Aspen Technology, Inc. (NASDAQ: AZPN), the asset optimization
software company, today announced financial results for its first
quarter of fiscal year 2019 ended September 30, 2018.
“We are pleased with our first quarter performance, which was
highlighted by 8% year-over-year annual spend growth driven by
solid performance across the company in each major geography and
product suite. We are benefiting from broadening signs of demand
among Engineering & Construction customers, in addition to
continued positive trends among owner-operator customers,” said
Antonio Pietri, President and Chief Executive Officer of
AspenTech.
Pietri continued, “We are also pleased with the progress in our
APM business. We are seeing growing market recognition of the
technical superiority of our product offering, which is helping
drive customer wins in our core verticals and the Global Economy
Industries. APM represents an exciting, and sizable, growth
opportunity in the early days of a market where we believe we are
well positioned to win.”
Pietri concluded, “We continue to execute on our strategic
priorities while also delivering high levels of profitability and
free cash flow on an annual basis. As a reminder, now that we have
adopted Topic 606, we will experience significant variability on
our income statement, due to the timing of renewals and the fact
that a significant amount of license revenue is now recognized up
front instead of ratably. However, the fundamental business drivers
and the value we provide customers have not changed under Topic
606.”
First Quarter Fiscal 2019 and Recent Business
Highlights
All results for the first fiscal quarter of 2019 and the
comparable periods are presented under ASC Topic 606, which the
company adopted on July 1st, 2018. As a reminder, AspenTech’s
income statement results are impacted by the adoption of Topic 606,
which impacts both the timing and method of revenue recognition for
term license contracts.
- 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 $498 million
at the end of the first quarter of fiscal 2019, which increased
8.1% compared to the first quarter of fiscal 2018 and 1.9%
sequentially.
- AspenTech repurchased approximately
473,000 shares of its common stock for $50.0 million in the first
quarter of fiscal 2019.
Summary of First Quarter Fiscal Year 2019 Financial
Results
AspenTech’s total revenue of $114.2 million included:
- License revenue, which
represents the portion of a term license agreement allocated to the
initial license, was $63.8 million in the first quarter of fiscal
2019, compared to $78.9 million in the first 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
$43.0 million in the first quarter of fiscal 2019, compared to
$40.3 million in the first quarter of fiscal 2018.
- Services and other revenue: was
$7.4 million in the first quarter of fiscal 2019, compared to $7.3
million in the first quarter of fiscal 2018.
For the quarter ended September 30, 2018, AspenTech reported
income from operations of $37.0 million, compared to income from
operations of $55.7 million for the quarter ended September 30,
2017.
Net income was $38.1 million for the quarter ended September 30,
2018, leading to net income per share of $0.53, compared to net
income per share of $0.55 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 and acquisition related fees, was
$46.9 million for the first quarter of fiscal 2019, compared to
non-GAAP income from operations of $62.8 million in the same period
last fiscal year. Non-GAAP net income was $45.9 million, or $0.64
per share, for the first quarter of fiscal 2019, compared to
non-GAAP net income of $45.0 million, or $0.61 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 $52.0 million
and borrowings of $170.0 million at September 30, 2018.
During the first quarter, the company generated $5.6 million in
cash flow from operations and $5.4 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, 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, October
24, 2018, at 4:30 p.m. (Eastern Time), to discuss the company's
financial results for the first 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 5091359. 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 5091359,
through November 25, 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 second, third and fourth 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 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.
