Aspen Technology, Inc. (NASDAQ: AZPN), a leading provider of
software and services to the process industries, today announced
financial results for its second quarter of fiscal year 2017, ended
December 31, 2016.
Antonio Pietri, President and Chief Executive Officer of
AspenTech, said “AspenTech reported second quarter fiscal 2017
financial results that exceeded expectations from both a financial
and operational perspective. We also achieved a major milestone in
our Asset Optimization strategy with the release of the new
aspenONE® Asset Performance Management™ (APM) suite. We are pleased
with the positive feedback and strong interest we have received
from early customers, and believe this new suite represents a
significant opportunity and important growth driver for our
business.”
Pietri continued, “We also see strong early demand for our
recently acquired Mtell product, whose machine learning-based
functionality enables prescriptive analytics for maximizing asset
availability. We expect the Mtell product together with our Fidelis
Reliability and Aspen Asset Analytics solutions to serve as core
components of our asset performance management offerings going
forward. We believe our expanding product portfolio will add to the
long-term value we deliver to our shareholders.”
Second Quarter Fiscal 2017 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 $450 million
at the end of the second quarter of fiscal 2017, which increased
4.6% compared to the second quarter of fiscal 2016 and 0.9%
sequentially.
- GAAP operating margin was 46.7%,
compared to 47.3% in the second quarter of fiscal 2016. Non-GAAP
operating margin was 50.8%, compared to 51.1% in the second quarter
of fiscal 2016.
- AspenTech repurchased 1.3 million
shares of its common stock for $70.0 million in the second quarter
of fiscal 2017.
Summary of Second Quarter Fiscal Year 2017 Financial
Results
AspenTech’s total revenue of $119.9 million included:
- Subscription and software
revenue was $112.9 million in the second quarter of fiscal
2017, an increase from $110.1 million in the second quarter of
fiscal 2016.
- Services and other revenue was
$7.0 million in the second quarter of fiscal 2017, compared to $9.0
million in the second quarter of fiscal 2016.
For the quarter ended December 31, 2016, AspenTech reported
income from operations of $56.1 million, compared to income from
operations of $56.3 million for the quarter ended December 31,
2015.
Net income was $37.0 million for the quarter ended December 31,
2016, leading to net income per share of $0.48, compared to 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 $60.9 million for the
second quarter of fiscal 2017, compared to non-GAAP income from
operations of $60.9 million in the same period last fiscal year.
Non-GAAP net income was $40.2 million, or $0.52 per share, for the
second quarter of fiscal 2017, compared to non-GAAP net income of
$39.6 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 $140.0 million
and borrowings of $140.0 million at December 31, 2016.
During the second quarter, the company generated $27.2 million
in cash flow from operations and $27.5 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, January
26, 2017, at 4:30 p.m. (Eastern Time), to discuss the company's
financial results for the second 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 54181526. 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 54181526,
through February 26, 2017.
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.
© 2017 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 EndedDecember
31,
Six Months EndedDecember
31,
2016 2015 2016 2015 Revenue:
Subscription and software $ 112,916 $ 110,126 $ 226,360 $ 221,985
Services and other 7,017 9,025
13,623 17,462 Total revenue 119,933
119,151 239,983 239,447
Cost of revenue: Subscription and software 5,176
4,967 10,245 10,209 Services and other 6,403
6,921 12,839 14,651 Total cost
of revenue 11,579 11,888 23,084
24,860 Gross profit 108,354
107,263 216,899 214,587
Operating expenses: Selling and marketing 21,829 21,178
43,854 43,614 Research and development 18,597 15,981 37,229 32,578
General and administrative 11,863 13,805
25,020 26,667 Total operating
expenses, net 52,289 50,964
106,103 102,859 Income from operations 56,065
56,299 110,796 111,728 Interest income 216 71 488 153 Interest
