AZPN
$108.42
Aspen Technology
$.13
.12%
Earnings Details
2nd Quarter December 2018
Wednesday, January 23, 2019 4:05:00 PM
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Summary

Aspen Technology Beats

Aspen Technology (AZPN) reported 2nd Quarter December 2018 earnings of $0.83 per share on revenue of $140.4 million. The consensus earnings estimate was $0.58 per share on revenue of $120.4 million. The Earnings Whisper number was $0.62 per share. Revenue grew 12.4% on a year-over-year basis.

The company said during its conference call it expects fiscal 2019 non-GAAP earnings of $3.37 to $3.60 per share on revenue of $545.0 million to $567.0 million. The company's previous guidance was earnings of $3.06 to $3.34 per share on revenue of $540.0 million to $564.0 million and the current consensus earnings estimate is $3.34 per share on revenue of $556.4 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
$0.83
Earnings Whisper
$0.62
Consensus Estimate
$0.58
Reported Revenue
$140.4 Mil
Revenue Estimate
$120.4 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

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

BEDFORD, Mass.--(BUSINESS WIRE)-- Aspen Technology, Inc. (NASDAQ: AZPN), the asset optimization software company, today announced financial results for its second quarter of fiscal year 2019 ended December 31, 2018.

“AspenTech delivered strong second quarter results, highlighted by annual spend growth of 9.4% year-over-year. We saw positive trends across each product suite and geography,” said Antonio Pietri, President and Chief Executive Officer of AspenTech. “The breadth of our performance demonstrated the positive impact of multiple favorable growth drivers and strong execution.”

Pietri continued, “We had our strongest quarterly APM performance to date, reflecting our ability to convert our pipeline into customer wins. We also saw solid demand in our core industries and increasing demand in the global economy industries for our APM suite. The growing adoption of APM reinforces our confidence in the ability to capitalize on this substantial market opportunity. We believe the success of the APM suite, the continued strength of our MSC suite and positive momentum in our Engineering suite position us to achieve our strategic objectives.”

Second 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 $513 million at the end of the second quarter of fiscal 2019, which increased 9.4% compared to the second quarter of fiscal 2018 and 3.0% sequentially.
  • AspenTech repurchased approximately 1.2 million shares of its common stock for $100.0 million in the second quarter of fiscal 2019.

Summary of Second Quarter Fiscal Year 2019 Financial Results

AspenTech’s total revenue of $140.4 million included:

  • License revenue, which represents the portion of a term license agreement allocated to the initial license, was $93.4 million in the second quarter of fiscal 2019, compared to $57.0 million in the second 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 $41.0 million in the second quarter of fiscal 2019, compared to $40.7 million in the second quarter of fiscal 2018.
  • Services and other revenue: was $6.0 million in the second quarter of fiscal 2019, compared to $7.8 million in the second quarter of fiscal 2018.

For the quarter ended December 31, 2018, AspenTech reported income from operations of $63.8 million, compared to income from operations of $30.1 million for the quarter ended December 31, 2017.

Net income was $59.2 million for the quarter ended December 31, 2018, leading to net income per share of $0.83, compared to net income per share of $1.81 in the same period last fiscal year. 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, which adds back the impact of stock-based compensation expense, amortization of intangibles associated with acquisitions and acquisition related fees, was $71.2 million for the second quarter of fiscal 2019, compared to non-GAAP income from operations of $37.8 million in the same period last fiscal year. Non-GAAP net income was $65.1 million, or $0.92 per share, for the second quarter of fiscal 2019, compared to non-GAAP net income of $137.0 million, or $1.88 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 $54.4 million and borrowings of $220.0 million at December 31, 2018.

