Aspen Technology Announces Financial Results for the Second Quarter of Fiscal 2025

Aspen Technology, Inc. (“AspenTech” or the “Company”) (NASDAQ: AZPN), a global leader in industrial software, today announced financial results for its second quarter in fiscal 2025, ended December 31, 2024.

Second Quarter Fiscal Year 2025 and Recent Business Highlights

Annual contract value1 (“ACV”) was $964.9 million for the second quarter of fiscal 2025, increasing 9.2% year over year and 2.5% quarter over quarter.
Cash flow from operations was $38.1 million and free cash flow was $36.4 million in the second quarter of fiscal 2025. A reconciliation of GAAP to non-GAAP results is presented in the financial tables included in this press release.

Second Quarter Fiscal Year 2025 Financial Results Summary

AspenTech’s total revenue was $303.6 million in the second quarter of fiscal 2025, compared to $257.2 million in the second quarter of fiscal 2024. Total revenue in the period included license and solutions revenue of $188.2 million, compared to $152.5 million in the second quarter of fiscal 2024, maintenance revenue of $90.6 million, compared to $85.1 million in the second quarter of fiscal 2024, and services and other revenue of $24.7 million, compared to $19.6 million in the second quarter of fiscal 2024. Bookings2 was $307.5 million in the second quarter of fiscal 2025, compared to $233.4 million in the second quarter of fiscal 2024.

Income from operations was $9.0 million in the second quarter of fiscal 2025, compared to a loss from operations of $49.2 million in the second quarter of fiscal 2024. Non-GAAP income from operations was $149.0 million in the second quarter of fiscal 2025, compared to $88.7 million in the second quarter of fiscal 2024. Net income was $20.3 million, or $0.32 per diluted share, in the second quarter of fiscal 2025, compared to a net loss of $21.5 million, or $0.34 per diluted share, in the second quarter of fiscal 2024. Non-GAAP net income was $131.1 million, or $2.06 per diluted share, in the second quarter of fiscal 2025, compared to $87.8 million, or $1.37 per diluted share, in the second quarter of fiscal 2024.

AspenTech had cash and cash equivalents of $181.8 million as of December 31, 2024, compared to $237.0 million as of June 30, 2024. The decrease in cash and cash equivalents during this period was due to the impact of share repurchase activity under the Company’s fiscal 2025 share repurchase authorization in the first quarter of fiscal 2025 and a net use of cash of $36.5 million in the second quarter of fiscal 2025 for the purchase of Open Grid Systems Limited. Under its revolving credit facility, AspenTech had no borrowings and $194.5 million available as of December 31, 2024.

AspenTech generated $38.1 million in cash flow from operations and $36.4 million in free cash flow in the second quarter of fiscal 2025, compared to $29.8 million in cash flow from operations and $29.2 million in free cash flow in the second quarter of fiscal 2024.

Conference Call and Fiscal 2025 Business Outlook

As a result of AspenTech entering into an Agreement and Plan of Merger (the “Merger Agreement”) with Emerson Electric Co. (“Emerson”) and Emersub CXV, Inc. (the “Purchaser”) on January 26, 2025, AspenTech will not host an earnings conference call for its second quarter fiscal 2025 results nor provide future guidance. For more information on the Merger Agreement, please refer to AspenTech’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on January 27, 2025.

Footnotes

ACV is the estimate of the annual value of the Company’s portfolio of term license and software maintenance and support, or SMS, contracts, the annual value of SMS agreements purchased with perpetual licenses and the annual value of standalone SMS agreements purchased with certain legacy term license agreements, which have become an immaterial part of the Company’s business. All ACV numbers presented in this press release exclude ACV associated with the Company’s Russia business for all periods presented.
Bookings is the total value of customer term license and perpetual license SMS contracts signed and delivered in the current period, less the value of such contracts signed in the current period where the initial licenses and SMS agreements are not yet deemed delivered, plus the term license contracts and perpetual license SMS contracts signed in a previous period for which the initial licenses are deemed delivered in the current period.