© 2018 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
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited in thousands, except per share data)
Three Months EndedSeptember
30,
2018 2017 As Adjusted
Revenue: License $ 63,755 $ 78,890 Maintenance 43,039 40,264
Services and other 7,375 7,333 Total revenue 114,169
126,487
Cost of revenue: License 1,665 1,231
Maintenance 3,993 4,552 Services and other 7,569 6,949
Total cost of revenue 13,227 12,732 Gross
profit 100,942 113,755
Operating expenses:
Selling and marketing 26,812 23,516 Research and development 21,056
19,489 General and administrative 16,084 15,037 Total
operating expenses 63,952 58,042 Income from
operations 36,990 55,713 Interest income 7,069 6,306 Interest
(expense) (1,814 ) (1,206 ) Other income (expense), net 128
(615 ) Income before provision for income taxes 42,373 60,198
Provision for income taxes 4,307 19,677 Net income $
38,066 $ 40,521
Net income per common share:
Basic $ 0.54 $ 0.55 Diluted $ 0.53 $ 0.55
Weighted average
shares outstanding: Basic 70,988 73,024 Diluted 72,015 73,609
ASPEN TECHNOLOGY, INC. AND
SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Unaudited in
thousands, except share data)
September 30, 2018
June 30, 2018
As Adjusted ASSETS Current assets: Cash and cash
equivalents $ 52,048 $ 96,165 Accounts receivable, net 53,999
41,810 Current contract assets
317,967
304,378
Contract costs 21,296 20,500 Prepaid expenses and other current
assets 12,992 10,509 Prepaid income taxes 1,422 2,601
Total current assets
459,724
475,963
Property, equipment and leasehold improvements, net 9,006 9,806
Computer software development costs, net 695 646 Goodwill 75,649
75,590 Intangible assets, net 34,192 35,310 Non-current contract
assets
357,947
340,622
Non-current deferred tax assets 1,176 11,090 Other non-current
assets 1,279 1,297 Total assets $ 939,668 $
950,324
LIABILITIES AND STOCKHOLDERS’ EQUITY Current
liabilities: Accounts payable $ 2,501 $ 4,230 Accrued expenses and
other current liabilities 32,000 39,515 Income taxes payable 46,869
1,698 Borrowings under credit agreement 170,000 170,000 Current
deferred revenue 23,737 15,150 Total current
liabilities 275,107 230,593 Non-current deferred revenue 15,046
12,354 Deferred income taxes 159,563 214,125 Other non-current
liabilities 16,833 17,068 Commitments and contingencies (Note 16)
Series D redeemable convertible preferred stock, $0.10 par
value—Authorized— 3,636 shares as of September 30, 2018 and June
30, 2018Issued and outstanding— none as of September 30, 2018 and
June 30, 2018 — — Stockholders’ equity: Common stock, $0.10 par
value— Authorized—210,000,000 sharesIssued— 103,279,138 shares at
September 30, 2018 and 103,130,300 shares at June 30,
2018Outstanding— 70,862,163 shares at September 30, 2018 and
71,186,701 shares at June 30, 2018 10,328 10,313 Additional paid-in
capital 724,752 715,475 Retained earnings 1,103,573 1,065,507
Accumulated other comprehensive income 965 1,388 Treasury stock, at
cost—32,416,975 shares of common stock at September 30, 2018 and
31,943,599 shares at June 30, 2018 (1,366,499 ) (1,316,499 ) Total
stockholders’ equity 473,119 476,184 Total
liabilities and stockholders’ equity $ 939,668 $ 950,324
ASPEN TECHNOLOGY, INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH
FLOWS(Unaudited in thousands)
Three Months EndedSeptember
30,
2018 2017 As Adjusted Cash
flows from operating activities: Net income $ 38,066 $ 40,521
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 2,000 1,753 Net
foreign currency (gains) losses (200 ) 936 Stock-based compensation
8,865 6,414 Deferred income taxes (44,670 ) (33 ) Provision for bad
debts 169 20 Other non-cash operating activities 107 —
Changes
in assets and liabilities: Accounts receivable, net (12,529 )
(9,093 ) Contract assets (30,914 )
(35,791
) Contract costs (796 )
(185
)
Prepaid expenses, prepaid income taxes, and other assets (855 )
