AZPN
$118.26
Aspen Technology
($1.71)
(1.43%)
Earnings Details
1st Quarter September 2019
Wednesday, October 30, 2019 4:05:00 PM
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Summary

Aspen Technology Beats

Aspen Technology (AZPN) reported 1st Quarter September 2019 earnings of $0.83 per share on revenue of $134.1 million. The consensus earnings estimate was $0.64 per share on revenue of $117.0 million. The Earnings Whisper number was $0.67 per share. Revenue grew 17.4% on a year-over-year basis.

The company said it now expects fiscal 2020 non-GAAP earnings of $3.47 to $3.89 per share and continues to expect revenue of $575.0 million to $615.0 million. The company's previous guidance was earnings of $3.44 to $3.85 per share and the current consensus earnings estimate is $3.75 per share on revenue of $612.3 million for the year ending June 30, 2020.

Aspen Technology Inc together with its subsidiaries is engaged in providing process optimization software solutions designed to manage and optimize plant and process design, operational performance, and supply chain planning.

Results
Reported Earnings
$0.83
Earnings Whisper
$0.67
Consensus Estimate
$0.64
Reported Revenue
$134.1 Mil
Revenue Estimate
$117.0 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Aspen Technology Announces Financial Results for the First Quarter of Fiscal 2020

BEDFORD, Mass.--(BUSINESS WIRE)--Aspen Technology, Inc. (NASDAQ:AZPN), the asset optimization software company, today announced financial results for its first quarter of fiscal year 2020 ended September 30, 2019.

“AspenTech got off to a good start in the first quarter of fiscal 2020, and we remain positive about the outlook for the full year. We believe that the broad-based strength in our business, driven by the increasing focus on digitalization and continuous improvement in operational excellence, positions us well to deliver another year of solid growth and free cash flow generation,” said Antonio Pietri, President and Chief Executive Officer of Aspen Technology.

Pietri continued, “The recent introduction of Aspen Enterprise Insights, which incorporates visualization and workflow management capabilities from our Sabisu acquisition, is an exciting opportunity for collaborative and data-driven applications. In addition, we continue to receive a positive reaction from customers to our strategy and plan for leveraging artificial intelligence, cloud and IoT technologies to drive significantly higher levels of operational excellence across assets, providing substantial incremental value for customers.”

First Quarter Fiscal 2020 Recent Business Highlights

  • Annual spend, which the company defines as the annualized value of all term license and maintenance contracts at the end of the quarter, was approximately $548 million at the end of the first quarter of fiscal 2020, which increased 10.0% compared to the first quarter of fiscal 2019 and 1.3% sequentially.
  • GAAP operating margin was 35.3% compared to 32.4% in the first quarter of fiscal 2019. Non-GAAP operating margin was 43.2% compared to 41.1% in the first quarter of fiscal 2019.
  • AspenTech repurchased approximately 382,000 shares of its common stock for $50 million in the first quarter of fiscal 2020.

Summary of First Quarter Fiscal Year 2020 Financial Results

AspenTech’s total revenue of $134.1 million included:

  • License revenue, which represents the portion of a term license agreement allocated to the initial license, was $81.2 million in the first quarter of fiscal 2020, compared to $63.8 million in the first quarter of fiscal 2019.
  • Maintenance revenue, which represents the portion of the term license agreement related to on-going support and the right to future product enhancements, was $43.6 million in the first quarter of fiscal 2020, compared to $43.0 million in the first quarter of fiscal 2019.
  • Services and other revenue was $9.3 million in the first quarter of fiscal 2020, compared to $7.4 million in the first quarter of fiscal 2019.

For the quarter ended September 30, 2019, AspenTech reported income from operations of $47.3 million, compared to income from operations of $37.0 million for the quarter ended September 30, 2018.

Net income was $46.3 million for the quarter ended September 30, 2019, leading to diluted net income per share of $0.67, compared to diluted net income per share of $0.53 in the same period last fiscal year.

Non-GAAP income from operations was $57.9 million for the first quarter of fiscal 2020, compared to non-GAAP income from operations of $46.9 million in the same period last fiscal year. Non-GAAP net income was $54.6 million, or $0.79 per share, for the first quarter of fiscal 2020, compared to non-GAAP net income of $45.9 million, or $0.64 per share, in the same period last fiscal year. These non-GAAP results add back the impact of stock-based compensation expense, amortization of intangibles and acquisition related fees. A reconciliation of GAAP to non-GAAP results is presented in the financial tables included in this press release.

