Aspen Technology, Inc. (NASDAQ: AZPN), the asset optimization
software company, today announced financial results for its second
quarter of fiscal year 2018, ended December 31, 2017.
“AspenTech delivered solid second quarter fiscal 2018 financial
results that exceeded our expectations from both a revenue and
profitability perspective. We saw positive performance from
owner-operator customers and growth from our Engineering and
Manufacturing/Supply Chain suites,” said Antonio Pietri, President
and Chief Executive Officer of AspenTech.
Pietri continued, “In addition, our APM business saw continued
traction for each solution in the product suite. Our second quarter
results have validated our belief that APM is a large opportunity
that can greatly increase the value we deliver to our customers
over time.”
Second Quarter Fiscal 2018 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 $469 million
at the end of the second quarter of fiscal 2018, which increased
4.2% compared to the second quarter of fiscal 2017 and 1.7%
sequentially.
- GAAP operating margin was 43.6%,
compared to 46.7% in the second quarter of fiscal 2017. Non-GAAP
operating margin was 49.8%, compared to 50.8% in the second quarter
of fiscal 2017.
- AspenTech repurchased approximately
756,000 shares of its common stock for $50.0 million in the second
quarter of fiscal 2018.
Summary of Second Quarter Fiscal Year 2018 Financial
Results
AspenTech’s total revenue of $124.9 million included:
- Subscription and software
revenue was $117.7 million in the second quarter of fiscal
2018, an increase from $112.9 million in the second quarter of
fiscal 2017.
- Services and other revenue was
$7.2 million in the second quarter of fiscal 2018, compared to $7.0
million in the second quarter of fiscal 2017.
For the quarter ended December 31, 2017, AspenTech reported
income from operations of $54.5 million, compared to income from
operations of $56.1 million for the quarter ended December 31,
2016.
Net income was $38.1 million for the quarter ended December 31,
2017, leading to net income per share of $0.52, compared to net
income per share of $0.48 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, litigation judgments, acquisition
related fees and non-capitalized acquired technology, was $62.2
million for the second quarter of fiscal 2018, compared to non-GAAP
income from operations of $60.9 million in the same period last
fiscal year. Non-GAAP net income was $43.0 million, or $0.59 per
share, for the second quarter of fiscal 2018, compared to non-GAAP
net income of $40.2 million, or $0.52 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 $48.7 million
and borrowings of $151.0 million at December 31, 2017.
During the second quarter, the company generated $42.4 million
in cash flow from operations and $42.2 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; non-capitalized acquired technology, excess tax
benefits from stock-based compensation, and other nonrecurring
items, such as acquisition or litigation 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
24, 2018, at 4:30 p.m. (Eastern Time), to discuss the company's
financial results for the second quarter fiscal year 2018 as well
as the company’s business outlook.
The live dial-in number is (866) 604-6127 or (443) 961-0460,
conference ID code 6562029. 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 6562029,
through February 24, 2018.
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
capital-intensive process industries; unfavorable economic and
market conditions or a lessening demand in the market for asset
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.
© 2018 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, 2017 2016
2017 2016 Revenue: Subscription
and software $ 117,658 $ 112,916 $ 233,414 $ 226,360 Services and
other 7,244 7,017 14,269 13,623 Total
revenue 124,902 119,933 247,683 239,983
Cost of revenue: Subscription and software 5,486 5,176
11,269 10,245 Services and other 6,603 6,403 13,552
12,839 Total cost of revenue 12,089 11,579
24,821 23,084 Gross profit 112,813
108,354 222,862 216,899
Operating
expenses: Selling and marketing 24,380 21,829 47,951 43,854
Research and development 19,790 18,597 39,279 37,229 General and
administrative 14,178 11,863 27,854 25,020
Total operating expenses 58,348 52,289 115,084
106,103 Income from operations 54,465 56,065 107,778
110,796 Interest income 40 216 181 488 Interest (expense) (1,261 )
(892 ) (2,467 ) (1,762 ) Other (expense) income, net (238 ) 697
(854 ) 1,344 Income before provision for income taxes
53,006 56,086 104,638 110,866 Provision for income taxes 14,928
19,076 31,805 38,855 Net income $
38,078 $ 37,010 $ 72,833 $ 72,011
Net income per common share: Basic $ 0.53 $ 0.48 $ 1.00 $
0.92 Diluted $ 0.52 $ 0.48 $ 0.99 $ 0.92