During the second quarter, the company generated $57.5 million in cash flow from operations and $57.3 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 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 AspenTech’s business. As the result of adoption of new licensing models, management believes that a number of AspenTech’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 AspenTech’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 AspenTech’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

AspenTech will host a conference call and webcast today, January 23, 2019, at 4:30 p.m. (Eastern Time), to discuss the company's financial results for the second 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 5661887. Interested parties may also listen to a live webcast of the call by logging on to the Investor Relations section of AspenTech’s website, http://ir.aspentech.com/events-and-presentations, and clicking on the “webcast” link. A replay of the call will be archived on AspenTech’s website and will also be available via telephone at (855) 859-2056 or (404) 537-3406, conference ID code 5661887, through February 23, 2019.

About AspenTech

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 faster, safer, longer and greener. 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 AspenTech’s 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, 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
December 31,

Six Months Ended
December 31,

2018     2017 2018     2017
As Adjusted As Adjusted
Revenue:
License $ 93,368 $ 56,975 $ 157,123 $ 135,865
Maintenance 41,038 40,729 84,077 80,993
Services and other 6,017   7,826   13,392   15,159  
Total revenue 140,423   105,530   254,592   232,017  
Cost of revenue:
License 1,819 1,233 3,484 2,464
Maintenance 5,286 4,250 9,279 8,802
Services and other 7,634   6,606   15,203   13,555  
Total cost of revenue 14,739   12,089   27,966   24,821  
Gross profit 125,684   93,441   226,626   207,196  
Operating expenses:
Selling and marketing 26,310 23,928 53,122 47,444
Research and development 20,317 19,790 41,373 39,279
General and administrative 15,299   19,618   31,383   34,655  
Total operating expenses 61,926   63,336   125,878   121,378  
Income from operations 63,758 30,105 100,748 85,818
Interest income 7,485 6,239 14,554 12,545
Interest (expense) (2,164 ) (1,261 ) (3,978 ) (2,467 )
Other (expense), net (578 ) (238 ) (451 ) (854 )
Income before income taxes 68,501 34,845 110,873 95,042
Provision for (benefit from) income taxes 9,284   (97,187 ) 13,591   (77,510 )
Net income $ 59,217   $ 132,032   $ 97,282   $ 172,552  
Net income per common share:
Basic $ 0.84 $ 1.83 $ 1.38 $ 2.37
Diluted $ 0.83 $ 1.81 $ 1.36 $ 2.35
Weighted average shares outstanding:
Basic 70,428 72,342 70,708 72,683
Diluted 71,148 73,036 71,600 73,333
 

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

       

December 31,
2018

June 30,
2018

As Adjusted
ASSETS
Current assets:
Cash and cash equivalents $ 54,428 $ 96,165
Accounts receivable, net 56,586 41,810
Current contract assets 321,135 304,378

Contract costs

23,046

20,500

Prepaid expenses and other current assets 10,330 10,509
Prepaid income taxes 921   2,601  
Total current assets

466,446

475,963

Property, equipment and leasehold improvements, net 8,311 9,806
Computer software development costs, net 691 646
Goodwill 74,802 75,590
Intangible assets, net 32,889 35,310
Non-current contract assets 366,581 340,622
Non-current deferred tax assets 1,651 11,090
Other non-current assets 1,075   1,297  
Total assets $ 952,446   $ 950,324  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 5,249 $ 4,230
Accrued expenses and other current liabilities 36,688 39,515
Income taxes payable 43,573 1,698
Borrowings under credit agreement 220,000 170,000
Current deferred revenue 23,145   15,150  
Total current liabilities 328,655 230,593
Non-current deferred revenue 18,167 12,354
Deferred income taxes 157,238 214,125
Other non-current liabilities 16,192 17,068
Commitments and contingencies (Note 16)
Series D redeemable convertible preferred stock, $0.10 par value—
Authorized— 3,636 shares as of December 31, 2018 and June 30, 2018
Issued and outstanding— none as of December 31, 2018 and June 30, 2018
Stockholders’ equity:
Common stock, $0.10 par value— Authorized—210,000,000 shares
Issued— 103,395,683 shares at December 31, 2018 and 103,130,300 shares at June 30, 2018
Outstanding— 69,803,177 shares at December 31, 2018 and 71,186,701 shares at June 30, 2018
10,340 10,313
Additional paid-in capital 725,493 715,475
Retained earnings 1,162,790 1,065,507
Accumulated other comprehensive income 70 1,388
Treasury stock, at cost—33,592,506 shares of common stock at December 31, 2018 and 31,943,599 shares at June 30, 2018 (1,466,499 ) (1,316,499 )
Total stockholders’ equity 432,194   476,184  
Total liabilities and stockholders’ equity $ 952,446   $ 950,324  
 