AspenTech had cash and cash equivalents of $57.9 million and borrowings of $320 million at September 30, 2019.

During the first quarter, the company generated $15.3 million in cash flow from operations and $14.3 million in free cash flow. Free cash flow is calculated as net cash provided by operating activities adjusted for the net impact of: purchases of property, equipment and leasehold improvements; capitalized computer software development costs, and other nonrecurring items, such as acquisition related (receipts) payments, net.

Business Outlook

Based on information as of today, October 30, 2019, AspenTech is issuing the following guidance for fiscal year 2020:

  • Annual spend growth of 10-12% year-over-year
  • Free cash flow of $250 to $260 million
  • Total bookings of $600 to $650 million
  • Total revenue of $575 to $615 million
  • GAAP total expenses of $369 to $374 million
  • Non-GAAP total expenses of $303 to $308 million
  • GAAP operating income of $206 to $241 million
  • Non-GAAP operating income of $272 to $307 million
  • GAAP net income per share of $2.72 to $3.14
  • Non-GAAP net income per share of $3.47 to $3.89

These statements are forward-looking and actual results may differ materially. Refer to the Forward-Looking Statements safe harbor below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.

AspenTech has not reconciled its expectations as to non-GAAP operating income and non-GAAP net income per share to their most directly comparable GAAP measure because certain items are out of AspenTech’s control or cannot be reasonably predicted. Accordingly, a reconciliation for forward-looking non-GAAP operating income and non-GAAP net income per share is not available without unreasonable effort.

Use of Non-GAAP Financial Measures

This press release contains “non-GAAP financial measures” under the rules of the U.S. Securities and Exchange Commission. Non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles. This non-GAAP information supplements, and is not intended to represent a measure of performance in accordance with, disclosures required by generally accepted accounting principles, or GAAP. Non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP. A reconciliation of GAAP to non-GAAP results is included in the financial tables included in this press release.

Management considers both GAAP and non-GAAP financial results in managing Aspen Technology’s business. As the result of adoption of new licensing models, management believes that a number of Aspen Technology’s performance indicators based on GAAP, including revenue, gross profit, operating income and net income, should be viewed in conjunction with certain non-GAAP and other business measures in assessing Aspen Technology’s performance, growth and financial condition. Accordingly, management utilizes a number of non-GAAP and other business metrics, including the non-GAAP metrics set forth in this press release, to track Aspen Technology’s business performance. None of these non-GAAP metrics should be considered as an alternative to any measure of financial performance calculated in accordance with GAAP.

Conference Call and Webcast

Aspen Technology will host a conference call and webcast today, October 30th, 2019, at 4:30 p.m. (Eastern Time), to discuss the company's financial results for the first quarter of fiscal 2020 as well as the company’s business outlook. The live dial-in number is (866) 471-3828 or (678) 509-7573, conference ID code 8363224. Interested parties may also listen to a live webcast of the call by logging on to the Investor Relations section of Aspen Technology’s website, http://ir.aspentech.com/events-and-presentations, and clicking on the “webcast” link. A replay of the call will be archived on Aspen Technology’s website and will also be available via telephone at (855) 859-2056 or (404) 537-3406, conference ID code 8363224, through November 6, 2019.

About Aspen Technology

Aspen Technology (AspenTech) is a global leader in asset optimization software. Its solutions address complex, industrial environments where it is critical to optimize the asset design, operation and maintenance lifecycle. AspenTech uniquely combines decades of process modelling expertise with artificial intelligence. Its purpose-built software platform automates knowledge work and builds sustainable competitive advantage by delivering high returns over the entire asset lifecycle. As a result, companies in capital-intensive industries can maximize uptime and push the limits of performance, running their assets safer, greener, longer and faster. Visit AspenTech.com to find out more.