About AspenTech

Aspen Technology, Inc. (NASDAQ: AZPN) is a global software leader helping industries at the forefront of the world’s dual challenge meet the increasing demand for resources from a rapidly growing population in a profitable and sustainable manner. AspenTech solutions address complex environments where it is critical to optimize the asset design, operation and maintenance lifecycle. Through our unique combination of deep domain expertise and innovation, customers in asset-intensive industries can run their assets safer, greener, longer and faster to improve their operational excellence. To learn more, visit AspenTech.com.

Additional Information and Where to Find it

No tender offer for the shares of the Company has commenced at this time. This communication is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell shares of the Company, nor is it a substitute for the tender offer materials that Emerson and the Purchaser will file with the SEC upon the commencement of the offer. A solicitation and offer to buy outstanding shares of the Company will only be made pursuant to the tender offer materials that Emerson and the Purchaser intend to file with the SEC. At the time the tender offer is commenced, Emerson and the Purchaser will file tender offer materials on Schedule TO and the Company will file a Solicitation/Recommendation Statement on Schedule 14D-9 and a transaction statement on Schedule 13E-3 with the SEC with respect to the tender offer. THE TENDER OFFER MATERIALS (INCLUDING AN OFFER TO PURCHASE, A RELATED LETTER OF TRANSMITTAL AND CERTAIN OTHER TENDER OFFER DOCUMENTS), THE SOLICITATION/RECOMMENDATION STATEMENT AND THE SCHEDULE 13E-3 WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND THE PARTIES THERETO. STOCKHOLDERS OF THE COMPANY ARE URGED TO READ THESE DOCUMENTS CAREFULLY WHEN THEY BECOME AVAILABLE (AND EACH AS IT MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME) BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION THAT STOCKHOLDERS OF THE COMPANY SHOULD CONSIDER BEFORE MAKING ANY DECISION REGARDING TENDERING THEIR SHARES OF COMMON STOCK IN THE TENDER OFFER. The tender offer materials (including the Offer to Purchase and the related Letter of Transmittal), the Solicitation/Recommendation Statement and the Schedule 13E-3 will be made available for free at the SEC’s website at www.sec.gov. In addition, free copies of these materials (if and when they become available) will be made available by the Company by mail to Aspen Technology, Inc., 20 Crosby Dr., Bedford, MA 01730, Attn: Investor Relations, by email at IR@aspentech.com or on the Company’s internet website at https://ir.aspentech.com.

Forward-Looking Statements

This communication contains forward-looking statements related to the Company, Emerson and the proposed acquisition by Emerson of the outstanding shares of common stock of the Company that Emerson does not already own (the “Transaction”), which involve substantial risks and uncertainties. Forward-looking statements include any statements containing the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “goal,” “may,” “might,” “plan,” “predict,” “project,” “seek,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue” and similar expressions.

Forward-looking statements reflect current beliefs and expectations; however, these statements involve inherent risks and uncertainties, including with respect to consummating the Transaction and any competing offers or acquisition proposals for the Company, uncertainties as to how many of the Company’s stockholders will tender their stock in the tender offer, the effects of the Transaction (or the announcement thereof) on the Company’s stock price, relationships with key third parties or governmental entities, transaction costs, risks that the Transaction disrupts current plans and operations or adversely affects employee retention, potentially diverting management’s attention from the Company’s ongoing business operations, changes in the Company’s business during the period between announcement and closing of the Transaction, and any legal proceedings that may be instituted related to the Transaction. Actual results could differ materially due to various factors, risks and uncertainties. Among other things, there can be no guarantee that the Transaction will be completed in the anticipated timeframe or at all, that the conditions required to complete the Transaction will be met, that any event, change or other circumstance that could give rise to the termination of the definitive agreement for the Transaction will not occur or that Emerson will realize the expected benefits of the Transaction; and other risks listed under the heading “Risk Factors” in the Company’s periodic reports filed with the SEC, including Current Reports on Form 8-K, Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K, as well as the Schedule 14D-9 and Schedule 13E-3 that may be filed by the Company and the Schedule TO and related tender offer documents that may be filed by Emerson. You should not place undue reliance on these statements. All forward-looking statements are based on information currently available to the Company, and the Company disclaims any obligation to update the information contained in this communication as new information becomes available.

