Aspen Technology, Inc. (AspenTech) (NASDAQ: AZPN), a global
leader in asset optimization software, today announced financial
results for its first-quarter of fiscal year 2022 ended September
30, 2021.
“AspenTech’s first quarter results reflected a notable
improvement in customer demand, particularly among refining
customers. While the macro environment remains fluid, we continue
to see positive interest from our customers, who recognize the
critical value AspenTech’s solutions can provide in supporting
their strategic sustainability and efficiency investments,” said
Antonio Pietri, President and Chief Executive Officer of
AspenTech.
Pietri continued, “The recent announcement of our definitive
agreement with Emerson Electric is a transformational moment for
us. After the Emerson transaction, AspenTech will be an industrial
software leader with an expanded product portfolio and broader
market reach that will extend our ability to help customers improve
safety, sustainability, reliability, and efficiency. We believe
this transaction will position AspenTech to deliver significant
growth and high levels of profitability while generating near- and
long-term value for our shareholders.”
First Quarter and Fiscal Year 2022 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 $630 million at the end of the first quarter of fiscal
2022, which increased 5.6% compared to the first quarter of fiscal
2021 and 1.4% sequentially.
- AspenTech repurchased approximately 1.1 million shares of its
common stock for $150 million in the first quarter of fiscal
2022.
- Emerson Electric (NYSE: EMR) and AspenTech entered into a
definitive agreement to contribute Emerson’s industrial software
businesses – OSI Inc. and the Geological Simulation Software
business – to AspenTech (“New AspenTech”).
Summary of First Quarter Fiscal Year 2022 Financial
Results
AspenTech’s total revenue of $136.0 million included:
- License revenue, which represents the portion of a term
license agreement allocated to the initial license, was $81.1
million in the first quarter of fiscal 2022, compared to $61.9
million in the first quarter of fiscal 2021.
- Maintenance revenue, which represents the portion of the
term license agreement related to ongoing support and the right to
future product enhancements, was $48.2 million in the first quarter
of fiscal 2022, compared to $46.9 million in the first quarter of
fiscal 2021.
- Services and other revenue was $6.7 million in the first
quarter of fiscal 2022, compared to $6.3 million in the first
quarter of fiscal 2021.
For the quarter ended September 30, 2021, AspenTech reported
income from operations of $39.9 million, compared to income from
operations of $34.2 million in the first quarter of fiscal
2021.
Net income was $39.4 million for the quarter ended September 30,
2021, leading to net income per share of $0.58, compared to net
income per share of $0.48 in the same period last fiscal year.
Non-GAAP income from operations was $55.4 million for the first
quarter of fiscal 2022, compared to non-GAAP income from operations
of $42.7 million in the same period last fiscal year. Non-GAAP net
income was $51.6 million, or $0.77 per share, for the first quarter
of fiscal 2022, compared to non-GAAP net income of $39.5 million,
or $0.58 per share, in the same period last fiscal year. These
non-GAAP results add back the impact of stock-based compensation
expense, amortization of intangibles and acquisition-related fees.
A reconciliation of GAAP to non-GAAP results is presented in the
financial tables included in this press release.
AspenTech had cash and cash equivalents of $248.0 million and
total borrowings, net of debt issuance costs, of $289.4 million at
September 30, 2021.
During the first quarter, the company generated $32.7 million in
cash flow from operations and $33.0 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; payments for capitalized
computer software development costs, and other nonrecurring items,
such as acquisition-related payments.
Business Outlook
Based on information as of today, October 27, 2021, AspenTech is
issuing the following guidance for fiscal year 2022:
- Annual spend growth of 5-7% year-over-year
- Free cash flow of $275 to $285 million
- Total bookings of $766 to $819 million
- Total revenue of $702 to $737 million
- GAAP total expense of $389 to $394 million
- Non-GAAP total expense of $341 to $346 million
- GAAP operating income of $313 to $343 million
- Non-GAAP operating income of $361 to $391 million
- GAAP net income of $285 to $311 million
- Non-GAAP net income of $323 to $349 million
- GAAP net income per share of $4.19 to $4.57
- Non-GAAP net income per share of $4.75 to $5.13
The above guidance does not give effect to the proposed
transaction with Emerson Electric, which, if completed, is expected
to close during fiscal 2022. These statements are forward-looking
and actual results may differ materially. Refer to the
Forward-Looking Statements safe harbor below for information on the
factors that could cause AspenTech’s actual results to differ
materially from these forward-looking statements.