2,292 Accounts payable, accrued expenses, income taxes payable and
other liabilities 34,924 6,764 Deferred revenue 11,403
(1,238 ) Net cash provided by operating activities 5,570
12,360
Cash flows from investing activities:
Purchases of property, equipment and leasehold improvements (96 )
(123 ) Payments for capitalized computer software costs (90 ) (65 )
Net cash used in investing activities (186 ) (188 )
Cash flows
from financing activities: Exercises of stock options 4,054
2,411 Repurchases of common stock (49,977 ) (55,109 ) Payments of
tax withholding obligations related to restricted stock (3,179 )
(1,650 ) Deferred business acquisition payments — (600 ) Payments
of credit agreement issuance costs — (351 ) Net cash used in
financing activities (49,102 ) (55,299 ) Effect of exchange rate
changes on cash and cash equivalents (399 ) 156 Decrease in
cash and cash equivalents (44,117 ) (42,971 ) Cash and cash
equivalents, beginning of period 96,165 101,954
Cash and cash equivalents, end of period $ 52,048 $
58,983 Supplemental disclosure of cash flow
information: Income taxes paid, net $ 2,755 $ 1,243 Interest paid
1,538 968
ASPEN TECHNOLOGY, INC. AND
SUBSIDIARIESReconciliation of GAAP to Non-GAAP Results of
Operations and Cash Flows(Unaudited in thousands, except per
share data)
Three Months EndedSeptember
30,
2018 2017 As Adjusted
Total
expenses
GAAP total expenses (a) $ 77,179 $ 70,774 Less: Stock-based
compensation (b) (8,865 ) (6,414 ) Amortization of intangibles
(1,067 ) (526 ) Acquisition related fees 7 (130 )
Non-GAAP total expenses
$ 67,254 $ 63,704
Income from
operations
GAAP income from operations $ 36,990 $ 55,713 Plus: Stock-based
compensation (b) 8,865 6,414 Amortization of intangibles 1,067 526
Acquisition related fees (7 ) 130
Non-GAAP income from operations
$ 46,915 $ 62,783
Net
income
GAAP net income $ 38,066 $ 40,521 Plus: Stock-based compensation
(b) 8,865 6,414 Amortization of intangibles 1,067 526 Acquisition
related fees (7 ) 130 Less: Income tax effect on Non-GAAP items (c)
(2,084 ) (2,545 )
Non-GAAP net income $ 45,907 $
45,046
Diluted income
per share
GAAP diluted income per share $ 0.53 $ 0.55 Plus: Stock-based
compensation (b) 0.13 0.08 Amortization of intangibles 0.01 0.01
Acquisition related fees — — Less: Income tax effect on Non-GAAP
items (c) (0.03 ) (0.03 )
Non-GAAP diluted income per share $ 0.64
$ 0.61 Shares used in computing
Non-GAAP diluted income per share 72,015 73,609
Three Months EndedSeptember
30,
2018 2017 As Adjusted
Free Cash
Flow
GAAP cash flow from operating activities $ 5,570 $ 12,360
Purchase of property, equipment and leasehold improvements (96 )
(123 ) Capitalized computer software development costs (90 ) (65 )
Non-capitalized acquired technology (d) — 75 Acquisition related
fee payments 12 — Free
Cash Flow $ 5,396 $ 12,247
(a) GAAP total expenses
Three Months EndedSeptember
30,
2018 2017 As Adjusted Total costs of revenue $
13,227 $ 12,732 Total operating expenses 63,952 58,042
GAAP total expenses $ 77,179 $ 70,774
(b) Stock-based compensation expense was as follows:
Three Months EndedSeptember
30,
2018 2017 Cost of services and other $ 465 $ 450
Selling and marketing 1,331 885 Research and development 2,295
1,896 General and administrative 4,774 3,183 Total
stock-based compensation $ 8,865 $ 6,414
(c) The income tax effect on non-GAAP items for the three months
ended September 30, 2018 is calculated utilizing the Company's
statutory tax rate, of 21 percent. The income tax effect on
non-GAAP items for the three months ended September 30, 2017 is
calculated utilizing the Company's estimated federal and state tax
rate.
(d) In the three months ended September 30, 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181024005885/en/
Media ContactAspenTechDavid Grip, +1
781-221-5273david.grip@aspentech.comorInvestor
ContactICRBrian Denyeau, +1
646-277-1251brian.denyeau@icrinc.com
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