two months after the launch of the tvOS 14.6 update.

tvOS 14.7, which is a free update, can be downloaded over the air through the Settings app on the Apple TV by going to System > Software Update. Apple TV owners who have automatic software updates enabled will be upgraded to tvOS 14.7 automatically.

Apple's tvOS updates are usually minor in scale, focusing on under-the-hood bug fixes, performance updates, and small tweaks rather than major outward-facing changes. No new features were discovered during the tvOS 14.7 beta testing process.

Apple does not provide detailed release notes for its tvOS updates, but it does offer some tvOS details through its tvOS support document.

tvOS 14.7 may be one of the final updates to the tvOS 14 operating system as Apple shifts its attention to tvOS 15, which is set to come out this fall.

Originally posted here:
Apple Releases tvOS 14.7 for Apple TV HD and Apple TV 4K - MacRumors

Forbes Advisor closely analyzed the top antivirus services to bring you this ranking. First, we gathered hundreds of data points on the top products from the top antivirus companies. The dataset was divided into the key features for an antivirus service: price, customer support, user experience, app ratings, and core features.

With the key features set apart, we weighted the results and assigned each of the features a score. The combination of these scores is what you see in the five-star rating above.

Although we looked at everything from support to ransomware protection, there were a few key areas that took precedence in our ranking. The first was the price. Theres some leeway when it comes to how expensive a service is versus how many features it offers, but lower is usually better.

Outside of that, we paid attention to features and extra protection measures. That included things such as a password manager and email security scanner, which arent available with every antivirus service.

Finally, we factored in qualitative elements that arent easily accounted for in data such as ease of use, value for money and stand-out features.

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Best Antivirus Software Of 2021 Forbes Advisor - Forbes

SALEM, Ore. (KTVZ) -- Families in Oregon now have a new option to prepare their children for kindergarten at home -- and at no cost. Thanks to generous donations made through the TED Organization, Waterford.org is bringing the Waterford Upstart program to Oregon.

Each year, 2.2 million 4-year-old children in the United States do not have access to publicly funded early education, and more than half are low-income children with no early education options at all. Waterford is one of eight nonprofit organizations in the world named a 2019 TED Audacious Project. As a part of this recognition, the organization was tasked with reaching more 4-year-olds in need, including 200 children in Oregon.

When a child begins school behind his or her peers, its very hard to catch up. An at-home solution like Waterford Upstart has proven to be not only effective in educating our youngest learners, but also a necessity for many families, said Kim Fischer, national spokesperson for Waterford.org. Waterford Upstart meets families where they are, so they can feel confident their children will walk into their first day of kindergarten prepared and ready to learn.

Waterford Upstart is an in-home, early education program that prepares four-year-old children for kindergarten. Families are given the tools they need to be their childs first and most influential teachers, including a computer and internet at no cost.

The program provides positive adult-child interactions while delivering personalized, online instruction 15 minutes a day, 5 days a week. Families are also given support through a family coach as well as tips to continue engaging their children offline. On average, 92% of children who participate in Waterford Upstart are ready for kindergartencompared to a 65% average nationwide and 48% for low-income children.

I was a little skeptical at first of my 5-year-old grandson being on a computer, but this program is phenomenal, said Laurie Danzuka, Jefferson County School Board Chair, and grandmother of a Waterford Upstart graduate. I didnt feel like he was getting the science, math, and reading instruction in preschool that he needed, and reading is everything. Waterford Upstart really boosted his learning and, more importantly, his interest in learning. My grandson is now in kindergarten and he loves to learn! Hes so far ahead of the game.

You can now apply for Waterford Upstart, but spots are limited and restrictions apply. Children must enter kindergarten in fall 2022. Families can register right now for this at-home, no-cost project by visiting WaterfordUpstart.org.

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Waterford.org

Waterford.org is an early education nonprofit with a mission to achieve universal literacy for children through equity, access, and parent empowerment. Waterford develops educational tools that guide students along adaptive, individualized learning paths toward fluent reading and lifelong learning. We empower parents as a childs first teacher, and we support teachers in taking the right actions at the right time for their students. In total, Waterford.org serves more than 300,000 children every year through all of our programs, and that number is continually growing.