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
27, 2021, at 4:30 p.m. (Eastern Time), to discuss the company's
financial results for the first-quarter fiscal year 2022 as well as
the company’s business outlook. The live dial-in number is (866)
471-3828 or (678) 509-7573, conference ID code 6994407. 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 6994407,
through November 3, 2021.
About AspenTech
AspenTech is a global leader in asset optimization software. Its
solutions address complex, industrial environments where it is
critical to optimize the asset design, operation and maintenance
lifecycle. AspenTech uniquely combines decades of process modelling
expertise with artificial intelligence. Its 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 safer, greener, longer and faster. Visit
AspenTech.com to find out more.
© 2021 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.
Forward-Looking Statements
The third paragraph of this press release as well as the
Business Outlook section contain forward-looking statements for
purposes of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements are based
upon current plans, estimates and expectations that are subject to
risks, uncertainties and assumptions. Should one or more of these
risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially
from those indicated or anticipated by such forward-looking
statements. We can give no assurance that such plans, estimates or
expectations will be achieved and therefore, actual results may
differ materially from any plans, estimates or expectations in such
forward-looking statements.
Actual results may vary significantly from AspenTech’s
expectations based on a number of risks and uncertainties,
including, without limitation: delays or reductions in demand for
AspenTech solutions due to the COVID-19 pandemic; 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; declines
in the demand for, or usage of, aspenONE software for any reason,
including declines due to adverse changes in the process or other
capital-intensive industries and materially reduced industry
spending budgets due to the drop in demand for oil due to the
COVID-19 pandemic; unfavorable economic and market conditions or a
lessening demand in the market for asset process optimization
software, including materially reduced industry spending budgets
due to the significant drop in oil prices arising from drop in
demand due to the COVID-19 pandemic; 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.
The third paragraph of this press release also contains
forward-looking statements regarding the pending transaction with
Emerson, including: statements regarding the expected timing and
structure of the transaction; the ability of the parties to
complete the transaction considering the various closing
conditions; the expected benefits of the transaction, such as
improved operations, enhanced revenues and cash flow, synergies,
growth potential, market profile, business plans, expanded
portfolio and financial strength; the competitive ability and
position of New AspenTech following completion of the transaction;
legal, economic and regulatory conditions; and any assumptions
underlying any of the foregoing.
Important factors that could cause actual results to differ
materially from AspenTech’s plans, estimates or expectations
regarding the transaction include, among others: (1) that one or
more closing conditions to the transaction, including certain
regulatory approvals, may not be satisfied or waived, on a timely
basis or otherwise, including that a governmental entity may
prohibit, delay or refuse to grant approval for the consummation of
the transaction, may require conditions, limitations or
restrictions in connection with such approvals or that the required
approval by AspenTech’s stockholders may not be obtained; (2) the
risk that the transaction may not be completed in the time frame
expected by AspenTech or Emerson, or at all; (3) unexpected costs,
charges or expenses resulting from the transaction; (4) uncertainty
of the expected financial performance of New AspenTech following
completion of the transaction; (5) failure to realize the
anticipated benefits of the transaction, including as a result of
delay in completing the transaction or integrating the industrial
software business of Emerson with AspenTech’s business; (6) the
ability of New AspenTech to implement its business strategy; (7)
difficulties and delays in achieving revenue and cost synergies of
New AspenTech; (8) inability to retain and hire key personnel; (9)
the occurrence of any event that could give rise to termination of
the transaction; (10) potential litigation in connection with the
transaction or other settlements or investigations that may affect
the timing or occurrence of the transaction or result in
significant costs of defense, indemnification and liability; (11)
AspenTech’s ability and the ability of Emerson and New AspenTech to
successfully recover from a disaster or other business continuity
problem due to a hurricane, flood, earthquake, terrorist attack,
war, pandemic, security breach, cyber-attack, power loss,
telecommunications failure or other natural or man-made event,
including the ability to function remotely during long-term
disruptions such as the COVID-19 pandemic; (12) potential adverse
reactions or changes to business relationships resulting from the
announcement or completion of the transaction; (13) the risk that
disruptions from the transaction will harm Emerson’s and
AspenTech’s business, including current plans and operations; (14)
certain restrictions during the pendency of the transaction that
may impact Emerson’s or AspenTech’s ability to pursue certain
business opportunities or strategic transactions; (15) AspenTech’s,
Emerson’s and New AspenTech’s ability to meet expectations
regarding the accounting and tax treatments of the transaction; and
(16) other risk factors as detailed from time to time in Emerson’s
and AspenTech’s reports filed with the SEC, including Emerson’s and
AspenTech’s annual report on Form 10-K, periodic quarterly reports
on Form 10-Q, periodic current reports on Form 8-K and other
documents filed with the SEC. While the list of factors presented
here is considered representative, no such list should be
considered to be a complete statement of all potential risks and
uncertainties. Unlisted factors may present significant additional
obstacles to the realization of forward-looking statements.