Forward-Looking Statements

The second and third paragraphs of this press release as well as the Business Outlook section contain forward-looking statements for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results may vary significantly from Aspen Technology’s (AspenTech) expectations based on a number of risks and uncertainties, including, without limitation: AspenTech’s failure to increase usage and product adoption of aspenONE offerings or grow the aspenONE APM business, and failure to continue to provide innovative, market-leading solutions; the demand for, or usage of, aspenONE software declines for any reason, including declines due to adverse changes in the process or other capital-intensive industries; unfavorable economic and market conditions or a lessening demand in the market for asset process optimization software; risks of foreign operations or transacting business with customers outside the United States; risks of competition and other risk factors described from time to time in AspenTech’s periodic reports filed with the Securities and Exchange Commission. AspenTech cannot guarantee any future results, levels of activity, performance, or achievements. AspenTech expressly disclaims any obligation to update forward-looking statements after the date of this press release.

© 2019 Aspen Technology, Inc. AspenTech, aspenONE, asset optimization and the Aspen leaf logo are trademarks of Aspen Technology, Inc. All rights reserved. All other trademarks are property of their respective owners.

Source: Aspen Technology, Inc.

ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited in Thousands, Except per Share Data)

 

 

Three Months Ended
September 30,

 

2019

 

2018

 

(Dollars in Thousands, Except per Share Data)

Revenue:

 

 

 

License

$

81,171

 

 

$

63,755

 

Maintenance

43,574

 

 

43,039

 

Services and other

9,346

 

 

7,375

 

Total revenue

134,091

 

 

114,169

 

Cost of revenue:

 

 

 

License

1,660

 

 

1,665

 

Maintenance

4,977

 

 

3,993

 

Services and other

8,581

 

 

7,569

 

Total cost of revenue

15,218

 

 

13,227

 

Gross profit

118,873

 

 

100,942

 

Operating expenses:

 

 

 

Selling and marketing

29,192

 

 

26,812

 

Research and development

22,493

 

 

21,056

 

General and administrative

19,884

 

 

16,084

 

Total operating expenses

71,569

 

 

63,952

 

Income from operations

47,304

 

 

36,990

 

Interest income

7,976

 

 

7,069

 

Interest (expense)

(3,000

)

 

(1,814

)

Other income, net

1,132

 

 

128

 

Income before income taxes

53,412

 

 

42,373

 

Provision for income taxes

7,128

 

 

4,307

 

Net income

$

46,284

 

 

$

38,066

 

Net income per common share:

 

 

 

Basic

$

0.68

 

 

$

0.54

 

Diluted

$

0.67

 

 

$

0.53

 

Weighted average shares outstanding:

 

 

 

Basic

68,441

 

 

70,988

 

Diluted

69,317

 

 

72,015

 

 

ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited in Thousands, Except Share and Per Share Data)

 

 

September 30,
2019

 

June 30,
2019

 

(Dollars in Thousands, Except Share Data)

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

57,943

 

 

$

71,926

 

Accounts receivable, net

48,991

 

 

47,784

 

Current contract assets

286,644

 

 

294,193

 

Prepaid expenses and other current assets

12,603

 

 

12,628

 

Prepaid income taxes

1,269

 

 

2,509

 

Total current assets

407,450

 

 

429,040

 

Property, equipment and leasehold improvements, net

7,259

 

 

7,234

 

Computer software development costs, net

1,205

 

 

1,306

 

Goodwill

126,937

 

 

78,383

 

Intangible assets, net

60,955

 

 

33,607

 

Non-current contract assets

358,704

 

 

325,510

 

Contract costs

25,327

 

 

24,982

 

Operating lease right-of-use assets

29,842

 

 

 

Deferred tax assets

1,781

 

 

1,669

 

Other non-current assets

2,197

 

 

1,334

 

Total assets

$

1,021,657

 

 

$

903,065

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

10,641

 

 

$

5,891

 

Accrued expenses and other current liabilities

41,176

 

 

54,594

 

Current operating lease liabilities

6,462

 

 

 

Income taxes payable

13,348

 

 

14,952

 

Borrowings under credit agreement

320,000

 

 

220,000

 

Current deferred revenue

25,699

 

 

25,318

 

Total current liabilities

417,326

 

 

320,755

 

Non-current deferred revenue

17,349

 

 

19,573

 

Deferred income taxes

160,230

 

 

159,071

 

Non-current operating lease liabilities

28,765

 

 

 

Other non-current liabilities

4,704

 

 

10,381

 

Commitments and contingencies (Note 17)

