Aspen Technology, Inc. (NASDAQ: AZPN), the asset optimization
software company, today announced financial results for its second
quarter of fiscal year 2019 ended December 31, 2018.
“AspenTech delivered strong second quarter results, highlighted
by annual spend growth of 9.4% year-over-year. We saw positive
trends across each product suite and geography,” said Antonio
Pietri, President and Chief Executive Officer of AspenTech. “The
breadth of our performance demonstrated the positive impact of
multiple favorable growth drivers and strong execution.”
Pietri continued, “We had our strongest quarterly APM
performance to date, reflecting our ability to convert our pipeline
into customer wins. We also saw solid demand in our core industries
and increasing demand in the global economy industries for our APM
suite. The growing adoption of APM reinforces our confidence in the
ability to capitalize on this substantial market opportunity. We
believe the success of the APM suite, the continued strength of our
MSC suite and positive momentum in our Engineering suite position
us to achieve our strategic objectives.”
Second Quarter Fiscal 2019 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 $513 million
at the end of the second quarter of fiscal 2019, which increased
9.4% compared to the second quarter of fiscal 2018 and 3.0%
sequentially.
- AspenTech repurchased approximately 1.2
million shares of its common stock for $100.0 million in the second
quarter of fiscal 2019.
Summary of Second Quarter Fiscal Year 2019 Financial
Results
AspenTech’s total revenue of $140.4 million included:
- License revenue, which
represents the portion of a term license agreement allocated to the
initial license, was $93.4 million in the second quarter of fiscal
2019, compared to $57.0 million in the second 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
$41.0 million in the second quarter of fiscal 2019, compared to
$40.7 million in the second quarter of fiscal 2018.
- Services and other revenue: was
$6.0 million in the second quarter of fiscal 2019, compared to $7.8
million in the second quarter of fiscal 2018.
For the quarter ended December 31, 2018, AspenTech reported
income from operations of $63.8 million, compared to income from
operations of $30.1 million for the quarter ended December 31,
2017.
Net income was $59.2 million for the quarter ended December 31,
2018, leading to net income per share of $0.83, compared to net
income per share of $1.81 in the same period last fiscal year. Net
income in the year ago period benefited from one-time, non-cash
items related to the implementation of Topic 606 and the
implementation of the Tax Cuts and Jobs Act of 2017.
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
$71.2 million for the second quarter of fiscal 2019, compared to
non-GAAP income from operations of $37.8 million in the same period
last fiscal year. Non-GAAP net income was $65.1 million, or $0.92
per share, for the second quarter of fiscal 2019, compared to
non-GAAP net income of $137.0 million, or $1.88 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 $54.4 million
and borrowings of $220.0 million at December 31, 2018.
During the second quarter, the company generated $57.5 million
in cash flow from operations and $57.3 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, 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, January
23, 2019, at 4:30 p.m. (Eastern Time), to discuss the company's
financial results for the second 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 5661887. 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 5661887,
through February 23, 2019.
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
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.
© 2019 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 EndedDecember
31,
Six Months EndedDecember
31,
2018 2017 2018
2017 As Adjusted As Adjusted Revenue:
License $ 93,368 $ 56,975 $ 157,123 $ 135,865 Maintenance 41,038
40,729 84,077 80,993 Services and other 6,017 7,826
13,392 15,159 Total revenue 140,423 105,530
254,592 232,017
Cost of revenue:
License 1,819 1,233 3,484 2,464 Maintenance 5,286 4,250 9,279 8,802
Services and other 7,634 6,606 15,203 13,555
Total cost of revenue 14,739 12,089 27,966
24,821 Gross profit 125,684 93,441
226,626 207,196
Operating expenses: Selling
and marketing 26,310 23,928 53,122 47,444 Research and development
20,317 19,790 41,373 39,279 General and administrative 15,299