© 2025 Aspen Technology, Inc. AspenTech, aspenONE, asset optimization and the Aspen leaf logo are trademarks of Aspen Technology, Inc. All rights reserved. All other trademarks not owned by AspenTech are property of their respective owners.

Use of Non-GAAP Financial Measures

This press release contains “non-GAAP financial measures” under the rules of the SEC. 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.

ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three Months Ended December 31,

Six Months Ended December 31,

2024

2023

2024

2023

(Dollars and Shares in Thousands, Except per Share Data)

Revenue:

License and solutions

188,248

152,463

289,907

301,111

Maintenance

90,577

85,056

181,263

170,024

Services and other

24,730

19,644

48,262

35,336

Total revenue

303,555

257,163

519,432

506,471

Cost of revenue:

License and solutions

61,197

67,326

124,851

138,903

Maintenance

12,159

10,647

22,847

20,848

Services and other

20,908

16,960

42,013

33,242

Total cost of revenue

94,264

94,933

189,711

192,993

Gross profit

209,291

162,230

329,721

313,478

Operating expenses:

Selling and marketing

117,961

122,240

243,622

244,618

Research and development

48,115

53,145

98,115

106,821

General and administrative

33,745

36,088

66,753

71,494

Restructuring costs

484

—

8,210

—

Total operating expenses

200,305

211,473

416,700

422,933

Income (loss) from operations

8,986

(49,243

)

(86,979

)

(109,455

)

Other expense, net

(8,905

)

(199

)

(6,864

)

(6,029

)

Interest income, net

16,481

12,283

33,657

26,333

Income (loss) before benefit for income taxes

16,562

(37,159

)

(60,186

)

(89,151

)

Benefit for income taxes

(3,779

)

(15,659

)

(20,063

)

(33,126

)

Net income (loss)

20,341

(21,500

)

(40,123

)

(56,025

)

Net income (loss) per common share:

Basic

0.32

(0.34

)

(0.63

)

(0.88

)

Diluted

0.32

(0.34

)

(0.63

)

(0.88

)

Weighted average shares outstanding:

Basic

63,259

63,699

63,252

64,009

Diluted

63,638

63,699

63,252

64,009

ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

December 31, 2024

June 30, 2024

(Dollars in Thousands, Except Share Data)

ASSETS

Current assets:

Cash and cash equivalents

181,814

236,970

Accounts receivable, net

133,043

115,533

Current contract assets, net

471,294

409,177

Prepaid expenses and other current assets

27,910

27,441

Receivables from related parties

69,670

78,483

Prepaid income taxes

9,347

8,462

Total current assets

893,078

876,066

Property, equipment and leasehold improvements, net

17,270

17,389

Goodwill

8,356,307

8,328,201

Intangible assets, net

3,960,147

4,184,750

Non-current contract assets, net

546,664

515,106

Contract costs

27,180

24,903

Operating lease right-of-use assets

91,874

96,034

Deferred income tax assets

5,369

6,989

Other non-current assets

38,901

22,269

Total assets

13,936,790

14,071,707

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

11,202

8,099

Accrued expenses and other current liabilities

78,718

100,167

Due to related parties

19,958

47,449

Current operating lease liabilities

10,734

13,125

Income taxes payable

26,979

44,249

Current contract liabilities

120,820

124,312

Total current liabilities

268,411

337,401

Non-current contract liabilities

50,032

27,512

Deferred income tax liabilities

727,913

790,687

Non-current operating lease liabilities

84,863

84,875

Other non-current liabilities

28,464

18,377

Stockholders’ equity:

Common stock, $0.0001 par value Authorized—600,000,000 shares Issued— 65,514,052 and 65,367,159 shares Outstanding— 63,305,569 and 63,251,495 shares