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.
© 2021 Aspen Technology, Inc. AspenTech, aspenONE, asset
optimization and the Aspen leaf logo are 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 Ended September
30,
2021
2020
Revenue:
License
$
81,104
$
61,859
Maintenance
48,213
46,858
Services and other
6,703
6,254
Total revenue
136,020
114,971
Cost of revenue:
License
2,462
2,136
Maintenance
4,562
4,764
Services and other
7,859
8,566
Total cost of revenue
14,883
15,466
Gross profit
121,137
99,505
Operating expenses:
Selling and marketing
29,481
25,172
Research and development
26,857
22,530
General and administrative
24,921
17,633
Total operating expenses
81,259
65,335
Income from operations
39,878
34,170
Interest income
8,664
8,669
Interest (expense)
(1,536)
(2,095)
Other (expense), net
(872)
(1,469)
Income before income taxes
46,134
39,275
Provision for income taxes
6,735
6,564
Net income
$
39,399
$
32,711
Net income per common share:
Basic
$
0.59
$
0.48
Diluted
$
0.58
$
0.48
Weighted average shares
outstanding:
Basic
67,001
67,729
Diluted
67,412
68,299
ASPEN TECHNOLOGY, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(Unaudited in Thousands, Except
Share and Per Share Data)
September 30,
2021
June 30, 2021
ASSETS
Current assets:
Cash and cash equivalents
$
247,965
$
379,853
Accounts receivable, net
38,631
52,502
Current contract assets, net
306,008
308,607
Prepaid expenses and other current
assets
15,044
12,716
Prepaid income taxes
2,474
14,639
Total current assets
610,122
768,317
Property, equipment and leasehold
improvements, net
5,140
5,610
Computer software development costs,
net
1,256
1,461
Goodwill
157,241
159,852
Intangible assets, net
41,742
44,327
Non-current contract assets, net
437,838
407,180
Contract costs
29,312
29,056
Operating lease right-of-use assets
31,865
32,539
Deferred tax assets
2,074
2,121
Other non-current assets
3,584
3,537
Total assets
$
1,320,174
$
1,454,000
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
4,087
$
4,367
Accrued expenses and other current
liabilities
44,477
50,575
Current operating lease liabilities
7,281
6,751
Income taxes payable
48,304
3,444
Current borrowings
22,000
20,000
Current deferred revenue
53,841
56,393
Total current liabilities
179,990
141,530
Non-current deferred revenue
8,471
11,732
Deferred tax liabilities
139,931
193,360
Non-current operating lease
liabilities
28,474
29,699
Non-current borrowings, net
267,365
273,162
Other non-current liabilities
3,697
3,760
Commitments and contingencies (Note
16)
Series D redeemable convertible preferred
stock, $0.10 par value—
Authorized— 3,636 shares as of September
30, 2021 and June 30, 2021
Issued and outstanding— none as of
September 30, 2021 and June 30, 2021
—
—
Stockholders’ equity:
Common stock, $0.10 par value—
Authorized—210,000,000 shares
Issued— 104,639,940 shares at September
30, 2021 and 104,543,414 shares at June 30, 2021
Outstanding— 66,942,492 shares at
September 30, 2021 and 67,912,160 shares at June 30, 2021
10,465
10,455
Additional paid-in capital
825,780
819,642
Retained earnings
1,817,532
1,778,133
Accumulated other comprehensive income
4,968
9,026
Treasury stock, at cost—37,697,448 shares
of common stock at September 30, 2021 and 36,631,254 shares at June
30, 2021
(1,966,499)
(1,816,499)
Total stockholders’ equity
692,246
800,757
Total liabilities and stockholders’
equity
$
1,320,174
$
1,454,000
ASPEN TECHNOLOGY, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited in Thousands)
