AZPN
$120.81
Aspen Technology
($1.91)
(1.56%)
Earnings Details
3rd Quarter March 2019
Wednesday, April 24, 2019 4:05:00 PM
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Summary

Aspen Technology Beats

Aspen Technology (AZPN) reported 3rd Quarter March 2019 earnings of $0.93 per share on revenue of $148.0 million. The consensus earnings estimate was $0.83 per share on revenue of $136.5 million. The Earnings Whisper number was $0.87 per share. Revenue grew 17.6% on a year-over-year basis.

The company said during its conference call it now expects fiscal 2019 revenue of $549.0 million to $569.0 million. The company's previous guidance was revenue of $545.0 million to $567.0 million and the current consensus estimate is revenue of $558.7 million for the year ending June 30, 2019.

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
$0.93
Earnings Whisper
$0.87
Consensus Estimate
$0.83
Reported Revenue
$148.0 Mil
Revenue Estimate
$136.5 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Aspen Technology Announces Financial Results for the Third Quarter of Fiscal 2019

BEDFORD, Mass.--(BUSINESS WIRE)-- Aspen Technology, Inc. (NASDAQ: AZPN), the asset optimization software company, today announced financial results for its third quarter of fiscal year 2019 ended March 31, 2019.

“AspenTech’s strong third quarter results were highlighted by annual spend growth of 9.7% year-over-year and positive growth contributions from each product suite and geography,” said Antonio Pietri, President and Chief Executive Officer of Aspen Technology. “Our performance benefited from investments in our strategic growth initiatives in recent quarters, an improving macroeconomic outlook for our Engineering & Construction and upstream customers, and strong execution by the AspenTech team.”

Pietri continued, “Our APM business had a record annual spend quarter as customers increasingly recognized the value predictive and prescriptive maintenance can have in improving their asset operations. We also saw broadening adoption within the APM suite, including the first site licenses for Aspen ProMV, our multivariate analysis solution. We believe our strong APM performance is indicative of the substantial opportunity for the APM suite and our strengthening competitive position in this market.”

Third Quarter Fiscal 2019 and 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 $526 million at the end of the third quarter of fiscal 2019, which increased 9.7% compared to the third quarter of fiscal 2018 and 2.6% sequentially.
  • AspenTech repurchased approximately 800,000 shares of its common stock for $75 million in the third quarter of fiscal 2019.

Summary of Third Quarter Fiscal Year 2019 Financial Results

AspenTech’s total revenue of $148 million included:

  • License revenue, which represents the portion of a term license agreement allocated to the initial license, was $98.5 million in the third quarter of fiscal 2019, compared to $79.1 million in the third quarter of fiscal 2018.
  • Maintenance revenue, which represents the portion of the term license agreement related to on-going support and the right to future product enhancements, was $41.9 million in the third quarter of fiscal 2019, compared to $40.9 million in the third quarter of fiscal 2018.
  • Services and other revenue was $7.6 million in the third quarter of fiscal 2019, compared to $7.8 million in the third quarter of fiscal 2018.

For the quarter ended March 31, 2019, AspenTech reported income from operations of $70.8 million, compared to income from operations of $53.6 million for the quarter ended March 31, 2018.

Net income was $61.6 million for the quarter ended March 31, 2019, leading to net income per share of $0.88, compared to net income per share of $0.61 in the same period last fiscal year.

Non-GAAP income from operations, which adds back the impact of stock-based compensation expense, amortization of intangibles associated with acquisitions and acquisition related fees, was $78.3 million for the third quarter of fiscal 2019, compared to non-GAAP income from operations of $59.9 million in the same period last fiscal year. Non-GAAP net income was $67.5 million, or $0.96 per share, for the third quarter of fiscal 2019, compared to non-GAAP net income of $49.0 million, or $0.67 per share, in the same period last fiscal year. A reconciliation of GAAP to non-GAAP results is presented in the financial tables included in this press release.

AspenTech had cash and marketable securities of $65.6 million and borrowings of $220 million at March 31, 2019.

During the third quarter, the company generated $90.0 million in cash flow from operations and $89.1 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 payments.