Additional paid-in capital

13,309,255

13,277,851

Accumulated deficit

(91,285

)

(51,162

)

Accumulated other comprehensive loss

(13,803

)

(7,261

)

Treasury stock, at cost — 2,208,483 and 2,115,664 shares of common stock

(427,067

)

(406,580

)

Total stockholders’ equity

12,777,107

12,812,855

Total liabilities and stockholders’ equity

13,936,790

14,071,707

ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Three Months Ended December 31,

Six Months Ended December 31,

2024

2023

2024

2023

(Dollars in Thousands)

Cash flows from operating activities:

Net income (loss)

20,341

(21,500

)

(40,123

)

(56,025

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

124,780

123,167

247,636

246,386

Reduction in the carrying amount of right-of-use assets

3,990

3,370

7,951

6,932

Net foreign currency losses

8,989

274

6,869

6,168

Stock-based compensation

14,582

16,211

29,396

32,910

Deferred income taxes

(33,512

)

(43,130

)

(65,960

)

(94,210

)

Provision for uncollectible receivables

2,006

1,597

2,497

3,385

Other non-cash operating activities

1,199

(648

)

941

(629

)

Changes in assets and liabilities:

Accounts receivable

(31,352

)

(40,126

)

(18,465

)

(10,709

)

Contract assets

(81,808

)

(33,864

)

(100,659

)

(57,926

)

Contract costs

(433

)

(1,896

)

852

(3,059

)

Lease liabilities

(3,376

)

(3,338

)

(6,417

)

(7,108

)

Prepaid expenses, prepaid income taxes, and other assets

(16,378

)

(584

)

(22,334

)

(17,606

)

Accounts payable, accrued expenses, income taxes payable and other liabilities

11,404

4,523

(25,648

)

9,258

Contract liabilities

17,704

25,771

17,203

(10,959

)

Net cash provided by operating activities

38,136

29,827

33,739

46,808

Cash flows from investing activities:

Purchases of property, equipment and leasehold improvements

(1,111

)

(500

)

(3,133

)

(1,437

)

Payments for business acquisitions, net of cash acquired

(36,490

)

—

(36,490

)

(8,273

)

Payments for equity method investments

(116

)

(423

)

(146

)

(521

)

Payments for capitalized computer software development costs

(634

)

(131

)

(634

)

(131

)

Payments for asset acquisitions

—

(12,500

)

Net cash used in investing activities

(38,351

)

(1,054

)

(40,403

)

(22,862

)

Cash flows from financing activities:

Issuance of shares of common stock, net of taxes

4,731

4,635

10,993

7,920

Repurchases of common stock

(2,220

)

(72,105

)

(22,707

)

(186,329

)

Payment of tax withholding obligations related to restricted stock

(3,813

)

(11,905

)

(8,448

)

(13,843

)

Net transfers (to) from Parent Company

(29,256

)

64,865

(20,420

)

68,755

Payments of debt issuance costs

(705

)

—

(812

)

—

Net cash used in financing activities

(31,263

)

(14,510

)

(41,394

)

(123,497

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

(4,209

)

(4,050

)

(945

)

(10,905

)

(Decrease) increase in cash, cash equivalents and restricted cash

(35,687

)

10,213

(49,003

)

(110,456

)

Cash, cash equivalents and restricted cash, beginning of period

235,152

120,540

248,468

241,209

Cash, cash equivalents and restricted cash, end of period

199,465

130,753

199,465

130,753

Reconciliation of cash, cash equivalents and restricted cash:

Cash and cash equivalents

181,814

130,753

181,814

130,753

Restricted cash in other non-current assets

17,651

—

17,651

—

Total cash, cash equivalents and restricted cash

199,465

130,753

199,465

130,753

ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES

Reconciliation of GAAP to Non-GAAP Results of Operations and Cash Flows

(Unaudited)

Three Months Ended December 31,

Six Months Ended December 31,

2024

2023

2024

2023

(Dollars and Shares in Thousands, Except per Share Data)

Total expenses

GAAP total expenses (a)

