AZPN
$116.61
Aspen Technology
($3.02)
(2.52%)
Earnings Details
Quarter June 2019
Wednesday, August 07, 2019 4:12:00 PM
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Summary

Aspen Technology Beats

Aspen Technology (AZPN) reported Quarter June 2019 earnings of $1.59 per share on revenue of $195.8 million. The consensus earnings estimate was $1.09 per share on revenue of $161.6 million. The Earnings Whisper number was $1.12 per share. Revenue grew 55.4% on a year-over-year basis.

The company said it expects fiscal 2020 earnings of $3.44 to $3.85 per share on revenue of $575.0 million to $615.0 million. The current consensus earnings estimate is $3.44 per share on revenue of $557.5 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
$1.59
Earnings Whisper
$1.12
Consensus Estimate
$1.09
Reported Revenue
$195.8 Mil
Revenue Estimate
$161.6 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Aspen Technology Announces Financial Results for the Fourth Quarter and Fiscal Year 2019

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

“AspenTech’s fourth quarter performance was a strong finish to a great year, highlighted by a return to double-digit annual spend growth. Our results reflect positive contributions across all areas of the business, including meaningful improvement in Engineering, continued strength in MSC and substantial growth from APM,” said Antonio Pietri, President and Chief Executive Officer of AspenTech.

Pietri continued, “We enter fiscal year 2020 performing at a high level and are benefitting from a positive demand environment driven by a secular technology investment cycle in the process and other capital intensive industries. We believe AspenTech is well positioned to benefit from this trend and intend to make investments in the business this year to ensure we maximize this opportunity. We are confident this will generate additional value for our customers and shareholders over time.”

Fourth Quarter and Fiscal Year 2019 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 $541 million at the end of the fourth quarter of fiscal 2019, which increased 10.6% compared to the fourth quarter of fiscal 2018 and 2.8% sequentially.
  • GAAP operating margin was 56.8% compared to 50.2% in the fourth quarter of fiscal 2018. Non-GAAP operating margin was 61.3% compared to 54.1% in the fourth quarter of fiscal 2018.
  • AspenTech repurchased approximately 648,000 shares of its common stock for $75 million in the fourth quarter of fiscal 2019.
  • AspenTech repurchased approximately 3.1 million shares of its common stock for $300 million in fiscal year 2019.

Summary of Fourth Quarter Fiscal Year 2019 Financial Results

AspenTech’s total revenue of $195.8 million included:

  • License revenue, which represents the portion of a term license agreement allocated to the initial license, was $148.5 million in the fourth quarter of fiscal 2019, compared to $111.6 million in the fourth 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 $39.5 million in the fourth quarter of fiscal 2019, compared to $39.2 million in the fourth quarter of fiscal 2018.
  • Services and other revenue was $7.8 million in the fourth quarter of fiscal 2019, compared to $8.3 million in the fourth quarter of fiscal 2018.

For the quarter ended June 30, 2019, AspenTech reported income from operations of $111.2 million, compared to income from operations of $79.8 million for the quarter ended June 30, 2018.

Net income was $103.9 million for the quarter ended June 30, 2019, leading to net income per share of $1.49, compared to net income per share of $1.06 in the same period last fiscal year.

Non-GAAP income from operations was $119.9 million for the fourth quarter of fiscal 2019, compared to non-GAAP income from operations of $86.1 million in the same period last fiscal year. Non-GAAP net income was $110.7 million, or $1.59 per share, for the fourth quarter of fiscal 2019, compared to non-GAAP net income of $81.2 million, or $1.12 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 $71.9 million and borrowings of $220 million at June 30, 2019.

During the fourth quarter, the company generated $85.2 million in cash flow from operations and $84.9 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.

Summary of Fiscal Year 2019 Financial Results

AspenTech’s total revenue of $598.3 million increased 15% from $518.9 million for fiscal year 2018.

  • License revenue was $404.1 million, an increase from $326.5 million for fiscal year 2018.
  • Maintenance revenue was $165.4 million, an increase from $161.1 million for fiscal year 2018.
  • Services and other revenue was $28.8 million, compared to $31.2 million for fiscal year 2018.

For the fiscal year ended June 30, 2019, AspenTech reported income from operations of $282.8 million, compared to income from operations of $219.2 million for fiscal year 2018.

Net income was $262.7 million for the fiscal year ended June 30, 2019, leading to net income per share of $3.71, compared to net income per share of $4.03 for fiscal year 2018. Net income in the year ago period benefited from one-time, non-cash items related to the implementation of Topic 606 and the implementation of the Tax Cuts and Jobs Act of 2017.

