Aspen Technology, Inc. (NASDAQ: AZPN), the asset optimization software
company, today announced financial results for its third quarter of
fiscal year 2019 ended March 31, 2019.
“AspenTech’s strong third quarter results were highlighted by annual
spend growth of 9.7% year-over-year and positive growth contributions
from each product suite and geography,” said Antonio Pietri, President
and Chief Executive Officer of Aspen Technology. “Our performance
benefited from investments in our strategic growth initiatives in recent
quarters, an improving macroeconomic outlook for our Engineering &
Construction and upstream customers, and strong execution by the
AspenTech team.”
Pietri continued, “Our APM business had a record annual spend quarter as
customers increasingly recognized the value predictive and prescriptive
maintenance can have in improving their asset operations. We also saw
broadening adoption within the APM suite, including the first site
licenses for Aspen ProMV, our multivariate analysis solution. We believe
our strong APM performance is indicative of the substantial opportunity
for the APM suite and our strengthening competitive position in this
market.”
Third 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 $526 million at the end of the third quarter of fiscal
2019, which increased 9.7% compared to the third quarter of fiscal
2018 and 2.6% sequentially. -
AspenTech repurchased approximately 800,000 shares of its common stock
for $75 million in the third quarter of fiscal 2019.
Summary of Third Quarter Fiscal Year 2019 Financial Results
AspenTech’s total revenue of $148 million included:
-
License revenue, which represents the portion of a term license
agreement allocated to the initial license, was $98.5 million
in the third quarter of fiscal 2019, compared to $79.1 million in the
third 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 $41.9 million in the third quarter of
fiscal 2019, compared to $40.9 million in the third quarter of fiscal
2018. -
Services and other revenue was $7.6 million in the third
quarter of fiscal 2019, compared to $7.8 million in the third quarter
of fiscal 2018.
For the quarter ended March 31, 2019, AspenTech reported income from
operations of $70.8 million, compared to income from operations of $53.6
million for the quarter ended March 31, 2018.
Net income was $61.6 million for the quarter ended March 31, 2019,
leading to net income per share of $0.88, compared to net income per
share of $0.61 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 $78.3 million for
the third quarter of fiscal 2019, compared to non-GAAP income from
operations of $59.9 million in the same period last fiscal year.
Non-GAAP net income was $67.5 million, or $0.96 per share, for the third
quarter of fiscal 2019, compared to non-GAAP net income of $49.0
million, or $0.67 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 $65.6 million and
borrowings of $220 million at March 31, 2019.
During the third quarter, the company generated $90.0 million in cash
flow from operations and $89.1 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 Aspen Technology’s business. As the result of adoption of new
licensing models, management believes that a number of Aspen
Technology’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 Aspen Technology’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 Aspen Technology’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
Aspen Technology will host a conference call and webcast today, April
24, 2019, at 4:30 p.m. (Eastern Time), to discuss the company’s
financial results for the third 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 4067052. Interested parties may also
listen to a live webcast of the call by logging on to the Investor
Relations section of Aspen Technology’s website, http://ir.aspentech.com/events-and-presentations,
and clicking on the “webcast” link. A replay of the call will be
archived on Aspen Technology’s website and will also be available via
telephone at (855) 859-2056 or (404) 537-3406, conference ID code
4067052, through May 24, 2019.
About Aspen Technology
Aspen Technology (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 safer, greener, longer and faster. 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 Aspen Technology’s (AspenTech) 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, the Aspen leaf logo,
Aspen, Aspen ProMV and Aspen Mtell are trademarks of Aspen Technology,
Inc. All rights reserved.
Source: Aspen Technology, Inc.
ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES |
|||||||||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
As Adjusted | As Adjusted | ||||||||||||||||||||
Revenue: | |||||||||||||||||||||
License | $ | 98,493 | $ | 79,073 | $ | 255,616 | $ | 214,938 | |||||||||||||
Maintenance | 41,878 | 40,897 | 125,955 | 121,890 | |||||||||||||||||
Services and other | 7,613 | 7,788 | 21,005 | 22,947 | |||||||||||||||||
Total revenue | 147,984 | 127,758 | 402,576 | 359,775 | |||||||||||||||||
Cost of revenue: | |||||||||||||||||||||
License | 1,658 | 1,279 | 5,142 | 3,743 | |||||||||||||||||
Maintenance | 4,962 | 4,259 | 14,241 | 13,061 | |||||||||||||||||
Services and other | 7,740 | 7,238 | 22,943 | 20,793 | |||||||||||||||||
Total cost of revenue | 14,360 | 12,776 | 42,326 | 37,597 | |||||||||||||||||
Gross profit | 133,624 | 114,982 | 360,250 | 322,178 | |||||||||||||||||
Operating expenses: | |||||||||||||||||||||
Selling and marketing | 27,410 | 25,246 | 80,532 | 72,690 | |||||||||||||||||