294,569

306,406

606,411

615,926

Less:

Stock-based compensation (b)

(14,582

)

(16,211

)

(29,396

)

(32,910

)

Amortization of intangibles (c)

(122,286

)

(121,565

)

(243,875

)

(243,152

)

Acquisition and integration planning related fees

(2,641

)

(125

)

(3,046

)

130

Restructuring costs3

(484

)

—

(8,210

)

—

Non-GAAP total expenses

154,576

168,505

321,884

339,994

Income (loss) from operations

GAAP income (loss) from operations

8,986

(49,243

)

(86,979

)

(109,455

)

Plus:

Stock-based compensation (b)

14,582

16,211

29,396

32,910

Amortization of intangibles (c)

122,286

121,565

243,875

243,152

Acquisition and integration planning related fees

2,641

125

3,046

(130

)

Restructuring costs3

484

—

8,210

—

Non-GAAP income from operations

148,979

88,658

197,548

166,477

Net income (loss)

GAAP net income (loss)

20,341

(21,500

)

(40,123

)

(56,025

)

Plus:

Stock-based compensation (b)

14,582

16,211

29,396

32,910

Amortization of intangibles (c)

122,286

121,565

243,875

243,152

Acquisition and integration planning related fees

2,641

125

3,046

(130

)

Restructuring costs3

484

—

8,210

—

Less:

Income tax effect on Non-GAAP items (d)

(29,234

)

(28,621

)

(59,436

)

(57,257

)

Non-GAAP net income

131,100

87,780

184,968

162,650

Diluted income (loss) per share

GAAP diluted income (loss) per share

0.32

(0.34

)

(0.63

)

(0.88

)

Plus:

Stock-based compensation (b)

0.23

0.25

0.46

0.51

Amortization of intangibles (c)

1.92

1.90

3.84

3.78

Acquisition and integration planning related fees

0.04

—

0.05

—

Restructuring costs3

0.01

—

0.13

—

Impact of diluted shares

—

0.01

(0.01

)

0.01

Less:

Income tax effect on Non-GAAP items (d)

(0.46

)

(0.45

)

(0.93

)

(0.89

)

Non-GAAP diluted income per share

2.06

1.37

2.91

2.53

Shares used in computing Non-GAAP diluted income per share

63,638

64,008

63,590

64,343

(3)

AspenTech incurred restructuring costs as a result of its workforce reduction and Russian business exit, which were both announced in August 2024.

Three Months Ended December 31,

Six Months Ended December 31,

2024

2023

2024

2023

(Dollars in Thousands)

Free Cash Flow

Net cash provided by operating activities (GAAP)

38,136

29,827

33,739

46,808

Purchases of property, equipment and leasehold improvements

(1,111

)

(500

)

(3,133

)

(1,437

)

Payments for capitalized computer software development costs

(634

)

(131

)

(634

)

(131

)

Free cash flow (non-GAAP)

36,391

29,196

29,972

45,240

(a) GAAP total expenses

Total costs of revenue

94,264

94,933

189,711

192,993

Total operating expenses

200,305

211,473

416,700

422,933

GAAP total expenses

294,569

306,406

606,411

615,926

(b) Stock-based compensation expense was as follows:

Cost of license and solutions

578

602

1,129

1,282

Cost of maintenance

893

729

1,780

1,217

Cost of services and other

1,430

360

2,475

858

Selling and marketing

2,382

2,707

5,312

5,649

Research and development

3,306

3,719

6,306

8,272

General and administrative

5,993

8,094

12,394

15,632

Total stock-based compensation

14,582

16,211

29,396

32,910

Cost of license and solutions

48,860

48,035

97,062

96,070

Selling and marketing

73,426

73,552

146,813

147,082

Total amortization of intangible assets

122,286

121,587

243,875

243,152

(d) The income tax effect on non-GAAP items for the three and six months ended December 31, 2024 and 2023, respectively, is calculated utilizing the Company’s combined US federal and state statutory tax rate as following:

U.S. Statutory Rate

21.79