Aspen Technology, Inc. (NASDAQ: AZPN), a leading provider of
software and services to the process industries, today announced
financial results for its first quarter of fiscal year 2017, ended
September 30, 2016.
Antonio Pietri, President and Chief Executive Officer of
AspenTech, said, “AspenTech delivered solid first quarter fiscal
2017 financial results that exceeded expectations from both a
revenue and profitability perspective. We also made significant
progress against our Asset Optimization strategy, completing two
technology acquisitions during the quarter and today announcing the
acquisition of Mtell. We believe these acquisitions will greatly
enhance the capabilities of our analytics and maintenance solutions
and further strengthen the value of the aspenONE offering for our
customers.”
Pietri continued, “We also repurchased $130 million of stock
during the first quarter as part of our share repurchase program.
Our disciplined execution enables us to continue investing in
product innovation while also maintaining our share repurchase
program, generating significant value for customers and
shareholders.”
First Quarter Fiscal 2017 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 $446 million
at the end of the first quarter of fiscal 2017, which increased
5.4% compared to the first quarter of fiscal 2016 and 1.1%
sequentially.
- GAAP operating margin was 45.6%,
compared to 46.1% in the first quarter of fiscal 2016. Non-GAAP
operating margin was 50.4%, compared to 50.1% in the first quarter
of fiscal 2016.
- AspenTech repurchased 2.9 million
shares of its common stock for $130.0 million in the first quarter
of fiscal 2017.
Summary of First Quarter Fiscal Year 2017 Financial
Results
AspenTech’s total revenue of $120.1 million included:
- Subscription and software
revenue was $113.4 million in the first quarter of fiscal 2017,
an increase from $111.9 million in the first quarter of fiscal
2016.
- Services and other revenue was
$6.6 million in the first quarter of fiscal 2017, compared to $8.4
million in the first quarter of fiscal 2016.
For the quarter ended September 30, 2016, AspenTech reported
income from operations of $54.7 million, compared to income from
operations of $55.4 million for the quarter ended September 30,
2015.
Net income was $35.0 million for the quarter ended September 30,
2016, leading to net income per share of $0.44, consistent with net
income per share of $0.44 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, acquisition-related expenses and
non-capitalized acquired technology was $60.5 million for the first
quarter of fiscal 2017, compared to non-GAAP income from operations
of $60.2 million in the same period last fiscal year. Non-GAAP net
income was $38.7 million, or $0.49 per share, for the first quarter
of fiscal 2017, compared to non-GAAP net income of $39.8 million,
or $0.47 per share, in the same period last fiscal year. A
reconciliation of GAAP to non-GAAP results is included in the
financial tables included in this press release.
AspenTech had cash and marketable securities of $191.6 million
and borrowings of $140 million at September 30, 2016.
During the first quarter, the company generated $26.3 million in
cash flow from operations and $26.7 million in free cash flow.
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, October
27, 2016, at 4:30 p.m. (Eastern Time), to discuss the company's
financial results for the first quarter fiscal year 2017 as well as
the company’s business outlook.
The live dial-in number is (866) 604-6127 or (443) 961-0460,
conference ID code 99548515. 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://www.aspentech.com/corporate/investor.cfm, 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 99548515,
through November 27, 2016.
About AspenTech
AspenTech is a leading supplier of software that optimizes
process manufacturing – for energy, chemicals, engineering and
construction, and other industries that manufacture and produce
products from a chemical process. With integrated aspenONE
solutions, process manufacturers can implement best practices for
optimizing their engineering, manufacturing and supply chain
operations. As a result, AspenTech customers are better able to
increase capacity, improve margins, reduce costs and become more
energy efficient. To see how the world’s leading process
manufacturers rely on AspenTech to achieve their operational
excellence goals, visit www.aspentech.com.
Forward-Looking Statements
The second and third paragraphs of this press release 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 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, and failure to continue to provide
innovative, market-leading solutions; demand for, or usage of,
aspenONE software declines for any reason, including declines due
to adverse changes in the process industries; unfavorable economic
and market conditions or a lessening demand in the market for
process optimization software; 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.