19,618 31,383 34,655 Total operating
expenses 61,926 63,336 125,878 121,378
Income from operations 63,758 30,105 100,748 85,818 Interest income
7,485 6,239 14,554 12,545 Interest (expense) (2,164 ) (1,261 )
(3,978 ) (2,467 ) Other (expense), net (578 ) (238 ) (451 ) (854 )
Income before income taxes 68,501 34,845 110,873 95,042 Provision
for (benefit from) income taxes 9,284 (97,187 ) 13,591
(77,510 ) Net income $ 59,217 $ 132,032 $
97,282 $ 172,552
Net income per common share:
Basic $ 0.84 $ 1.83 $ 1.38 $ 2.37 Diluted $ 0.83 $ 1.81 $ 1.36 $
2.35
Weighted average shares outstanding: Basic 70,428
72,342 70,708 72,683 Diluted 71,148 73,036 71,600 73,333
ASPEN TECHNOLOGY, INC. AND
SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Unaudited in
Thousands, Except Share and Per Share Data)
December 31, 2018
June 30, 2018
As Adjusted ASSETS Current assets: Cash and cash
equivalents $ 54,428 $ 96,165 Accounts receivable, net 56,586
41,810 Current contract assets 321,135 304,378
Contract costs
23,046
20,500
Prepaid expenses and other current assets 10,330 10,509 Prepaid
income taxes 921 2,601 Total current assets
466,446
475,963
Property, equipment and leasehold improvements, net 8,311 9,806
Computer software development costs, net 691 646 Goodwill 74,802
75,590 Intangible assets, net 32,889 35,310 Non-current contract
assets 366,581 340,622 Non-current deferred tax assets 1,651 11,090
Other non-current assets 1,075 1,297 Total assets $
952,446 $ 950,324
LIABILITIES AND STOCKHOLDERS’
EQUITY Current liabilities: Accounts payable $ 5,249 $ 4,230
Accrued expenses and other current liabilities 36,688 39,515 Income
taxes payable 43,573 1,698 Borrowings under credit agreement
220,000 170,000 Current deferred revenue 23,145 15,150
Total current liabilities 328,655 230,593 Non-current
deferred revenue 18,167 12,354 Deferred income taxes 157,238
214,125 Other non-current liabilities 16,192 17,068 Commitments and
contingencies (Note 16) Series D redeemable convertible preferred
stock, $0.10 par value—Authorized— 3,636 shares as of December 31,
2018 and June 30, 2018Issued and outstanding— none as of December
31, 2018 and June 30, 2018 — — Stockholders’ equity: Common stock,
$0.10 par value— Authorized—210,000,000 sharesIssued— 103,395,683
shares at December 31, 2018 and 103,130,300 shares at June 30,
2018Outstanding— 69,803,177 shares at December 31, 2018 and
71,186,701 shares at June 30, 2018 10,340 10,313 Additional paid-in
capital 725,493 715,475 Retained earnings 1,162,790 1,065,507
Accumulated other comprehensive income 70 1,388 Treasury stock, at
cost—33,592,506 shares of common stock at December 31, 2018 and
31,943,599 shares at June 30, 2018 (1,466,499 ) (1,316,499 ) Total
stockholders’ equity 432,194 476,184 Total
liabilities and stockholders’ equity $ 952,446 $ 950,324
ASPEN TECHNOLOGY, INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH
FLOWS(Unaudited in Thousands)
Three Months EndedDecember
31, Six Months EndedDecember 31, 2018
2017 2018 2017
As Adjusted As Adjusted Cash flows from operating
activities: Net income $ 59,217 $ 132,032 $ 97,282 $ 172,552
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 2,049 1,605
4,049 3,358 Net foreign currency losses 518 54 318 990 Stock-based
compensation 6,335 5,455 15,200 11,869 Deferred income taxes (2,804
) (90,748 ) (47,474 ) (90,781 ) Provision for (recovery from) bad
debts 658 (48 ) 827 (28 ) Other non-cash operating activities 110
207 217 207
Changes in assets and liabilities: Accounts
receivable (3,935 ) 8,760 (16,464 ) (333 ) Contract assets (11,014
) (5,136 ) (41,928 ) (40,927 ) Contract costs (1,750 ) 126 (2,546 )
(59 ) Prepaid expenses, prepaid income taxes, and other assets
2,599 (1,333 ) 1,744 959 Accounts payable, accrued expenses, income
taxes payable and other liabilities 2,793 (8,557 ) 37,718 (1,792 )
Deferred revenue 2,751 (15 ) 14,154 (1,253 ) Net cash
provided by operating activities 57,527 42,402 63,097
54,762
Cash flows from investing activities:
Purchases of property, equipment and leasehold improvements (84 )
(33 ) (180 ) (156 ) Payments for business acquisitions — (10,800 )
— (10,800 ) Payments for capitalized computer software costs (99 )
(291 ) (189 ) (356 ) Net cash used in investing activities (183 )
(11,124 ) (369 ) (11,312 )
Cash flows from financing
activities: Exercises of stock options 412 1,137 4,466 3,548
Repurchases of common stock (97,446 ) (49,928 ) (147,423 ) (105,037