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

       
Three Months Ended
December 31,
Six Months Ended
December 31,
2018     2017 2018     2017
As Adjusted As Adjusted
Cash flows from operating activities:
Net income $ 59,217 $ 132,032 $ 97,282 $ 172,552
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 2,049 1,605 4,049 3,358
Net foreign currency losses 518 54 318 990
Stock-based compensation 6,335 5,455 15,200 11,869
Deferred income taxes (2,804 ) (90,748 ) (47,474 ) (90,781 )
Provision for (recovery from) bad debts 658 (48 ) 827 (28 )
Other non-cash operating activities 110 207 217 207
Changes in assets and liabilities:
Accounts receivable (3,935 ) 8,760 (16,464 ) (333 )
Contract assets (11,014 ) (5,136 ) (41,928 ) (40,927 )
Contract costs (1,750 ) 126 (2,546 ) (59 )
Prepaid expenses, prepaid income taxes, and other assets 2,599 (1,333 ) 1,744 959
Accounts payable, accrued expenses, income taxes payable and other liabilities 2,793 (8,557 ) 37,718 (1,792 )
Deferred revenue 2,751   (15 ) 14,154   (1,253 )
Net cash provided by operating activities 57,527   42,402   63,097   54,762  
Cash flows from investing activities:
Purchases of property, equipment and leasehold improvements (84 ) (33 ) (180 ) (156 )
Payments for business acquisitions (10,800 ) (10,800 )
Payments for capitalized computer software costs (99 ) (291 ) (189 ) (356 )
Net cash used in investing activities (183 ) (11,124 ) (369 ) (11,312 )
Cash flows from financing activities:
Exercises of stock options 412 1,137 4,466 3,548
Repurchases of common stock (97,446 ) (49,928 ) (147,423 ) (105,037 )
Payments of tax withholding obligations related to restricted stock (6,475 ) (1,817 ) (9,654 ) (3,467 )
Deferred business acquisition payments (1,200 ) (2,000 ) (1,200 ) (2,600 )
Proceeds from credit agreement 50,000 11,000 50,000 11,000
Payments of credit agreement issuance costs       (351 )
Net cash used in financing activities (54,709 ) (41,608 ) (103,811 ) (96,907 )
Effect of exchange rate changes on cash and cash equivalents (255 ) 50   (654 ) 206  
Increase (decrease) in cash and cash equivalents 2,380 (10,280 ) (41,737 ) (53,251 )
Cash and cash equivalents, beginning of period 52,048   58,983   96,165   101,954  
Cash and cash equivalents, end of period $ 54,428   $ 48,703   $ 54,428   $ 48,703  
 
Supplemental disclosure of cash flow information:
Income taxes paid, net $ 15,072 $ 28,499 $ 17,827 $ 29,742
Interest paid 2,003 1,071 3,541 2,039
 

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
December 31,
Six Months Ended
December 31,
2018 2017 2018 2017
As Adjusted As Adjusted

Total expenses

GAAP total expenses (a) $ 76,665 $ 75,425 $ 153,844 $ 146,199
Less:
Stock-based compensation (b) (6,335 ) (5,455 ) (15,200 ) (11,869 )
Amortization of intangibles (1,156 ) (526 ) (2,223 ) (1,052 )
Litigation judgment (1,548 ) (1,548 )
Acquisition related fees (198 ) 7 (328 )
                         