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, April 24, 2019, at 4:30 p.m. (Eastern Time), to discuss the company's financial results for the third quarter fiscal year 2019 as well as the company’s business outlook. The live dial-in number is (833) 713-6081 or (702) 374-0603, conference ID code 4067052. 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 4067052, through May 24, 2019.

About Aspen Technology

Aspen Technology (AspenTech) is a leading software supplier for optimizing asset performance. Our products thrive in complex, industrial environments where it is critical to optimize the asset design, operation and maintenance lifecycle. AspenTech uniquely combines decades of process modeling expertise with big data machine learning. Our 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 third paragraph of this press release contains 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, the Aspen leaf logo, Aspen, Aspen ProMV and Aspen Mtell are trademarks of Aspen Technology, Inc. All rights reserved.

Source: Aspen Technology, Inc.

 

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

         

Three Months Ended
March 31,

Nine Months Ended
March 31,

2019     2018 2019     2018
As Adjusted As Adjusted
Revenue:
License $ 98,493 $ 79,073 $ 255,616 $ 214,938
Maintenance 41,878 40,897 125,955 121,890
Services and other 7,613   7,788   21,005   22,947  
Total revenue 147,984   127,758   402,576   359,775  
Cost of revenue:
License 1,658 1,279 5,142 3,743
Maintenance 4,962 4,259 14,241 13,061
Services and other 7,740   7,238   22,943   20,793  
Total cost of revenue 14,360   12,776   42,326   37,597  
Gross profit 133,624   114,982   360,250   322,178  
Operating expenses:
Selling and marketing 27,410 25,246 80,532 72,690
Research and development 20,520 21,584 61,893 60,863
General and administrative 14,863   14,533   46,246   49,188  
Total operating expenses 62,793   61,363   188,671   182,741  
Income from operations 70,831 53,619 171,579 139,437
Interest income 6,835 6,304 21,389 18,849
Interest (expense) (2,350 ) (1,485 ) (6,328 ) (3,952 )
Other (expense), net (34 ) (104 ) (485 ) (958 )
Income before income taxes 75,282 58,334 186,155 153,376
Provision for (benefit from) income taxes 13,695   13,829   27,286   (63,681 )
Net income $ 61,587   $ 44,505   $ 158,869   $ 217,057  
Net income per common share:
Basic $ 0.89 $ 0.62 $ 2.26 $ 3.00
Diluted $ 0.88 $ 0.61 $ 2.23 $ 2.97
Weighted average shares outstanding:
Basic 69,423 71,828 70,286 72,402
Diluted 70,160 72,663 71,142 73,136
         

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

 

March 31,
2019

June 30,
2018
As Adjusted
ASSETS
Current assets:
Cash and cash equivalents $ 65,592 $ 96,165
Accounts receivable, net 45,293 41,810
Current contract assets 314,745 304,378
Contract costs 24,325 20,500
Prepaid expenses and other current assets 11,124 10,509
Prepaid income taxes 1,573   2,601  
Total current assets 462,652 475,963
Property, equipment and leasehold improvements, net 7,589 9,806
Computer software development costs, net 1,452 646
Goodwill 73,534 75,590
Intangible assets, net 31,756 35,310
Non-current contract assets 358,709 340,622
Deferred tax assets 1,696 11,090
Other non-current assets 1,279   1,297  
Total assets $ 938,667   $ 950,324  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 4,023 $ 4,230
Accrued expenses and other current liabilities 42,746 39,515
Income taxes payable 35,582 1,698
Borrowings under credit agreement 220,000 170,000
Current deferred revenue 24,415   15,150  
Total current liabilities 326,766 230,593
Non-current deferred revenue 19,312 12,354
Deferred income taxes 154,901 214,125
Other non-current liabilities 12,403 17,068
Commitments and contingencies (Note 16)
Series D redeemable convertible preferred stock, $0.10 par value—
Authorized— 3,636 shares as of March 31, 2019 and June 30, 2018
Issued and outstanding— none as of March 31, 2019 and June 30, 2018
Stockholders’ equity:
Common stock, $0.10 par value— Authorized—210,000,000 shares
Issued— 103,478,590 shares at March 31, 2019 and 103,130,300 shares at June 30, 2018
Outstanding— 69,108,515 shares at March 31, 2019 and 71,186,701 shares at June 30, 2018
10,348 10,313
Additional paid-in capital 730,830 715,475
Retained earnings 1,224,377 1,065,507
Accumulated other comprehensive income 1,229 1,388
Treasury stock, at cost—34,370,075 shares of common stock at March 31, 2019 and 31,943,599 shares at June 30, 2018 (1,541,499 ) (1,316,499 )
Total stockholders’ equity 425,285   476,184  
Total liabilities and stockholders’ equity $ 938,667   $ 950,324  
 