Weighted average shares
outstanding: Basic 72,342 76,905 72,683 77,977 Diluted 73,036
77,318 73,333 78,356
ASPEN TECHNOLOGY, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited in thousands, except share
data)
December 31, 2017 June 30, 2017
ASSETS Current assets: Cash and cash equivalents $ 48,703 $
101,954 Accounts receivable, net 24,208 27,670 Prepaid expenses and
other current assets 10,420 12,061 Prepaid income taxes 5,408
4,501 Total current assets 88,739 146,186 Property,
equipment and leasehold improvements, net 11,483 13,400 Computer
software development costs, net 766 667 Goodwill 55,703 51,248
Intangible assets, net 27,737 20,789 Non-current deferred tax
assets 10,093 14,352 Other non-current assets 1,275 1,300
Total assets $ 195,796 $ 247,942
LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities:
Accounts payable $ 3,996 $ 5,467 Accrued expenses and other current
liabilities 42,753 48,149 Income taxes payable 17 1,603 Borrowings
under credit agreement 151,000 140,000 Current deferred revenue
232,653 272,024
Total current liabilities
430,419 467,243 Non-current deferred revenue 26,025 28,335 Other
non-current liabilities 13,859 13,148 Commitments and contingencies
(Note 15) Series D redeemable convertible preferred stock, $0.10
par value—Authorized— 3,636 shares as of December 31, 2017 and June
30, 2017Issued and outstanding— none as of December 31, 2017 and
June 30, 2017 — — Stockholders’ deficit: Common stock, $0.10 par
value— Authorized—210,000,000 sharesIssued— 102,775,919 shares at
December 31, 2017 and 102,567,129 shares at June 30,
2017Outstanding— 72,034,435 shares at December 31, 2017 and
73,421,153 shares at June 30, 2017 10,278 10,257 Additional paid-in
capital 699,428 687,479 Retained earnings 229,353 156,520
Accumulated other comprehensive income 2,933 1,459 Treasury stock,
at cost—30,741,484 shares of common stock at December 31, 2017 and
29,145,976 shares at June 30, 2017 (1,216,499 ) (1,116,499 ) Total
stockholders’ deficit (274,507 ) (260,784 ) Total liabilities and
stockholders’ deficit $ 195,796 $ 247,942
ASPEN TECHNOLOGY, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(Unaudited in thousands)
Three Months EndedDecember 31, Six Months
EndedDecember 31, 2017 2016
2017 2016 Cash flows from operating
activities: Net income $ 38,078 $ 37,010 $ 72,833 $ 72,011
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 1,605 1,509
3,358 3,300 Net foreign currency (gains) losses 54 (1,554 ) 990
(2,301 ) Stock-based compensation 5,455 4,671 11,869 9,630 Deferred
income taxes 4,329 228 4,296 182 Provision for (recovery from) bad
debts (48 ) 63 (28 ) 56 Tax benefits from stock-based compensation
— 448 — 1,032 Excess tax benefits from stock-based compensation —
(448 ) — (1,032 ) Other non-cash operating activities 207 (50 ) 207
40
Changes in assets and liabilities: Accounts receivable
4,160 3,849 3,656 2,494 Prepaid expenses, prepaid income taxes, and
other assets (1,333 ) 1,776 959 3,661 Accounts payable, accrued
expenses, income taxes payable and other liabilities (8,556 )
(7,436 ) (1,792 ) 5,084 Deferred revenue (1,549 ) (12,899 ) (41,586
) (40,740 ) Net cash provided by operating activities 42,402
27,167 54,762 53,417
Cash flows from
investing activities: Purchases of marketable securities —
(490,000 ) — (683,748 ) Maturities of marketable securities —
560,195 — 613,379 Purchases of property, equipment and leasehold
improvements (33 ) (476 ) (156 ) (1,374 ) Payments for business
acquisitions, net of cash acquired (10,800 ) (30,771 ) (10,800 )
(36,171 ) Payments for capitalized computer software costs (291 )
(49 ) (356 ) (100 ) Net cash used in investing activities (11,124 )
38,899 (11,312 ) (108,014 )
Cash flows from financing
activities: Exercises of stock options 1,137 1,754 3,548 4,843
Repurchases of common stock (49,928 ) (47,963 ) (105,037 ) (199,584
) Payments of tax withholding obligations related to restricted
stock (1,817 ) (1,489 ) (3,467 ) (2,786 ) Deferred business
acquisition payments (2,000 ) — (2,600 ) Excess tax benefits from
stock-based compensation — 448 — 1,032 Proceeds from credit
agreement 11,000 — 11,000 — Payments of credit agreement issuance
costs — — (351 ) — Net cash used in financing
activities (41,608 ) (47,250 ) (96,907 ) (196,495 ) Effect of
exchange rate changes on cash and cash equivalents 50 (167 )
206 (218 ) Decrease in cash and cash equivalents (10,280 )
18,649 (53,251 ) (251,310 ) Cash and cash equivalents, beginning of
period 58,983 48,377 101,954 318,336
Cash and cash equivalents, end of period $ 48,703 $
67,026 $ 48,703 $ 67,026 Supplemental
disclosure of cash flow information: Income taxes paid, net $
28,499 $ 23,761 $ 29,742 $ 25,000 Interest paid 1,071 729 2,039
1,579