 

 

 

Series D redeemable convertible preferred stock, $0.10 par value—
Authorized— 3,636 shares as of September 30, 2019 and June 30, 2019
Issued and outstanding— none as of September 30, 2019 and June 30, 2019

 

 

 

Stockholders’ equity:

 

 

 

Common stock, $0.10 par value— Authorized—210,000,000 shares
Issued— 103,717,526 shares at September 30, 2019 and 103,642,292 shares at June 30, 2019
Outstanding— 68,317,521 shares at September 30, 2019 and 68,624,566 shares at June 30, 2019

10,372

 

 

10,365

 

Additional paid-in capital

745,908

 

 

739,099

 

Retained earnings

1,306,268

 

 

1,259,984

 

Accumulated other comprehensive (loss) income

(2,766

)

 

336

 

Treasury stock, at cost—35,400,005 shares of common stock at September 30, 2019 and 35,017,726 shares at June 30, 2019

(1,666,499

)

 

(1,616,499

)

Total stockholders’ equity

393,283

 

 

393,285

 

Total liabilities and stockholders’ equity

$

1,021,657

 

 

$

903,065

 

 

ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited in Thousands)

 

 

Three Months Ended
September 30,

 

2019

 

2018

 

(Dollars in Thousands)

Cash flows from operating activities:

 

 

 

Net income

$

46,284

 

 

$

38,066

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

2,036

 

 

2,000

 

Right-of-use asset amortization

1,887

 

 

 

Net foreign currency losses (gains)

721

 

 

(200

)

Stock-based compensation

9,275

 

 

8,865

 

Deferred income taxes

(182

)

 

(44,670

)

Provision for bad debts

982

 

 

34

 

Other non-cash operating activities

107

 

 

107

 

Changes in assets and liabilities:

 

 

 

Accounts receivable

(1,945

)

 

(12,394

)

Contract assets

(25,440

)

 

(30,914

)

Contract costs

(345

)

 

(796

)

Lease liabilities

(1,932

)

 

 

Prepaid expenses, prepaid income taxes, and other assets

(2,092

)

 

(855

)

Accounts payable, accrued expenses, income taxes payable and other liabilities

(12,741

)

 

34,924

 

Deferred revenue

(1,355

)

 

11,403

 

Net cash provided by operating activities

15,260

 

 

5,570

 

Cash flows from investing activities:

 

 

 

Purchases of property, equipment and leasehold improvements

(600

)

 

(96

)

Payments for business acquisitions, net of cash acquired

(74,219

)

 

 

Payments for capitalized computer software costs

(9

)

 

(90

)

Net cash used in investing activities

(74,828

)

 

(186

)

Cash flows from financing activities:

 

 

 

Exercises of stock options

1,018

 

 

4,054

 

Repurchases of common stock

(50,848

)

 

(49,977

)

Payments of tax withholding obligations related to restricted stock

(3,166

)

 

(3,179

)

Proceeds from credit agreement

100,000

 

 

 

Net cash provided by (used in) financing activities

47,004

 

 

(49,102

)

Effect of exchange rate changes on cash and cash equivalents

(729

)

 

(399

)

Decrease in cash, cash equivalents, and restricted cash

(13,293

)

 

(44,117

)

Cash and cash equivalents, beginning of period

71,926

 

 

96,165

 

Cash, cash equivalents, and restricted cash, end of period

$

58,633

 

 

$

52,048

 

Supplemental disclosure of cash flow information:

 

 

 

Income taxes paid, net

$

10,284

 

 

$

2,755

 

Interest paid

2,801

 

 

1,538

 

Supplemental disclosure of non-cash activities:

 

 

 

Change in purchases of property, equipment and leasehold improvements included in accounts payable and accrued expenses

$

160

 

 

$

(11

)

Change in repurchases of common stock included in accounts payable and accrued expenses

(848

)

 

23

 

Lease liabilities arising from obtaining right-of-use assets

3,272

 

 

 

 

 

 

 

 

September 30,
2019

 

June 30,
2019

Reconciliation to amounts within the unaudited consolidated balance sheets:

(Dollars in Thousands)

Cash and cash equivalents

$

57,943

 

 

$

71,926

 

Restricted cash included in other non-current assets

690

 

 

 

