Aspen Technology, Inc. (NASDAQ: AZPN), the asset optimization
software company, today announced financial results for its third
quarter of fiscal year 2017, ended March 31, 2017.
Antonio Pietri, President and Chief Executive Officer of
AspenTech, said “AspenTech reported third quarter fiscal 2017
financial results that exceeded expectations from a revenue and
profitability perspective. The demand from our owner-operator
customers offset the impact of continued macroeconomic challenges
facing engineering and construction and upstream customers.”
Pietri continued, “Last week we hosted our biennial OPTIMIZE
2017 user conference, which was focused on Asset Optimization.
Customers showed strong interest in the direction of our
engineering and manufacturing and supply chain products and the
significant value those solutions can capture from increased asset
efficiency. A highlight of the conference was the positive customer
reaction to our new Asset Performance Maintenance (APM) suite,
which expands AspenTech’s capabilities into the maintenance of the
physical asset by leveraging reliability analysis, machine-based
learning, and prescriptive analytics. We are excited by the
opportunity for APM and believe it can be an important contributor
to growth in the coming years.”
Pietri concluded, “At the same time, we continued to utilize our
strong cash flow to generate value for shareholders via our share
buyback program, which in the third quarter surpassed $1 billion in
cumulative repurchases since the program began in fiscal year
2011.”
Third 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 $452 million
at the end of the third quarter of fiscal 2017, which increased
4.9% compared to the third quarter of fiscal 2016 and 0.3%
sequentially.
- GAAP operating margin was 43.8%,
compared to 42.5% in the third quarter of fiscal 2016. Non-GAAP
operating margin was 48.1%, compared to 49.7% in the third quarter
of fiscal 2016.
- AspenTech repurchased 1.7 million
shares of its common stock for $100.0 million in the third quarter
of fiscal 2017.
Summary of Third Quarter Fiscal Year 2017 Financial
Results
AspenTech’s total revenue of $119.3 million included:
- Subscription and software
revenue was $111.7 million in the third quarter of fiscal 2017,
consistent with $111.7 million in the third quarter of fiscal
2016.
- Services and other revenue was
$7.6 million in the third quarter of fiscal 2017, an increase from
$7.5 million in the third quarter of fiscal 2016.
For the quarter ended March 31, 2017, AspenTech reported income
from operations of $52.3 million, compared to income from
operations of $50.7 million for the quarter ended March 31,
2016.
Net income was $35.8 million for the quarter ended March 31,
2017, leading to net income per share of $0.47, compared to net
income per share of $0.40 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 $57.4 million for the third
quarter of fiscal 2017, compared to non-GAAP income from operations
of $59.3 million in the same period last fiscal year. Non-GAAP net
income was $39.4 million, or $0.52 per share, for the third quarter
of fiscal 2017, compared to non-GAAP net income of $40.9 million,
or $0.49 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 $101.7 million
and borrowings of $140.0 million at March 31, 2017.
During the third quarter, the company generated $55.6 million in
cash flow from operations and $56.2 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, May 2,
2017, at 4:30 p.m. (Eastern Time), to discuss the company's
financial results for the third 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 7805720. 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 7805720,
through June 2, 2017.
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, 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 EndedMarch
31,
Nine Months EndedMarch
31,
2017 2016
2017 2016 Revenue:
Subscription and software $ 111,717 $ 111,722 $ 338,077 $ 333,707
Services and other 7,560 7,495
21,184 24,957 Total revenue 119,277
119,217 359,261 358,664
Cost of revenue: Subscription and software 5,521
5,266 15,766 15,475 Services and other 6,746
6,754 19,586 21,405 Total cost
of revenue 12,267 12,020 35,352
36,880 Gross profit 107,010
107,197 323,909 321,784
Operating expenses: Selling and marketing 22,269 23,090
66,123 66,704 Research and development 20,348 17,820 57,577 50,398
General and administrative 12,120 15,606
37,140 42,273 Total operating