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 EndedDecember 31, Six Months
EndedDecember 31, 2017 2016
2017 2016
Total
expenses
GAAP total expenses (a) $ 70,437 $ 63,868 $ 139,905 $ 129,187 Less:
Stock-based compensation (b) (5,455 ) (4,671 ) (11,869 ) (9,630 )
Non-capitalized acquired technology (e) — — — (350 ) Amortization
of intangibles (526 ) (56 ) (1,052 ) (111 ) Litigation judgment
(1,548 ) — (1,548 ) — Acquisition related fees (198 ) (99 ) (328 )
(461 )
Non-GAAP total expenses
$ 62,710 $ 59,042
$ 125,108 $ 118,635
Income from
operations
GAAP income from operations $ 54,465 $ 56,065 $ 107,778 $ 110,796
Plus: Stock-based compensation (b) 5,455 4,671 11,869 9,630
Non-capitalized acquired technology (e) — — — 350 Amortization of
intangibles 526 56 1,052 111 Litigation judgment 1,548 — 1,548 —
Acquisition related fees 198 99 328 461
Non-GAAP income from operations $ 62,192
$ 60,891 $ 122,575
$ 121,348
Net
income
GAAP net income $ 38,078 $ 37,010 $ 72,833 $ 72,011 Plus:
Stock-based compensation (b) 5,455 4,671 11,869 9,630
Non-capitalized acquired technology (e) — — — 350 Amortization of
intangibles 526 56 1,052 111 Litigation judgment 1,548 — 1,548 —
Acquisition related fees 198 99 328 461 Less: Income tax effect on
Non-GAAP items (c) (2,782 ) (1,649 ) (5,327 ) (3,665 )
Non-GAAP net income $ 43,023
$ 40,187 $ 82,303
$ 78,898
Diluted income
per share
GAAP diluted income per share $ 0.52 $ 0.48 $ 0.99 $ 0.92 Plus:
Stock-based compensation (b) 0.07 0.06 0.16 0.12 Non-capitalized
acquired technology (e) — — — 0.01 Amortization of intangibles 0.01
— 0.01 — Litigation judgment 0.02 — 0.02 — Acquisition related fees
0.01 — 0.01 0.01 Less: Income tax effect on Non-GAAP items (c)
(0.04 ) (0.02 ) (0.07 ) (0.05 )
Non-GAAP
diluted income per share $ 0.59
$ 0.52 $ 1.12 $ 1.01
Shares used in computing Non-GAAP diluted income per
share 73,036 77,318 73,333 78,356
Three Months
EndedDecember 31, Six Months EndedDecember
31, 2017 2016 2017 2016
Free Cash
Flow
GAAP cash flow from operating activities $ 42,402 $ 27,167 $ 54,762
$ 53,417 Purchase of property, equipment and leasehold
improvements (33 ) (476 ) (156 ) (1,374 ) Capitalized computer
software development costs (291 ) (49 ) (356 ) (100 )
Non-capitalized acquired technology (e) — — 75 846 Excess tax
benefits from stock-based compensation (d) — 448 — 1,032
Acquisition related fee payments 88
413 88 413
Free Cash Flow $ 42,166 $ 27,503
$ 54,413 $ 54,234
(a) GAAP total expenses
Three Months EndedDecember
31, Six Months EndedDecember 31, 2017
2016 2017 2016 Total costs of revenue $ 12,089
$ 11,579 $ 24,821 $ 23,084 Total operating expenses 58,348
52,289 115,084 106,103 GAAP total expenses $
70,437 $ 63,868 $ 139,905 $ 129,187
(b) Stock-based compensation expense was as follows:
Three Months EndedDecember 31, Six Months
EndedDecember 31, 2017 2016 2017
2016 Cost of services and other $ 324 $ 374 $ 774 $ 743
Selling and marketing 1,006 1,010 1,891 1,965 Research and
development 1,891 1,495 3,788 2,558 General and administrative
2,234 1,792 5,416 4,364 Total
stock-based compensation $ 5,455 $ 4,671 $ 11,869
$ 9,630
(c) The income tax effect on non-GAAP items for the three and
six months ended December 31, 2017 is calculated utilizing the
Company's federal and state tax rate in effect as of the beginning
of the fiscal year, of 36 percent. The income tax effect on
non-GAAP items for the three and six months ended December 31, 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
the Company’s income taxes payable. The Company adopted ASU No.
2016-09, Compensation - Stock Compensation (Topic 718):
Improvements to Employee Share-Based Payment Accounting (“ASU No.
2016-09”) effective July 1, 2017. The Company adopted the cash flow
presentation prospectively, and accordingly, excess tax benefits
from stock-based compensation of $0.4 million and $1.0 million is
presented as an operating activity as a component of net income for
the three and six months ended December 31, 2017, respectively,
while $0.4 million and $1.0 million of excess tax benefits from
stock-based compensation is presented as a financing activity for
the three and six months ended December 31, 2016, respectively.
(e) In the six months ended December 31, 2016, the Company
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. The Company
has 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, 2017 and 2016, the Company has excluded payments of $0.1
million and $0.8 million, respectively, for non-capitalized
acquired technology (including $0.1 million and $0.5 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/20180124006118/en/
Media ContactAspenTechDavid Grip, +1
781-221-5273david.grip@aspentech.comorInvestor ContactICRBrian
Denyeau, +1 646-277-1251brian.denyeau@icrinc.com
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