Cash, cash equivalents, and restricted cash, end of period

$

58,633

 

 

$

71,926

 

 

ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Results of Operations and Cash Flows
(Unaudited in Thousands, Except per Share Data)

 

 

 

Three Months Ended
September 30,

 

 

2019

 

2018

Total expenses

 

 

 

 

GAAP total expenses (a)

 

$

86,787

 

 

$

77,179

 

Less:

 

 

 

 

Stock-based compensation (b)

 

(9,275

)

 

(8,865

)

Amortization of intangibles

 

(1,195

)

 

(1,067

)

Acquisition related fees

 

(118

)

 

7

 

 

 

 

 

 

Non-GAAP total expenses

 

$

76,199

 

 

$

67,254

 

 

 

 

 

 

Income from operations

 

 

 

 

GAAP income from operations

 

$

47,304

 

 

$

36,990

 

Plus:

 

 

 

 

Stock-based compensation (b)

 

9,275

 

 

8,865

 

Amortization of intangibles

 

1,195

 

 

1,067

 

Acquisition related fees

 

118

 

 

(7

)

 

 

 

 

 

Non-GAAP income from operations

 

$

57,892

 

 

$

46,915

 

 

 

 

 

 

Net income

 

 

 

 

GAAP net income

 

$

46,284

 

 

$

38,066

 

Plus:

 

 

 

 

Stock-based compensation (b)

 

9,275

 

 

8,865

 

Amortization of intangibles

 

1,195

 

 

1,067

 

Acquisition related fees

 

118

 

 

(7

)

Less:

 

 

 

 

Income tax effect on Non-GAAP items (c)

 

(2,223

)

 

(2,084

)

 

 

 

 

 

Non-GAAP net income

 

$

54,649

 

 

$

45,907

 

 

 

 

 

 

Diluted income per share

 

 

 

 

GAAP diluted income per share

 

$

0.67

 

 

$

0.53

 

Plus:

 

 

 

 

Stock-based compensation (b)

 

0.13

 

 

0.13

 

Amortization of intangibles

 

0.02

 

 

0.01

 

Acquisition related fees

 

 

 

 

Less:

 

 

 

 

Income tax effect on Non-GAAP items (c)

 

(0.03

)

 

(0.03

)

 

 

 

 

 

Non-GAAP diluted income per share

 

$

0.79

 

 

$

0.64

 

 

 

 

 

 

Shares used in computing Non-GAAP diluted income per share

 

69,317

 

 

72,015

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
September 30,

 

 

2019

 

2018

Free Cash Flow

 

 

 

 

GAAP cash flow from operating activities

 

$

15,260

 

 

$

5,570

 

Purchase of property, equipment and leasehold improvements

 

(600

)

 

(96

)

Capitalized computer software development costs

 

(9

)

 

(90

)

Acquisition related (receipts) payments, net

 

(353

)

 

12

 

Free Cash Flow

 

$

14,298

 

 

$

5,396

 

 

 

 

 

 

(a) GAAP total expenses

 

 

 

 

 

 

Three Months Ended
September 30,

 

 

2019

 

2018

Total costs of revenue

 

$

15,218

 

 

$

13,227

 

Total operating expenses

 

71,569

 

 

63,952

 

GAAP total expenses

 

$

86,787

 

 

$

77,179

 

 

 

 

 

 

(b) Stock-based compensation expense was as follows:

 

 

 

 

 

 

Three Months Ended
September 30,

 

 

2019

 

2018

Cost of maintenance

 

$

398

 

 

$

146

 

Cost of services and other

 

543

 

 

319

 

Selling and marketing

 

1,547

 

 

1,331

 

Research and development

 

2,102

 

 

2,295

 

General and administrative

 

4,685

 

 

4,774

 

Total stock-based compensation

 

$

9,275

 

 

$

8,865

 

 

 

 

 

 

(c) The income tax effect on non-GAAP items for the three months ended September 30, 2019 and 2018 is calculated utilizing the Company's statutory tax rate of 21 percent.

 

Media Contact
Lucy Millington
AspenTech
+1 781-221-6419
lucy.millington@aspentech.com

Investor Contact
Brian Denyeau
ICR
+1 646-277-1251
brian.denyeau@icrinc.com

Source: Aspen Technology, Inc.