Three Months Ended
September 30,
2021
2020
Cash flows from operating
activities:
Net income
$
39,399
$
32,711
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
2,783
2,334
Reduction in the carrying amount of
right-of-use assets
2,466
2,365
Net foreign currency losses
751
1,463
Stock-based compensation
10,090
6,268
Deferred income taxes
(53,352)
41
Provision for bad debts
1,082
3,120
Other non-cash operating activities
331
202
Changes in assets and
liabilities:
Accounts receivable
12,190
2,243
Contract assets, net
(29,554)
(7,366)
Contract costs
(256)
284
Lease liabilities
(2,561)
(2,663)
Prepaid expenses, prepaid income taxes,
and other assets
9,790
(1,900)
Accounts payable, accrued expenses, income
taxes payable and other liabilities
44,386
(5,505)
Deferred revenue
(4,858)
2,854
Net cash provided by operating
activities
32,687
36,451
Cash flows from investing
activities:
Purchases of property, equipment and
leasehold improvements
(253)
(177)
Payments for equity method investments
(350)
(334)
Payments for capitalized computer software
development costs
(178)
(806)
Net cash used in investing activities
(781)
(1,317)
Cash flows from financing
activities:
Issuance of shares of common stock
1,391
268
Repurchases of common stock
(154,353)
—
Payments of tax withholding obligations
related to restricted stock
(6,053)
(1,828)
Deferred business acquisition payments
(10)
—
Repayments of amounts borrowed
(4,000)
(4,000)
Net cash used in financing activities
(163,025)
(5,560)
Effect of exchange rate changes on cash
and cash equivalents
(558)
228
(Decrease) Increase in cash and cash
equivalents
(131,677)
29,802
Cash and cash equivalents, beginning of
period
379,853
287,796
Cash, cash equivalents, and restricted
cash, end of period
$
248,176
$
317,598
Supplemental disclosure of cash flow
information:
Income taxes paid, net
$
2,818
$
2,703
Interest paid
1,333
2,121
Supplemental disclosure of non-cash
activities:
Change in purchases of property, equipment
and leasehold improvements included in accounts payable and accrued
expenses
$
(118)
$
281
Change in repurchases of common stock
included in accounts payable and accrued expenses
(4,353)
—
Lease liabilities arising from obtaining
right-of-use assets
1,463
223
September 30,
2021
September 30,
2020
Reconciliation to amounts within the
unaudited consolidated balance sheets:
(Dollars in Thousands)
Cash and cash equivalents
$
247,965
$
317,511
Restricted cash included in other
non-current assets
211
87
Cash, cash equivalents, and restricted
cash, end of period
$
248,176
$
317,598
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 September
30,
2021
2020
Total
expenses
GAAP total expenses (a)
$
96,142
$
80,801
Less:
Stock-based compensation (b)
(10,090)
(6,268)
Amortization of intangibles
(2,044)
(1,745)
Acquisition related fees
(3,356)
(563)
Non-GAAP total expenses
$
80,652
$
72,225
Income from
operations
GAAP income from operations
$
39,878
$
34,170
Plus:
Stock-based compensation (b)
10,090
6,268
Amortization of intangibles
2,044
1,745
Acquisition related fees
3,356
563
Non-GAAP income from operations
$
55,368
$
42,746
Net
income
GAAP net income
$
39,399
$
32,711
Plus:
Stock-based compensation (b)
10,090
6,268
Amortization of intangibles
2,044
1,745
Acquisition related fees
3,356
563
Less:
Income tax effect on Non-GAAP items
(c)
(3,253)
(1,801)
Non-GAAP net income
$
51,636
$
39,486
Diluted income