© 2016 Aspen Technology, Inc. AspenTech, aspenONE and the Aspen
leaf logo are registered 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 (Unaudited in
thousands, except per share data)
Three Months Ended
September 30, 2016 2015 Revenue:
Subscription and software $ 113,444 $ 111,859 Services and other
6,606 8,437 Total revenue
120,050 120,296
Cost of revenue:
Subscription and software 5,069 5,242 Services and other
6,437 7,730 Total cost of revenue
11,506 12,972 Gross profit 108,544
107,324
Operating expenses: Selling and
marketing 22,025 22,436 Research and development 18,632 16,597
General and administrative 13,157 12,862
Total operating expenses 53,814 51,895
Income from operations 54,730 55,429 Interest income 272 82
Interest expense (869 ) (1 ) Other income, net 646
896 Income before provision for income taxes 54,779
56,406 Provision for income taxes 19,779
19,635 Net income $ 35,000 $ 36,771
Net
income per common share: Basic $ 0.44 $ 0.44 Diluted $ 0.44 $
0.44
Weighted average shares outstanding: Basic 79,048
83,876 Diluted 79,385 84,320
ASPEN
TECHNOLOGY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE
SHEETS (Unaudited in thousands, except share data)
September 30, June 30, 2016 2016
ASSETS Current assets: Cash and cash equivalents $ 48,377 $
318,336 Short-term marketable securities 143,174 3,006 Accounts
receivable, net 21,847 20,476 Prepaid expenses and other current
assets 12,154 13,948 Prepaid income taxes 112
5,557 Total current assets 225,664 361,323 Property,
equipment and leasehold improvements, net 15,766 15,825 Computer
software development costs, net 680 720 Goodwill 25,278 23,438
Intangible assets, net 9,067 5,000 Non-current deferred tax assets
12,264 12,236 Other non-current assets 1,225
1,196 Total assets $ 289,944 $ 419,738
LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities:
Accounts payable $ 3,754 $ 3,559 Accrued expenses and other current
liabilities 29,968 36,105 Income taxes payable 11,838 439
Borrowings under credit agreement 140,000 140,000 Current deferred
revenue 226,105 252,520 Total current
liabilities 411,665 432,623 Non-current deferred revenue 28,097
29,558 Other non-current liabilities 33,767 32,591 Commitments and
contingencies Series D redeemable convertible preferred stock,
$0.10 par value—
Authorized— 3,636 shares as of September
30, 2016 and June 30, 2016
Issued and outstanding— none as of
September 30, 2016 and June 30, 2016
— — Stockholders’ deficit: Common stock, $0.10 par value—
Authorized—210,000,000 shares
Issued— 102,218,791 shares at September
30, 2016 and 102,031,960 shares at June 30, 2016
Outstanding— 77,468,068 shares at
September 30, 2016 and 80,177,950 shares at June 30, 2016
10,222 10,203 Additional paid-in capital 646,647 659,287 Retained
earnings (deficit) 29,324 (5,676 ) Accumulated other comprehensive
income 1,721 2,651
Treasury stock, at cost—24,750,723 shares
of common stock at September 30, 2016 and21,854,010 shares at June
30, 2016
(871,499 ) (741,499 ) Total stockholders’ deficit
(183,585 ) (75,034 ) Total liabilities and
stockholders' deficit $ 289,944 $ 419,738
ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited in
thousands)
Three Months Ended September 30,
2016 2015 Cash flows from operating
activities: Net income $ 35,000 $ 36,771 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation and amortization 1,791 1,547 Net foreign currency
gains (745 ) (1,189 ) Stock-based compensation 4,958 4,423 Deferred
income taxes (46 ) — Provision for (recovery from) bad debts (7 )
26 Tax benefits from stock-based compensation 584 1,577 Excess tax
benefits from stock-based compensation (584 ) (1,577 ) Other
non-cash operating activities 90 159
Changes in assets and
liabilities: Accounts receivable (1,355 ) 8,769 Prepaid
expenses, prepaid income taxes, and other assets 1,885 812 Accounts
payable, accrued expenses, income taxes payable and other
liabilities 12,520 2,348 Deferred revenue (27,841 )
(35,220 ) Net cash provided by operating activities 26,250
18,446
Cash flows from investing
activities: Purchases of marketable securities (193,748 ) —
Maturities of marketable securities 53,184 10,370 Purchases of
property, equipment and leasehold improvements (898 ) (1,119 )
Payments for business acquisitions (5,400 ) — Payments for
capitalized computer software costs (51 ) —
Net cash (used in) provided by investing activities (146,913
) 9,251
Cash flows from financing activities:
Exercises of stock options 3,089 611 Repurchases of common stock
(151,621 ) (55,033 ) Payments of tax withholding obligations