Waterford Upstart

Waterford Upstart helps four-year-old children prepare for school at home and at no cost. Children develop foundational reading and social-emotional skills, and families are empowered to become their childs first and most influential teachers. The children use adaptive software just 15 minutes a day, five days a week in the year before they start school. Waterford Upstart also fuels family involvement in their childs early education through family coaches and fun educational activities parents can complete with their children offline. Waterford Upstart has been rigorously tested and proven, earning the program a federal EIR grant and the title of a TED Audacious project. Independent research shows the average Waterford Upstart graduate enters kindergarten reading at nearly a first-grade level and maintains those gains through the fourth grade.

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Free, TED-funded early education program available to Oregon 4-year-olds - KTVZ

Say youre planning to watch a movie tonight you sit down, open the Amazon app, and start searching. Want to watch Marvels The Avengers from 2012? Thats free on Amazon Prime. But if youre interested in the most recent installment in the Avengers series, Marvel Studios Avengers: Endgame from 2019, that will cost you $3.99 to rent. But not all new movies are rental only, and not all older movies are free. For example, you can watch Eddie Murphy in 2021s Coming 2 America for free with your Prime membership, but if you want to check out the Murphy classic Beverly Hills Copfrom 1984, thatll cost you an additional $2.99. What gives?

Amazon is known for making very deliberate choices about what to bundle in with a standard Prime membership, when, and for how long. To make these decisions, the company is likely using a metric like cost-per-first-stream dividing the titles costs (e.g. production or licensing) by the total number of subscribers streaming a given title to determine what to offer as standalone versus adding to the basic Prime bundle. Because the value of shows and movies tends to depreciate, some titles will lose their value after a certain period. At that point, the standalone charge can no longer be justified, so Amazon moves these titles under the standard Prime membership.

This two-step approach to rolling out services is an example of a strategy called biphasic subscription monetization in which 1) businesses roll out novel services as standalone offerings and quickly monetize them by targeting enthusiastic consumers, before 2) adding them to pre-existing bundles consisting of more mature services and monetizing them over longer periods of time with the broader consumer base.

As companies across sectors are going from a product-based to a subscription-based business model from Microsoft, Google, and Nike to auto manufacturers, industrial manufacturers, and brick-and-mortar retailers this strategy is catching on. If done correctly, it can help offset initial development costs of novel offerings, provide companies with quick and actionable feedback on these novel services, and generate positive momentum that drives larger investments in innovation. And as companies continue to add more services to existing subscription bundles, they can justify a progressive increase in subscription fees since the perceived value of the bundle is increasing.

In my experience working with thousands of subscription businesses, Ive seen three considerations that drive the successful adoption of the biphasic monetization strategy. First, companies need to prove the benefits of this biphasic monetization strategy by qualifying new services against 13 attributes that make up what I call the Unified Subscription Adoption Model (USAM). I developed the USAM as the first hybrid framework for assessing the end-to-end potential of subscription offerings, combining two widely recognized technology and product adoption models, but adjusting their core attributes to better match the idiosyncrasies of subscription-based offerings. Second, new features/services need to be added over time to maintain or increase the overall price of a given subscription bundle. And lastly, companies need to take into account how susceptible the demand for a given offering is to changes in price.

Lets dig in with an example to show this biphasic monetization strategy in action.

Recently, traditional automakers alongside software juggernauts including Apple, Google, Amazon, and Baidu have embarked on a tight race to offer the most advanced and well-integrated automotive software-as-a-service subscriptions, making them ideal candidates for deploying a biphasic monetization strategy.

Lets explore a simplified example of how that could work.

A hypothetical automaker has already introduced a basic subscription bundle consisting of three car-connected services: road navigation, road assistance, and remote start. The bundle is offered to all prospective car owners in the form of a subscription for $89 per month. Ten thousand car owners have already subscribed to the basic subscription, generating $890,000 Monthly Recurring Revenue (MRR) for the automaker.

Lets assume that the same automakers R&D unit has developed two new connected services that are ready to be launched: Over-The-Air software updates (OTA) and Semi-Autonomous Driving (SAD).

The marketing department has conducted a market segmentation study according to which, the automakers Serviceable Obtainable Market (SOM) consists of a total 10,000 existing drivers, out of which 9,000 are low-income earners and 1,000 are high-income earners. Through various A/B tests conducted in the past, the automaker found out the Price Elasticity of Demand (PED) for the basic bundle is 0.9 (quite elastic). This means that an increase in the overall price of the bundle will result in an almost proportionate decrease in demand. The company also defined the minimum prices of the two services to be $5/month for OTA and $15/month for SAD based on the investment size required to develop each service.