Non-GAAP total expenses     $ 69,174       $ 67,698       $ 136,428       $ 131,402  
 

Income from operations

GAAP income from operations $ 63,758 $ 30,105 $ 100,748 $ 85,818
Plus:
Stock-based compensation (b) 6,335 5,455 15,200 11,869
Amortization of intangibles 1,156 526 2,223 1,052
Litigation judgment 1,548 1,548
Acquisition related fees 198 (7 ) 328
                         
Non-GAAP income from operations     $ 71,249       $ 37,832       $ 118,164       $ 100,615  
 

Net income

GAAP net income $ 59,217 $ 132,032 $ 97,282 $ 172,552
Plus:
Stock-based compensation (b) 6,335 5,455 15,200 11,869
Amortization of intangibles 1,156 526 2,223 1,052
Litigation judgment 1,548 1,548
Acquisition related fees 198 (7 ) 328
Less:
Income tax effect on Non-GAAP items (c) (1,573 ) (2,782 ) (3,657 ) (5,327 )
                         
Non-GAAP net income     $ 65,135       $ 136,977       $ 111,041       $ 182,022  
 

Diluted income per share

GAAP diluted income per share $ 0.83 $ 1.81 $ 1.36 $ 2.35
Plus:
Stock-based compensation (b) 0.09 0.07 0.21 0.16
Amortization of intangibles 0.02 0.01 0.03 0.01
Litigation judgment 0.02 0.02
Acquisition related fees 0.01 0.01
Less:
Income tax effect on Non-GAAP items (c) (0.02 ) (0.04 ) (0.05 ) (0.07 )
                         
Non-GAAP diluted income per share     $ 0.92       $ 1.88       $ 1.55       $ 2.48  
 
Shares used in computing Non-GAAP diluted income per share 71,148 73,036 71,600 73,333
 
 
 
Three Months Ended
December 31,
Six Months Ended
December 31,
2018 2017 2018 2017
As Adjusted As Adjusted

Free Cash Flow

GAAP cash flow from operating activities $ 57,527 $ 42,402 $ 63,097 $ 54,762
 
Purchase of property, equipment and leasehold improvements (84 ) (33 ) (180 ) (156 )
Capitalized computer software development costs (99 ) (291 ) (189 ) (356 )
Non-capitalized acquired technology (d) 75
Acquisition related fee payments           88       12       88  
Free Cash Flow     $ 57,344       $ 42,166       $ 62,740       $ 54,413  
 
(a) GAAP total expenses
Three Months Ended
December 31,
Six Months Ended
December 31,
2018 2017 2018 2017
As Adjusted As Adjusted
Total costs of revenue $ 14,739 $ 12,089 $ 27,966 $ 24,821
Total operating expenses 61,926   63,336   125,878   121,378  
GAAP total expenses $ 76,665   $ 75,425   $ 153,844   $ 146,199  
 
(b) Stock-based compensation expense was as follows:
Three Months Ended
December 31,
Six Months Ended
December 31,
2018 2017 2018 2017
Cost of maintenance $ 391 $ $ 537 $
Cost of services and other 288 324 606 774
Selling and marketing 1,194 1,006 2,526 1,891
Research and development 1,637 1,891 3,932 3,788
General and administrative 2,825   2,234   7,599   5,416  
Total stock-based compensation $ 6,335   $ 5,455   $ 15,200   $ 11,869  

 

 

 

(c) The income tax effect on non-GAAP items for the three and six months ended December 31, 2018 is calculated utilizing the Company's statutory tax rate, of 21 percent. The income tax effect on non-GAAP items for the three and six months ended December 31, 2017 is calculated utilizing the Company's estimated federal and state tax rate.

(d) In the six months ended December 31, 2017, 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.