related to restricted stock (1,297 ) (1,125 ) Excess tax benefits
from stock-based compensation 584 1,577
Net cash used in financing activities (149,245 ) (53,970 ) Effect
of exchange rate changes on cash and cash equivalents (51 )
(237 ) Decrease in cash and cash equivalents (269,959 )
(26,510 ) Cash and cash equivalents, beginning of period
318,336 156,249
Cash and cash equivalents,
end of period $ 48,377 $ 129,739
Supplemental disclosure of cash flow information: Income taxes
paid, net $ 1,239 $ 2,895 Interest paid 850 1
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,
2016 2015
Total
expenses
GAAP total expenses (a) $ 65,320 $ 64,867 Less: Stock-based
compensation (b) (4,958 ) (4,423 ) Non-capitalized acquired
technology (e) (350 ) (250 ) Amortization of purchased technology
intangibles (55 ) (113 ) Acquisition related fees (f) (362 ) —
Non-GAAP total expenses $
59,595 $ 60,081
Income from
operations
GAAP income from operations $ 54,730 $ 55,429 Plus: Stock-based
compensation (b) 4,958 4,423 Non-capitalized acquired technology
(e) 350 250 Amortization of purchased technology intangibles 55 113
Acquisition related fees (f) 362 —
Non-GAAP income from operations $ 60,455
$ 60,215
Net
income
GAAP net income $ 35,000 $ 36,771 Plus: Stock-based compensation
(b) 4,958 4,423 Non-capitalized acquired technology (e) 350 250
Amortization of purchased technology intangibles 55 113 Acquisition
related fees (f) 362 — Less: Income tax effect on Non-GAAP items
(c) (2,061 ) (1,723 ) Non-GAAP
net income $ 38,664 $ 39,834
Diluted income
per share
GAAP diluted income per share $ 0.44 $ 0.44 Plus: Stock-based
compensation (b) 0.06 0.05 Non-capitalized acquired technology (e)
0.01 0.00 Amortization of purchased technology intangibles 0.00
0.00 Acquisition related fees (f) 0.01 — Less: Income tax effect on
Non-GAAP items (c) (0.03 ) (0.02 )
Non-GAAP diluted income per share $ 0.49
$ 0.47 Shares used in computing Non-GAAP
diluted income per share 79,385 84,320
Three
Months Ended
September 30,
2016 2015
Free Cash
Flow
GAAP cash flow from operating activities $ 26,250 $ 18,446
Purchase of property, equipment and leasehold improvements (898 )
(1,119 ) Capitalized computer software development costs (51 ) —
Non-capitalized acquired technology (e) 846 1,250 Excess tax
benefits from stock-based compensation (d) 584 1,577
Free Cash Flow $ 26,731 $
20,154 (a) GAAP total expenses
Three Months
Ended
September 30,
2016 2015 Total costs of revenue $ 11,506 $ 12,972
Total operating expenses 53,814 51,895
GAAP total expenses $ 65,320 $ 64,867 (b)
Stock-based compensation expense was as follows:
Three Months
Ended
September 30,
2016 2015 Cost of services and other $ 369 $ 357
Selling and marketing 955 912 Research and development 1,062 824
General and administrative 2,572 2,330
Total stock-based compensation $ 4,958 $ 4,423
(c) The income tax effect on non-GAAP items for the three months
ended September 30, 2016 and 2015 is calculated utilizing the
Company's estimated federal and state tax rate of 36%. (d)
Excess tax benefits are related to stock-based compensation tax
deductions in excess of book compensation expense and reduce our
income taxes payable. We have included the impact of excess tax
benefits in free cash flow to be consistent with the treatment of
other tax activity. (e) In the three months ended September
30, 2016 and September 30, 2015, we acquired technology that did
not meet the accounting requirements for capitalization and
therefore the cost of the acquired technology was expensed as
research and development. We have excluded the expense of the
acquired technology from non-GAAP operating income to be consistent
with transactions where the acquired assets were capitalized. In
the three months ended September 30, 2016 and 2015, we have
excluded payments of $0.8 million and $1.3 million, respectively,
for the non-capitalized acquired technology (including a $0.5
million and $1 million, respectively 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. (f)
During the three months ended September 30, 2016, we incurred $0.4
million of operating expenses related to acquisition fees, which
were not paid by September 30, 2016. There were no such activities
for the three months ended September 30, 2015.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161027006754/en/
Media ContactAspenTechDavid Grip, +1
781-221-5273david.grip@aspentech.comorInvestor
ContactICRBrian Denyeau, +1
646-277-1251brian.denyeau@icrinc.com
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