) Payments of tax withholding obligations related to restricted
stock (6,475 ) (1,817 ) (9,654 ) (3,467 ) Deferred business
acquisition payments (1,200 ) (2,000 ) (1,200 ) (2,600 ) Proceeds
from credit agreement 50,000 11,000 50,000 11,000 Payments of
credit agreement issuance costs — — — (351 )
Net cash used in financing activities (54,709 ) (41,608 ) (103,811
) (96,907 ) Effect of exchange rate changes on cash and cash
equivalents (255 ) 50 (654 ) 206 Increase (decrease)
in cash and cash equivalents 2,380 (10,280 ) (41,737 ) (53,251 )
Cash and cash equivalents, beginning of period 52,048 58,983
96,165 101,954
Cash and cash equivalents,
end of period $ 54,428 $ 48,703 $ 54,428 $
48,703 Supplemental disclosure of cash flow
information: Income taxes paid, net $ 15,072 $ 28,499 $ 17,827 $
29,742 Interest paid 2,003 1,071 3,541 2,039
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 EndedDecember 31, Six Months
EndedDecember 31, 2018 2017 2018
2017 As Adjusted As Adjusted
Total
expenses
GAAP total expenses (a) $ 76,665 $ 75,425 $ 153,844 $ 146,199 Less:
Stock-based compensation (b) (6,335 ) (5,455 ) (15,200 ) (11,869 )
Amortization of intangibles (1,156 ) (526 ) (2,223 ) (1,052 )
Litigation judgment — (1,548 ) — (1,548 ) Acquisition related fees
— (198 ) 7 (328 )
Non-GAAP total expenses
$ 69,174 $ 67,698
$ 136,428 $ 131,402
Income from
operations
GAAP income from operations $ 63,758 $ 30,105 $ 100,748 $ 85,818
Plus: Stock-based compensation (b) 6,335 5,455 15,200 11,869
Amortization of intangibles 1,156 526 2,223 1,052 Litigation
judgment — 1,548 — 1,548 Acquisition related fees — 198 (7 ) 328
Non-GAAP income from operations
$ 71,249 $ 37,832
$ 118,164 $ 100,615
Net
income
GAAP net income $ 59,217 $ 132,032 $ 97,282 $ 172,552 Plus:
Stock-based compensation (b) 6,335 5,455 15,200 11,869 Amortization
of intangibles 1,156 526 2,223 1,052 Litigation judgment — 1,548 —
1,548 Acquisition related fees — 198 (7 ) 328 Less: Income tax
effect on Non-GAAP items (c) (1,573 ) (2,782 ) (3,657 ) (5,327 )
Non-GAAP net income $
65,135 $ 136,977 $
111,041 $ 182,022
Diluted income
per share
GAAP diluted income per share $ 0.83 $ 1.81 $ 1.36 $ 2.35 Plus:
Stock-based compensation (b) 0.09 0.07 0.21 0.16 Amortization of
intangibles 0.02 0.01 0.03 0.01 Litigation judgment — 0.02 — 0.02
Acquisition related fees — 0.01 — 0.01 Less: Income tax effect on
Non-GAAP items (c) (0.02 ) (0.04 ) (0.05 ) (0.07 )
Non-GAAP diluted income per share $
0.92 $ 1.88 $ 1.55
$ 2.48 Shares used in computing
Non-GAAP diluted income per share 71,148 73,036 71,600 73,333
Three Months EndedDecember 31,
Six Months EndedDecember 31, 2018 2017
2018 2017 As Adjusted As Adjusted
Free Cash
Flow
GAAP cash flow from operating activities $ 57,527 $ 42,402 $ 63,097
$ 54,762 Purchase of property, equipment and leasehold
improvements (84 ) (33 ) (180 ) (156 ) Capitalized computer
software development costs (99 ) (291 ) (189 ) (356 )
Non-capitalized acquired technology (d) — — — 75 Acquisition
related fee payments — 88
12 88 Free Cash Flow
$ 57,344 $ 42,166
$ 62,740 $ 54,413 (a)
GAAP total expenses
Three Months EndedDecember 31,
Six Months EndedDecember 31, 2018 2017
2018 2017 As Adjusted As Adjusted Total
costs of revenue $ 14,739 $ 12,089 $ 27,966 $ 24,821 Total
operating expenses 61,926 63,336 125,878
121,378 GAAP total expenses $ 76,665 $ 75,425
$ 153,844 $ 146,199 (b) Stock-based
compensation expense was as follows:
Three Months
EndedDecember 31, Six Months EndedDecember
31, 2018 2017 2018 2017 Cost of
maintenance $ 391 $ — $ 537 $ — Cost of services and other 288 324
606 774 Selling and marketing 1,194 1,006 2,526 1,891 Research and
development 1,637 1,891 3,932 3,788 General and administrative
2,825 2,234 7,599 5,416 Total
stock-based compensation $ 6,335 $ 5,455 $ 15,200
$ 11,869
(c) The income tax effect on non-GAAP items for the three and
six months ended December 31, 2018 is calculated utilizing the
Company's statutory tax rate, of 21 percent. The income tax effect
on non-GAAP items for the three and six months ended December 31,
2017 is calculated utilizing the Company's estimated federal and
state tax rate.
(d) In the six months ended December 31, 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/20190123005797/en/
Media ContactDavid GripAspenTech+1
781-221-5273david.grip@aspentech.com
Investor ContactBrian DenyeauICR+1
646-277-1251brian.denyeau@icrinc.com
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