per share
GAAP diluted income per share
$
0.58
$
0.48
Plus:
Stock-based compensation (b)
0.15
0.09
Amortization of intangibles
0.04
0.03
Acquisition related fees
0.05
0.01
Less:
Income tax effect on Non-GAAP items
(c)
(0.05)
(0.03)
Non-GAAP diluted income per share
$
0.77
$
0.58
Shares used in computing Non-GAAP diluted
income per share
67,412
68,299
Three Months Ended
September 30,
2021
2020
Free Cash
Flow
Net cash provided by operating activities
(GAAP)
$
32,687
$
36,451
Purchases of property, equipment and
leasehold improvements
(253)
(177)
Payments for capitalized computer software
development costs
(178)
(806)
Acquisition related payments
777
291
Free cash flow (non-GAAP)
$
33,033
$
35,759
(a) GAAP total expenses
Three Months Ended
September 30,
2021
2020
Total costs of revenue
$
14,883
$
15,466
Total operating expenses
81,259
65,335
GAAP total expenses
$
96,142
$
80,801
(b) Stock-based compensation expense was
as follows:
Three Months Ended
September 30,
2021
2020
Cost of maintenance
$
205
$
316
Cost of services and other
280
450
Selling and marketing
1,863
1,244
Research and development
1,998
1,722
General and administrative
5,744
2,536
Total stock-based compensation
$
10,090
$
6,268
(c) The income tax effect on non-GAAP items for the three months
ended September 30, 2021 and 2020, respectively, is calculated
utilizing the Company's statutory tax rate of 21 percent.
ASPEN TECHNOLOGY, INC. AND
SUBSIDIARIES
Reconciliation of
Forward-Looking Guidance Range
(Unaudited in Thousands, Except
per Share Data)
Twelve Months Ended June 30,
2022 (a)
Range
Low
High
Guidance - Total expenses
GAAP - total expenses
$
389,000
$
394,000
Less:
Stock-based compensation
(36,000)
(36,000)
Amortization of intangibles
(9,000)
(9,000)
Acquisition related fees
(3,000)
(3,000)
Non-GAAP - total expenses
$
341,000
$
346,000
Guidance - Income from
operations
GAAP - income from operations
$
313,000
$
343,000
Plus:
Stock-based compensation
36,000
36,000
Amortization of intangibles
9,000
9,000
Acquisition related fees
3,000
3,000
Non-GAAP - income from operations
$
361,000
$
391,000
Guidance - Net income and diluted
income per share
GAAP - net income and diluted income per
share
$
285,000
$
4.19
$
311,000
$
4.57
Plus:
Stock-based compensation
36,000
36,000
Amortization of intangibles
9,000
9,000
Acquisition related fees
3,000
3,000
Less:
Income tax effect on Non-GAAP items
(a)
(10,000)
(10,000)
Non-GAAP - net income and diluted income
per share
$
323,000
$
4.75
$
349,000
$
5.13
Shares used in computing guidance for
Non-GAAP diluted income per share
68,000
68,000
Guidance - Free Cash Flow
GAAP - Net cash provided by operating
activities
$
278,000
$
288,000
Less:
Purchases of property, equipment and
leasehold improvements
(3,000)
(3,000)
Payments for capitalized computer software
development costs
(800)
(800)
Plus:
Acquisition related payments
800
800
Free cash flow expectation (non-GAAP)
$
275,000
$
285,000
(a) Rounded amount used, except per share data. (b) The income tax
effect on non-GAAP items for the twelve months ended June 30, 2022
is calculated utilizing the Company's statutory tax rate of 21
percent.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211027006020/en/
Media Contact Len Dieterle Aspen Technology +1
781-221-4291 len.dieterle@aspentech.com
Investor Contact Brian Denyeau ICR for Aspen Technology
+1 646-277-1251 brian.denyeau@icrinc.com
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