expenses 54,737 56,516 160,840
159,375 Income from operations 52,273 50,681
163,069 162,409 Interest income 176 90 665 243 Interest (expense)
(959 ) (330 ) (2,721 ) (344 ) Other (expense) income, net
(56 ) (2,686 ) 1,287 (1,947 ) Income
before provision for income taxes 51,434 47,755 162,300 160,361
Provision for income taxes 15,600 14,584
54,455 53,736 Net income $
35,834 $ 33,171 $ 107,845 $ 106,625
Net income per common share: Basic $ 0.47 $ 0.40 $ 1.40 $
1.28 Diluted $ 0.47 $ 0.40 $ 1.39 $ 1.27
Weighted average shares
outstanding: Basic 75,676 83,081 77,221 83,425 Diluted 76,182
83,373 77,652 83,842
ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited in thousands, except
share data)
March 31, 2017
June 30, 2016
ASSETS Current assets: Cash and cash equivalents $ 84,552 $
318,336 Short-term marketable securities 17,137 3,006 Accounts
receivable, net 35,192 20,476 Prepaid expenses and other current
assets 9,655 13,948 Prepaid income taxes 516
5,557 Total current assets 147,052 361,323 Property,
equipment and leasehold improvements, net 14,154 15,825 Computer
software development costs, net 505 720 Goodwill 50,909 23,438
Intangible assets, net 21,223 5,000 Non-current deferred tax assets
8,868 12,236 Other non-current assets 1,241
1,196 Total assets $ 243,952 $ 419,738
LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities:
Accounts payable $ 4,643 $ 3,559 Accrued expenses and other current
liabilities 38,342 36,105 Income taxes payable 3,499 439 Borrowings
under credit agreement 140,000 140,000 Current deferred revenue
240,791 252,520 Total current
liabilities 427,275 432,623 Non-current deferred revenue 27,661
29,558 Other non-current liabilities 38,511 32,591 Commitments and
contingencies (Note 16) Series D redeemable convertible preferred
stock, $0.10 par value—
Authorized— 3,636 shares as of March 31,
2017 and June 30, 2016
Issued and outstanding— none as of March
31, 2017 and June 30, 2016
— — Stockholders’ deficit: Common stock, $0.10 par value—
Authorized—210,000,000 shares
Issued— 102,484,948 shares at March 31,
2017 and 102,031,960 shares at June 30, 2016
Outstanding— 74,661,804 shares at March
31, 2017 and 80,177,950 shares at June 30, 2016
10,249 10,203 Additional paid-in capital 679,471 659,287 Retained
earnings (deficit) 102,168 (5,676 ) Accumulated other comprehensive
income 116 2,651 Treasury stock, at cost—27,823,144 shares of
common stock at March 31, 2017 and 21,854,010 shares at June 30,
2016 (1,041,499 ) (741,499 ) Total stockholders’
deficit (249,495 ) (75,034 ) Total liabilities and
stockholders’ deficit $ 243,952 $ 419,738
ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited in thousands)
Three Months EndedMarch
31,
Nine Months EndedMarch
31,
2017 2016
2017 2016 Cash flows from
operating activities: Net income $ 35,834 $ 33,171 $ 107,845 $
106,625 Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 1,693 1,499
4,993 4,519 Net foreign currency losses (gains) 281 2,865 (2,020 )
1,421 Stock-based compensation 4,677 4,378 14,307 12,313 Deferred
income taxes 987 828 1,169 695 Provision for bad debts 169 (2 ) 225
174 Tax benefits from stock-based compensation 1,312 47 2,344 1,878
Excess tax benefits from stock-based compensation (1,312 ) (47 )
(2,344 ) (1,878 ) Other non-cash operating activities 390 (14 ) 430
257
Changes in assets and liabilities, excluding initial effects
of acquisitions: Accounts receivable (17,438 ) (7,207 ) (14,944
) 8,513 Prepaid expenses, prepaid income taxes, and other assets
(13 ) 1,453 3,648 3,446 Accounts payable, accrued expenses, income
taxes payable and other liabilities 1,863 (2,276 ) 6,947 (5,583 )
Deferred revenue 27,178 35,028
(13,562 ) (23,485 ) Net cash provided by operating
activities 55,621 69,723 109,038
108,895
Cash flows from investing
activities: Purchases of marketable securities — — (683,748 ) —
Maturities of marketable securities 55,837 20,916 669,216 52,965
Purchases of property, equipment and leasehold improvements (777 )
(749 ) (2,151 ) (2,530 ) Acquisition related deposits — (255,067 )
— (255,067 ) Payments for business acquisitions, net of cash
acquired — — (36,171 ) — Payments for capitalized computer software
costs (26 ) — (126 ) —
Net cash provided by (used in) investing activities 55,034
(234,900 ) (52,980 ) (204,632 )
Cash
flows from financing activities: Exercises of stock options
3,049 417 7,892 2,862 Repurchases of common stock (96,058 ) (46,338