Non-GAAP income from operations was $316.3 million for fiscal year 2019, an improvement compared to non-GAAP income from operations of $246.6 million for fiscal year 2018. Non-GAAP net income was $289.2 million, or $4.09 per share, for fiscal year 2019, compared to non-GAAP net income of $313.4 million, or $4.30 per share, for fiscal year 2018.

For the fiscal year ended June 30, 2019, the company generated $238.3 million in cash flow from operations and $236.8 million in free cash flow.

Note regarding Balance Sheet and Cash flow: AspenTech is in the process of completing its final documentation under FASB Topic 606 (Revenue from Contracts with Customers) in connection with its Annual Report on Form 10-K, which it expects to file on time later this month. Selected balance sheet and statement of cash flow information is provided in the tables below.

Business Outlook

Based on information as of today, August 7, 2019, AspenTech is issuing the following financial 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 operating income of $206 to $241 million
  • Non-GAAP operating income of $272 to $307 million
  • GAAP net income per share of $2.70 to $3.11
  • Non-GAAP net income per share of $3.44 to $3.85

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, August 7th, 2019, at 4:30 p.m. (Eastern Time), to discuss the company's financial results for the fourth quarter and fiscal year 2019 as well as the company’s business outlook. The live dial-in number is (866) 471-3828 or (678) 509-7573, conference ID code 2744108. 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 2744108, through August 14, 2019.

About Aspen Technology

Aspen Technology (AspenTech) is a leading software supplier for optimizing asset performance. Its 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 modelling expertise with machine learning. The company's 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 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.

ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except per Share Data)
 
Three Months Ended
June 30,
Twelve Months Ended
June 30,

2019

 

2018

 

2019

 

2018

 

As Adjusted

As Adjusted

Revenue:
License

$ 148,506

 

$ 111,611

 

$ 404,122

 

$ 326,549

 

Maintenance

39,481

 

39,175

 

165,436

 

161,065

 

Services and other

7,782

 

8,298

 

28,787

 

31,245

 

Total revenue

195,769

 

159,084

 

598,345

 

518,859

 

Cost of revenue:
License

1,918

 

1,493

 

7,060

 

5,236

 

Maintenance

4,967

 

4,347

 

19,208

 

17,408

 

Services and other

8,605

 

7,207

 

31,548

 

28,000

 

Total cost of revenue

15,490

 

13,047

 

57,816

 

50,644

 

Gross profit

180,279

 

146,037

 

540,529

 

468,215

 

Operating expenses:
Selling and marketing

30,842

 

27,047

 

111,374

 

99,737

 

Research and development

21,229

 

21,213

 

83,122

 

82,076

 

General and administrative

16,985

 

17,993

 

63,231

 

67,181

 

Total operating expenses

69,056

 

66,253

 

257,727

 

248,994

 

Income from operations

111,223

 

79,784

 

282,802

 

219,221

 

Interest income

7,068

 

6,105

 

28,457

 

24,954

 

Interest (expense)

(2,405

)

(1,739

)

(8,733

)

(5,691

)

Other income (expense), net

1,149

 

120

 

664

 

(838

)

Income before income taxes

117,035

 

84,270

 

303,190

 

237,646

 

Provision for (benefit from) income taxes

13,170

 

7,624

 

40,456

 

(56,057

)

Net income

$ 103,865

 

$ 76,646

 

$ 262,734

 

$ 293,703

 

Net income per common share:
Basic

$ 1.51

 

$ 1.07

 

$ 3.76

 

$ 4.07

 

Diluted

$ 1.49

 

$ 1.06

 

$ 3.71

 

$ 4.03

 

Weighted average shares outstanding:
Basic

68,839

 

71,349

 

69,925

 

72,140

 

Diluted

69,638

 

72,315

 

70,787

 

72,956

 

ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
 
June 30,

 

2019

 

2018

Cash and cash equivalents

$

71,926

$

96,165

Borrowings under credit agreement

 

220,000

 

170,000

ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Results of Operations and Cash Flows
(Dollars in Thousands, Except per Share Data)
 
Three Months Ended
June 30,
Twelve Months Ended
June 30,

2019

2018

2019

2018

As AdjustedAs Adjusted
Total expenses
GAAP total expenses (a)

$

84,546

 

$

79,300

 

$

315,543

 

$

299,638

 

Less:
Stock-based compensation (b)

 

(6,119

)

 

(5,466

)

 

(27,573

)

 

(22,688

)

Amortization of intangibles

 

(1,153

)

 

(653

)

 

(4,533

)

 

(2,231

)

Litigation judgment

 

(141

)

 

(1,689

)

Acquisition related fees

 

(1,430

)

 

(15

)

 

(1,438

)

 