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

         

Three Months Ended
March 31,

Nine Months Ended
March 31,
2019     2018 2019     2018
As Adjusted As Adjusted
Cash flows from operating activities:
Net income $ 61,587 $ 44,505 $ 158,869 $ 217,057
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 2,014 1,544 6,063 4,902
Net foreign currency (gains) losses (295 ) 96 23 1,086
Stock-based compensation 6,254 5,353 21,454 17,222
Deferred income taxes (2,373 ) (32,662 ) (49,847 ) (123,443 )
Provision for (recovery from) bad debts (353 ) 1,401 474 1,373
Other non-cash operating activities 124 107 341 314
Changes in assets and liabilities:
Accounts receivable 12,281 1,762 (4,183 ) 1,429
Contract assets 14,531 33,160 (27,397 ) (7,767 )
Contract costs (1,279 ) (592 ) (3,825 ) (651 )
Prepaid expenses, prepaid income taxes, and other assets (1,543 ) 3,949 201 4,908
Accounts payable, accrued expenses, income taxes payable and other liabilities (4,738 ) (2,656 ) 32,980 (4,448 )
Deferred revenue 3,829   17,100   17,983   15,847  
Net cash provided by operating activities 90,039   73,067   153,136   127,829  
Cash flows from investing activities:
Purchases of property, equipment and leasehold improvements (26 ) (61 ) (206 ) (217 )
Payments for business acquisitions, net of cash (22,900 ) (33,700 )
Payments for capitalized computer software costs (905 ) 57   (1,094 ) (299 )
Net cash used in investing activities (931 ) (22,904 ) (1,300 ) (34,216 )
Cash flows from financing activities:
Exercises of stock options 1,415 3,854 5,881 7,402
Repurchases of common stock (76,759 ) (49,328 ) (224,182 ) (154,365 )
Payments of tax withholding obligations related to restricted stock (2,262 ) (1,945 ) (11,916 ) (5,412 )
Deferred business acquisition payments (500 ) (1,700 ) (2,600 )
Proceeds from credit agreement 19,000 50,000 30,000
Payments of credit agreement issuance costs       (351 )
Net cash used in financing activities (78,106 ) (28,419 ) (181,917 ) (125,326 )
Effect of exchange rate changes on cash and cash equivalents 162   628   (492 ) 834  
Increase (decrease) in cash and cash equivalents 11,164 22,372 (30,573 ) (30,879 )
Cash and cash equivalents, beginning of period 54,428   48,703   96,165   101,954  
Cash and cash equivalents, end of period $ 65,592   $ 71,075   $ 65,592   $ 71,075  
 
Supplemental disclosure of cash flow information:
Income taxes paid, net $

21,296

$ 8,920 $

39,123

$ 38,662
Interest paid 2,187 1,417 5,728 3,456
         

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
March 31,
Nine Months Ended
March 31,
2019     2018 2019     2018
As Adjusted As Adjusted

Total expenses

GAAP total expenses (a) $ 77,153 $ 74,139 $ 230,997 $ 220,338
Less:
Stock-based compensation (b) (6,254 ) (5,353 ) (21,454 ) (17,222 )
Amortization of intangibles (1,157 ) (526 ) (3,380 ) (1,578 )
Litigation judgment (1,548 )
Acquisition related fees (15 ) (378 ) (8 ) (706 )
                           