) (295,642 ) (103,128 ) Payments of tax withholding obligations
related to restricted stock (1,560 ) (1,216 ) (4,346 ) (3,404 )
Excess tax benefits from stock-based compensation 1,312 47 2,344
1,878 Proceeds from credit agreement — 140,000 — 140,000 Payments
of credit agreement issuance costs — (1,587 )
— (1,587 ) Net cash (used in) provided by
financing activities (93,257 ) 91,323 (289,752 ) 36,621 Effect of
exchange rate changes on cash and cash equivalents 128
141 (90 ) (223 ) Increase
(decrease) in cash and cash equivalents 17,526 (73,713 ) (233,784 )
(59,339 ) Cash and cash equivalents, beginning of period
67,026 170,623 318,336
156,249
Cash and cash equivalents, end of period $
84,552 $ 96,910 $ 84,552 $ 96,910
Supplemental disclosure of cash flow information: Income
taxes paid, net $ 16,742 $ 17,115 $ 41,742 $ 51,612 Interest paid
920 330 2,499 344
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,
2017 2016
2017 2016
Total
expenses
GAAP total expenses (a) $ 67,004 $ 68,536 $ 196,192 $ 196,255 Less:
Stock-based compensation (b) (4,677 ) (4,378 ) (14,307 ) (12,313 )
Non-capitalized acquired technology (e) — — (350 ) (250 )
Amortization of intangibles (405 ) (14 ) (516 ) (147 ) Acquisition
related fees (31 ) (4,187 ) (493 ) (5,213 )
Non-GAAP total
expenses $ 61,891
$ 59,957 $ 180,526
$ 178,332
Income from
operations
GAAP income from operations $ 52,273 $ 50,681 $ 163,069 $ 162,409
Plus: Stock-based compensation (b) 4,677 4,378 14,307 12,313
Non-capitalized acquired technology (e) — — 350 250 Amortization of
intangibles 405 14 516 147 Acquisition related fees 31 4,187 493
5,213
Non-GAAP income from operations
$ 57,386 $ 59,260
$ 178,735 $
180,332
Net
income
GAAP net income $ 35,834 $ 33,171 $ 107,845 $ 106,625 Plus:
Stock-based compensation (b) 4,677 4,378 14,307 12,313
Non-capitalized acquired technology (e) — — 350 250 Amortization of
intangibles 405 14 516 147 Acquisition related fees 31 7,623 493
8,649 Less: Income tax effect on Non-GAAP items (c) (1,554 ) (4,325
) (5,248 ) (7,689 )
Non-GAAP net income
$ 39,393 $ 40,861
$ 118,263 $
120,295
Diluted income
per share
GAAP diluted income per share $ 0.47 $ 0.40 $ 1.39 $ 1.27 Plus:
Stock-based compensation (b) 0.06 0.05 0.18 0.15 Non-capitalized
acquired technology (e) — — 0.00 0.00 Amortization of intangibles
0.01 0.00 0.01 0.00 Acquisition related fees 0.00 0.09 0.01 0.10
Less: Income tax effect on Non-GAAP items (c) (0.02 ) (0.05 ) (0.07
) (0.09 )
Non-GAAP diluted income per share
$ 0.52 $ 0.49
$ 1.52 $
1.43 Shares used in computing Non-GAAP diluted income
per share 76,182 83,373 77,652 83,842
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,
2017 2016
2017 2016
Free Cash
Flow
GAAP cash flow from operating activities $ 55,621 $ 69,723 $
109,038 $ 108,895 Purchase of property, equipment and
leasehold improvements (777 ) (749 ) (2,151 ) (2,530 ) Capitalized
computer software development costs (26 ) — (126 ) —
Non-capitalized acquired technology (e) — — 846 1,250 Excess tax
benefits from stock-based compensation (d) 1,312 47 2,344 1,878
Acquisition related fee payments 35 6,068 448 6,068 Litigation
related payments —
2,080 —
2,080 Free Cash Flow $
56,165 $ 77,169 $
110,399 $ 117,641 (a) GAAP total
expenses
Three Months Ended March
31,
Nine Months Ended March
31,
2017 2016
2017 2016 Total costs of revenue
$ 12,267 $ 12,020 $ 35,352 $ 36,880 Total operating expenses
54,737 56,516 160,840
159,375 GAAP total expenses $ 67,004 $ 68,536
$ 196,192 $ 196,255 (b) Stock-based
compensation expense was as follows:
Three Months Ended March
31,
Nine Months Ended March
31,
2017 2016
2017 2016 Cost of services and
other $ 363 $ 343 $ 1,106 $ 1,049 Selling and marketing 972 1,797
2,937 3,547 Research and development 1,618 871 4,177 2,543 General
and administrative 1,724 1,367
6,087 5,174 Total stock-based compensation $
4,677 $ 4,378 $ 14,307 $ 12,313
(c) The income tax effect on non-GAAP items for the three and
nine months ended March 31, 2017 and 2016 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 nine months ended March 31, 2017 and March 31, 2016,
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 nine months ended March
31, 2017 and 2016, 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/20170502006770/en/
Media ContactAspenTechDavid Grip, +1
781-221-5273david.grip@aspentech.comorInvestor
ContactICRBrian Denyeau, +1
646-277-1251brian.denyeau@icrinc.com
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