(721

)

 
Non-GAAP total expenses

$

75,844

 

$

73,025

 

$

281,999

 

$

272,309

 

 
Income from operations
GAAP income from operations

$

111,223

 

$

79,784

 

$

282,802

 

$

219,221

 

Plus:
Stock-based compensation (b)

 

6,119

 

 

5,466

 

 

27,573

 

 

22,688

 

Amortization of intangibles

 

1,153

 

 

653

 

 

4,533

 

 

2,231

 

Litigation judgment

 

141

 

 

1,689

 

Acquisition related fees

 

1,430

 

 

15

 

 

1,438

 

 

721

 

 
Non-GAAP income from operations

$

119,925

 

$

86,059

 

$

316,346

 

$

246,550

 

 
Net income
GAAP net income

$

103,865

 

$

76,646

 

$

262,734

 

$

293,703

 

Plus:
Stock-based compensation (b)

 

6,119

 

 

5,466

 

 

27,573

 

 

22,688

 

Amortization of intangibles

 

1,153

 

 

653

 

 

4,533

 

 

2,231

 

Litigation judgment

 

141

 

 

1,689

 

Acquisition related fees

 

1,430

 

 

15

 

 

1,438

 

 

721

 

Less:
Income tax effect on Non-GAAP items (c)

 

(1,827

)

 

(1,763

)

 

(7,044

)

 

(7,679

)

 
Non-GAAP net income

$

110,740

 

$

81,158

 

$

289,234

 

$

313,353

 

 
Diluted income per share
GAAP diluted income per share

$

1.49

 

$

1.06

 

$

3.71

 

$

4.03

 

Plus:
Stock-based compensation (b)

 

0.09

 

 

0.07

 

 

0.40

 

 

0.32

 

Amortization of intangibles

 

0.02

 

 

0.01

 

 

0.06

 

 

0.03

 

Litigation judgment

 

0.00

 

 

0.02

 

Acquisition related fees

 

0.02

 

 

0.00

 

 

0.02

 

 

0.01

 

Less:
Income tax effect on Non-GAAP items (c)

 

(0.03

)

 

(0.02

)

 

(0.10

)

 

(0.11

)

 
Non-GAAP diluted income per share

$

1.59

 

$

1.12

 

$

4.09

 

$

4.30

 

 
Shares used in computing Non-GAAP diluted income per share

 

69,638

 

 

72,315

 

 

70,787

 

 

72,956

 

 
 
Three Months Ended
June 30,
Twelve Months Ended
June 30,

2019

2018

2019

2018

Free Cash Flow
GAAP cash flow from operating activities

$

85,177

 

$

79,107

 

$

238,313

 

$

206,936

 

 
Purchase of property, equipment and leasehold improvements

 

(230

)

 

(114

)

 

(436

)

 

(331

)

Capitalized computer software development costs

 

(37

)

 

(30

)

 

(1,131

)

 

(329

)

Non-capitalized acquired technology (d)

 

75

 

Acquisition related fee payments

 

280

 

 

27

 

 

1,148

 

Litigation related payments

 

260

 

 

4,546

 

Free Cash Flow

$

84,910

 

$

79,503

 

$

236,773

 

$

212,045

 

 
(a) GAAP total expenses
Three Months Ended
June 30,
Twelve Months Ended
June 30,

2019

2018

2019

2018

As AdjustedAs Adjusted
Total costs of revenue

$

15,490

 

$

13,047

 

$

57,816

 

$

50,644

 

Total operating expenses

 

69,056

 

 

66,253

 

 

257,727

 

 

248,994

 

GAAP total expenses

$

84,546

 

$

79,300

 

$

315,543

 

$

299,638

 

 
(b) Stock-based compensation expense was as follows:
Three Months Ended
June 30,
Twelve Months Ended
June 30,

2019

2018

2019

2018

As AdjustedAs Adjusted
Cost of maintenance

$

366

 

$

111

 

$

1,282

 

$

559

 

Cost of services and other

 

382

 

 

249

 

 

1,420

 

 

920

 

Selling and marketing

 

1,162

 

 

992

 

 

4,849

 

 

3,862

 

Research and development

 

1,472

 

 

1,938

 

 

6,923

 

 

7,617

 

General and administrative

 

2,737

 

 

2,176

 

 

13,099

 

 

9,730

 

Total stock-based compensation

$

6,119

 

$

5,466

 

$

27,573

 

$

22,688

 

 
(c) The income tax effect on non-GAAP items for the three and twelve months ended June 30, 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 twelve months ended June 30, 2018 is calculated utilizing the Company's estimated federal and state tax rate.
(d) In the twelve months ended June 30, 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.