Non-GAAP total expenses       $ 69,727       $ 67,882       $ 206,155       $ 199,284  
 

Income from operations

GAAP income from operations $ 70,831 $ 53,619 $ 171,579 $ 139,437
Plus:
Stock-based compensation (b) 6,254 5,353 21,454 17,222
Amortization of intangibles 1,157 526 3,380 1,578
Litigation judgment 1,548
Acquisition related fees 15 378 8 706
                           
Non-GAAP income from operations       $ 78,257       $ 59,876       $ 196,421       $ 160,491  
 

Net income

GAAP net income $ 61,587 $ 44,505 $ 158,869 $ 217,057
Plus:
Stock-based compensation (b) 6,254 5,353 21,454 17,222
Amortization of intangibles 1,157 526 3,380 1,578
Litigation judgment 1,548
Acquisition related fees 15 378 8 706
Less:
Income tax effect on Non-GAAP items (c) (1,559 ) (1,758 ) (5,217 ) (5,916 )
                           
Non-GAAP net income       $ 67,454       $ 49,004       $ 178,494       $ 232,195  
 

Diluted income per share

GAAP diluted income per share $ 0.88 $ 0.61 $ 2.23 $ 2.97
Plus:
Stock-based compensation (b) 0.08 0.06 0.30 0.23
Amortization of intangibles 0.02 0.01 0.05 0.02
Litigation judgment 0.02
Acquisition related fees 0.01 0.01
Less:
Income tax effect on Non-GAAP items (c) (0.02 ) (0.02 ) (0.07 ) (0.08 )
                           
Non-GAAP diluted income per share       $ 0.96       $ 0.67       $ 2.51       $ 3.17  
 
Shares used in computing Non-GAAP diluted income per share 70,160 72,663 71,142 73,136
 
 
Three Months Ended
March 31,
Nine Months Ended
March 31,
2019 2018 2019 2018
As Adjusted As Adjusted

Free Cash Flow

GAAP cash flow from operating activities $ 90,039 $ 73,067 $ 153,136 $ 127,829
 
Purchase of property, equipment and leasehold improvements (26 ) (61 ) (206 ) (217 )
Capitalized computer software development costs (905 ) 57 (1,094 ) (299 )
Non-capitalized acquired technology (d) 75
Acquisition related fee payments 16 780 27 868
Litigation related payments             4,286             4,286  
Free Cash Flow       $ 89,124       $ 78,129       $ 151,863       $ 132,542  
 
(a) GAAP total expenses
Three Months Ended
March 31,
Nine Months Ended
March 31,
2019 2018 2019 2018
As Adjusted As Adjusted
Total costs of revenue $ 14,360 $ 12,776 $ 42,326 $ 37,597
Total operating expenses 62,793   61,363   188,671   182,741  
GAAP total expenses $ 77,153   $ 74,139   $ 230,997   $ 220,338  
 
(b) Stock-based compensation expense was as follows:
Three Months Ended
March 31,
Nine Months Ended
March 31,
2019 2018 2019 2018
Cost of maintenance $ 379 $ $ 916 $
Cost of services and other 366 345 1,038 1,119
Selling and marketing 1,228 979 3,687 2,870
Research and development 1,518 1,892 5,451 5,679
General and administrative 2,763   2,137   10,362   7,554  
Total stock-based compensation $ 6,254   $ 5,353   $ 21,454   $ 17,222  

(c) The income tax effect on non-GAAP items for the three and nine months ended March 31, 2019 is calculated utilizing the Company's statutory tax rate of 21 percent. The income tax effect on non-GAAP items for the three and nine months ended March 31, 2018 is calculated utilizing the Company's estimated federal and state tax rate.

 
(d) In the nine months ended March 31, 2018, the Company has excluded $0.1 million of final payments related to non-capitalized acquired technology from prior fiscal periods from free cash flow to be consistent with the treatment of other transactions where the acquired assets were capitalized.

Media Contact
David Grip
AspenTech
+1 781-221-5273
david.grip@aspentech.com

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

Source: Aspen Technology, Inc.