expense (892 ) (13 ) (1,762 ) (14 ) Other income (expense), net
697 (157 ) 1,344 739
Income before provision for income taxes 56,086 56,200
110,866 112,606 Provision for income taxes 19,076
19,517 38,855 39,152 Net
income $ 37,010 $ 36,683 $ 72,011 $ 73,454
Net income per common share: Basic $ 0.48 $ 0.44 $
0.92 $ 0.88 Diluted $ 0.48 $ 0.44 $ 0.92 $ 0.87
Weighted average
shares outstanding: Basic 76,905 83,315 77,977 83,596 Diluted
77,318 83,703 78,356 84,035
ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited in thousands, except
share data)
December 31, 2016
June 30, 2016
ASSETS Current assets: Cash and cash equivalents $ 67,026 $
318,336 Short-term marketable securities 72,939 3,006 Accounts
receivable, net 17,927 20,476 Prepaid expenses and other current
assets 10,409 13,948 Prepaid income taxes 108
5,557 Total current assets 168,409 361,323 Property,
equipment and leasehold improvements, net 14,992 15,825 Computer
software development costs, net 571 720 Goodwill 53,033 23,438
Intangible assets, net 21,628 5,000 Non-current deferred tax assets
7,542 12,236 Other non-current assets 1,182
1,196 Total assets $ 267,357 $ 419,738
LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities:
Accounts payable $ 1,289 $ 3,559 Accrued expenses and other current
liabilities 33,028 36,105 Income taxes payable 6,800 439 Borrowings
under credit agreement 140,000 140,000 Current deferred revenue
213,883 252,520 Total current
liabilities 395,000 432,623 Non-current deferred revenue 27,452
29,558 Other non-current liabilities 37,782 32,591 Commitments and
contingencies (Note 16) Series D redeemable convertible preferred
stock, $0.10 par value—
Authorized— 3,636 shares as of December
31, 2016 and June 30, 2016
Issued and outstanding— none as of
December 31, 2016 and June 30, 2016
— — Stockholders’ deficit: Common stock, $0.10 par value—
Authorized—210,000,000 shares
Issued— 102,331,673 shares at December 31,
2016 and 102,031,960 shares at June 30, 2016
Outstanding— 76,244,859 shares at December
31, 2016 and 80,177,950 shares at June 30, 2016
10,233 10,203 Additional paid-in capital 672,041 659,287
Accumulated deficit 66,334 (5,676 ) Accumulated other comprehensive
income 14 2,651 Treasury stock, at cost—26,086,814 shares of common
stock at December 31, 2016 and 21,854,010 shares at June 30, 2016
(941,499 ) (741,499 ) Total stockholders’ deficit
(192,877 ) (75,034 ) Total liabilities and
stockholders’ deficit $ 267,357 $ 419,738
ASPEN TECHNOLOGY, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited in
thousands)
Three Months Ended
December 31,
Six Months Ended
December 31,
2016 2015 2016
2015 Cash flows from operating
activities: Net income $ 37,010 $ 36,683 $ 72,011 $ 73,454
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 1,509 1,473
3,300 3,020 Net foreign currency gains (1,554 ) (255 ) (2,301 )
(1,444 ) Stock-based compensation 4,671 3,512 9,630 7,935 Deferred
income taxes 228 (133 ) 182 (133 ) Provision for bad debts 63 150
56 176 Tax benefits from stock-based compensation 448 254 1,032
1,831 Excess tax benefits from stock-based compensation (448 ) (254
) (1,032 ) (1,831 ) Other non-cash operating activities (50 ) 112
40 271
Changes in assets and liabilities, excluding initial
effects of acquisitions: Accounts receivable 3,849 6,951 2,494
15,720 Prepaid expenses, prepaid income taxes, and other assets
1,776 1,181 3,661 1,993 Accounts payable, accrued expenses, income
taxes payable and other liabilities (7,436 ) (5,655 ) 5,084 (3,307
) Deferred revenue (12,899 ) (23,293 ) (40,740
) (58,513 ) Net cash provided by operating activities
27,167 20,726 53,417
39,172
Cash flows from investing activities:
Purchases of marketable securities (490,000 ) — (683,748 ) —
Maturities of marketable securities 560,195 21,679 613,379 32,049
Purchases of property, equipment and leasehold improvements (476 )
(662 ) (1,374 ) (1,781 ) Payments for business acquisitions, net of
cash acquired (30,771 ) — (36,171 ) — Capitalized computer software
development costs (49 ) — (100 )
— Net cash provided by (used in) investing activities
38,899 21,017 (108,014 ) 30,268
Cash flows from financing activities: Exercises of
stock options 1,754 1,834 4,843 2,445 Repurchases of common stock
(47,963 ) (1,757 ) (199,584 ) (56,790 ) Payments of tax withholding
obligations related to restricted stock (1,489 ) (1,063 ) (2,786 )