So, how would the company deploy a biphasic monetization strategy?

Companies need to measure the maturity of an offer to determine the overall market readiness for a new service. The Unified Subscription Adoption Model (USAM) is a hybrid framework for assessing the end-to-end potential of offerings, measuring attributes that will impact potential adoption, including: functionality, reliability, usefulness, usability, efficiency, and desirability.

To use the framework, you measure the service quality attributes by asking a series of core questions. For example, for Desirability, the pertinent question is Does it make the user care? and what you are assessing is the measure of positive emotions, such as desire and pleasure, that a service generates for the user. Similarly, for Usefulness, the question is Does it solve real problems? For each attribute, you rate on a continuum of Low to High and then tally the results for a total score.

If we use this framework for our two new hypothetical connected services, we clearly witness that the two services differ across the board. The first service (OTA) is a very mature service (scoring 55/60 points). In contrast, semi-autonomous driving is more of a Minimum Viable Product (MVP) scoring 32/60 points.

The overall service quality is very often a reliable indicator of both market maturity and market penetration. The ratings for OTA indicate the service is well diffused/adopted in the market (past the late majority of the consumer population). In other words, OTA is an existing feature in most if not all cars. Car owners expect that their cars software can be updated remotely (i.e. over the air), similarly to how laptops or PCs do. In contrast, SAD appears to be a novel service still in the early adoption phase (early majority of the consumer population). It is widely seen as a nice-to-have feature, not really a necessity.

Lets start by hypothesizing that the automaker decides to add both services to the existing basic subscription offering.

Approach 1: All-in Bundling Strategy

Once the automaker adds both services to the existing basic bundle, the subscription fee increases to cover the R&D costs incurred to develop the OTA and SAD services. In consequence, 2,000 subscribers representing 20% of the overall subscriber base cancel their subscriptions. The increased subscription fee is barely enough to offset the subscriber churn, leading to a 2% reduction in the automakers Monthly Recurring Revenue (MRR) from $890k to $872k.

Lets think about this dynamic. Once the automaker adds a nice-to-have service to a bundle consisting of basic services and uses that to justify a fee increase, car owners feel like they are asked to pay for a feature they dont need and never asked for. Since the basic bundle includes services with close substitutes, they wont hesitate to cancel their subscription.

Lets now see how the biphasic monetization strategy can provide a much more profitable alternative. Exhibit 2 shows the impact of adding OTA to the existing basic bundle and launching SAD as a standalone subscription service.

Approach 2: Basic Bundle + Stand-Alone Strategy

The OTA service matches closely the overall maturity of the basic bundle already adopted by 10,000 subscribers. By adding it to the bundle, the automaker increases the overall subscription fee to cover the R&D costs. In consequence, a portion of subscribers still cancel but the churn, in this case, is much lower resulting in a net MRR gain.

The gains do not end here though. The manufacturer launches SAD as a standalone subscription at $15/month and targets only those drivers in their subscriber base that demonstrate the greatest willingness/ability to pay for additional features. The car manufacturer now has two recurring revenue streams.

Over time, semi-autonomous driving will mature as a capability as an increasing number of car manufacturers offer it and its overall quality increases. It will eventually be adopted by the early and late majorities of the consumer population. At that point, the standalone subscription fee wont be justified, forcing the automaker to make the feature part of the basic bundle and, perhaps, using that as a justification for an increase in its subscription fee.

To avoid losing the second revenue stream altogether, the car manufacturer will need to launch a new service as a stand-alone subscription to replace SAD. This process creates a continuous innovation cycle that can help subscription businesses stay competitive while growing their revenue and minimizing risks associated with new launches.

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All in all, the biphasic subscription monetization strategy poses a proven, logical, and practical solution to the dilemma of launching novel services as standalone offerings versus adding them to existing bundles in the fast-moving subscription economy.

Success, however, comes with conditions. For biphasic monetization strategies to succeed, companies must maintain a constant flow of innovation, know their costs, study their subscribers, and analyze acquisition and retention drivers. Its a tall order, but the benefits make it worthwhile. Just ask Amazon.

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What Belongs in Your Basic Bundle? - Harvard Business Review