(2,188 ) Excess tax benefits from stock-based compensation
448 254 1,032 1,831
Net cash used in financing activities (47,250 ) (732 )
(196,495 ) (54,702 ) Effect of exchange rate changes on cash and
cash equivalents (167 ) (127 ) (218 )
(364 ) Increase (decrease) in cash and cash equivalents 18,649
40,884 (251,310 ) 14,374 Cash and cash equivalents, beginning of
period 48,377 129,739 318,336
156,249
Cash and cash equivalents, end of
period $ 67,026 $ 170,623 $ 67,026 $
170,623 Supplemental disclosure of cash flow
information: Income taxes paid, net $ 23,761 $ 31,602 $ 25,000 $
34,497 Interest paid 729 13 1,579 14
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,
2016 2015 2016 2015
Total
expenses
GAAP total expenses (a) $ 63,868 $ 62,852 $ 129,187 $ 127,719 Less:
Stock-based compensation (b) (4,671 ) (3,512 ) (9,630 ) (7,935 )
Non-capitalized acquired technology (e) — — (350 ) (250 )
Amortization of intangibles (56 ) (20 ) (111 ) (133 )
Acquisition related fees
(99 ) (1,028 ) (461 ) (1,028 )
Non-GAAP total expenses $
59,042 $ 58,292
$ 118,635 $ 118,373
Income from
operations
GAAP income from operations $ 56,065 $ 56,299 $ 110,796 $ 111,728
Plus: Stock-based compensation (b) 4,671 3,512 9,630 7,935
Non-capitalized acquired technology (e) — — 350 250 Amortization of
intangibles 56 20 111 133
Acquisition related fees
99 1,028 461 1,028
Non-GAAP income from operations $
60,891 $ 60,859
$ 121,348 $ 121,074
Net
income
GAAP net income $ 37,010 $ 36,683 $ 72,011 $ 73,454 Plus:
Stock-based compensation (b) 4,671 3,512 9,630 7,935
Non-capitalized acquired technology (e) — — 350 250 Amortization of
intangibles 56 20 111 133
Acquisition related fees
99 1,028 461 1,028 Less: Income tax effect on Non-GAAP items (c)
(1,649 ) (1,642 ) (3,665 ) (3,365 )
Non-GAAP net income
$ 40,187 $ 39,601
$ 78,898 $ 79,435
Diluted income
per share
GAAP diluted income per share $ 0.48 $ 0.44 $ 0.92 $ 0.87 Plus:
Stock-based compensation (b) 0.06 0.04 0.12 0.10 Non-capitalized
acquired technology (e) — — 0.01 0.01 Amortization of intangibles
0.00 0.00 0.00 0.00
Acquisition related fees
0.00 0.01 0.01 0.01 Less: Income tax effect on Non-GAAP items (c)
(0.02 ) (0.02 ) (0.05 ) (0.04 )
Non-GAAP diluted income per share
$ 0.52 $ 0.47
$ 1.01 $ 0.95
Shares used in computing Non-GAAP diluted income per
share 77,318 83,703 78,356 84,035
Three Months Ended December
31,
Six Months Ended December
31,
2016 2015 2016 2015
Free Cash
Flow
GAAP cash flow from operating activities $ 27,167 $ 20,726 $ 53,417
$ 39,172 Purchase of property, equipment and leasehold
improvements (476 ) (662 ) (1,374 ) (1,781 ) Capitalized computer
software development costs (49 ) — (100 ) — Non-capitalized
acquired technology (e) — — 846 1,250 Excess tax benefits from
stock-based compensation (d) 448 254 1,032 1,831
Acquisition related fees
413 — 413 —
Free
Cash Flow $ 27,503
$ 20,318 $ 54,234
$ 40,472 (a) GAAP total expenses
Three Months Ended December
31,
Six Months Ended December
31,
2016 2015 2016 2015 Total costs of
revenue $ 11,579 $ 11,888 $ 23,084 $ 24,860 Total operating
expenses 52,289 50,964 106,103
102,859 GAAP total expenses $ 63,868 $
62,852 $ 129,187 $ 127,719 (b)
Stock-based compensation expense was as follows:
Three Months Ended December
31,
Six Months Ended December
31,
2016 2015 2016 2015 Cost of services
and other $ 374 $ 350 $ 743 $ 707 Selling and marketing 1,010 837
1,965 1,750 Research and development 1,495 848 2,558 1,672 General
and administrative 1,792 1,477
4,364 3,806 Total stock-based compensation $
4,671 $ 3,512 $ 9,630 $ 7,935
(c) The income tax effect on non-GAAP items for the three and
six months ended December 31, 2016 and 2015 is calculated utilizing
the Company's estimated federal and state tax rate.
(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 six months ended December 31, 2016 and December 31,
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 six months ended December
31, 2016 and 2015, we have excluded payments of $0.8 million and
$1.3 million, respectively, for the non-capitalized acquired
technology (including $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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170126006186/en/
Media ContactAspenTechDavid Grip,
+1-781-221-5273david.grip@aspentech.comorInvestor
ContactICRBrian Denyeau,
+1-646-277-1251brian.denyeau@icrinc.com
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