Research and development | 20,520 | 21,584 | 61,893 | 60,863 | |||||||||||||||||
General and administrative | 14,863 | 14,533 | 46,246 | 49,188 | |||||||||||||||||
Total operating expenses | 62,793 | 61,363 | 188,671 | 182,741 | |||||||||||||||||
Income from operations | 70,831 | 53,619 | 171,579 | 139,437 | |||||||||||||||||
Interest income | 6,835 | 6,304 | 21,389 | 18,849 | |||||||||||||||||
Interest (expense) | (2,350 | ) | (1,485 | ) | (6,328 | ) | (3,952 | ) | |||||||||||||
Other (expense), net | (34 | ) | (104 | ) | (485 | ) | (958 | ) | |||||||||||||
Income before income taxes | 75,282 | 58,334 | 186,155 | 153,376 | |||||||||||||||||
Provision for (benefit from) income taxes | 13,695 | 13,829 | 27,286 | (63,681 | ) | ||||||||||||||||
Net income | $ | 61,587 | $ | 44,505 | $ | 158,869 | $ | 217,057 | |||||||||||||
Net income per common share: | |||||||||||||||||||||
Basic | $ | 0.89 | $ | 0.62 | $ | 2.26 | $ | 3.00 | |||||||||||||
Diluted | $ | 0.88 | $ | 0.61 | $ | 2.23 | $ | 2.97 | |||||||||||||
Weighted average shares outstanding: | |||||||||||||||||||||
Basic | 69,423 | 71,828 | 70,286 | 72,402 | |||||||||||||||||
Diluted | 70,160 | 72,663 | 71,142 | 73,136 |
ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES |
|||||||||||
March 31, |
June 30, 2018 |
||||||||||
As Adjusted | |||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 65,592 | $ | 96,165 | |||||||
Accounts receivable, net | 45,293 | 41,810 | |||||||||
Current contract assets | 314,745 | 304,378 | |||||||||
Contract costs | 24,325 | 20,500 | |||||||||
Prepaid expenses and other current assets | 11,124 | 10,509 | |||||||||
Prepaid income taxes | 1,573 | 2,601 | |||||||||
Total current assets | 462,652 | 475,963 | |||||||||
Property, equipment and leasehold improvements, net | 7,589 | 9,806 | |||||||||
Computer software development costs, net | 1,452 | 646 | |||||||||
Goodwill | 73,534 | 75,590 | |||||||||
Intangible assets, net | 31,756 | 35,310 | |||||||||
Non-current contract assets | 358,709 | 340,622 | |||||||||
Deferred tax assets | 1,696 | 11,090 | |||||||||
Other non-current assets | 1,279 | 1,297 | |||||||||
Total assets | $ | 938,667 | $ | 950,324 | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 4,023 | $ | 4,230 | |||||||
Accrued expenses and other current liabilities | 42,746 | 39,515 | |||||||||
Income taxes payable | 35,582 | 1,698 | |||||||||
Borrowings under credit agreement | 220,000 | 170,000 | |||||||||
Current deferred revenue | 24,415 | 15,150 | |||||||||
Total current liabilities | 326,766 | 230,593 | |||||||||
Non-current deferred revenue | 19,312 | 12,354 | |||||||||
Deferred income taxes | 154,901 | 214,125 | |||||||||
Other non-current liabilities | 12,403 | 17,068 | |||||||||
Commitments and contingencies (Note 16) | |||||||||||
Series D redeemable convertible preferred stock, $0.10 par value— Authorized— 3,636 shares as of March 31, 2019 and June 30, 2018 Issued and outstanding— none as of March 31, 2019 and June 30, 2018 |
— | — | |||||||||
Stockholders’ equity: | |||||||||||
Common stock, $0.10 par value— Authorized—210,000,000 shares Issued— 103,478,590 shares at March 31, 2019 and 103,130,300 shares at June 30, 2018 Outstanding— 69,108,515 shares at March 31, 2019 and 71,186,701 shares at June 30, 2018 |
10,348 | 10,313 | |||||||||
Additional paid-in capital | 730,830 | 715,475 | |||||||||
Retained earnings | 1,224,377 | 1,065,507 | |||||||||
Accumulated other comprehensive income | 1,229 | 1,388 | |||||||||
Treasury stock, at cost—34,370,075 shares of common stock at March 31, 2019 and 31,943,599 shares at June 30, 2018 |
(1,541,499 | ) | (1,316,499 | ) | |||||||
Total stockholders’ equity | 425,285 | 476,184 | |||||||||
Total liabilities and stockholders’ equity | $ | 938,667 | $ | 950,324 |
ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES |
|||||||||||||||||||||
Three Months Ended |
Nine Months Ended March 31, |
||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
As Adjusted | As Adjusted | ||||||||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||||
Net income | $ | 61,587 | $ | 44,505 | $ | 158,869 | $ | 217,057 | |||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||||||||||||||||
Depreciation and amortization | 2,014 | 1,544 | 6,063 | 4,902 | |||||||||||||||||
Net foreign currency (gains) losses | (295 | ) | 96 | 23 | 1,086 | ||||||||||||||||
Stock-based compensation | 6,254 | 5,353 | 21,454 | 17,222 | |||||||||||||||||
Deferred income taxes | (2,373 | ) | (32,662 | ) | (49,847 | ) | (123,443 | ) | |||||||||||||
Provision for (recovery from) bad debts | (353 | ) | 1,401 | 474 | 1,373 | ||||||||||||||||
Other non-cash operating activities | 124 | 107 | 341 | 314 | |||||||||||||||||
Changes in assets and liabilities: | |||||||||||||||||||||
Accounts receivable | 12,281 | 1,762 | (4,183 | ) | 1,429 | ||||||||||||||||
Contract assets | 14,531 | 33,160 | (27,397 | ) | (7,767 | ) | |||||||||||||||
Contract costs | (1,279 | ) | (592 | ) | (3,825 | ) | (651 | ) | |||||||||||||
Prepaid expenses, prepaid income taxes, and other assets | (1,543 | ) | 3,949 | 201 | 4,908 | ||||||||||||||||
Accounts payable, accrued expenses, income taxes payable and other liabilities |
(4,738 | ) | (2,656 | ) | 32,980 | (4,448 | ) | ||||||||||||||
Deferred revenue | 3,829 | 17,100 | 17,983 | 15,847 | |||||||||||||||||
Net cash provided by operating activities | 90,039 | 73,067 | 153,136 | 127,829 | |||||||||||||||||
Cash flows from investing activities: | |||||||||||||||||||||
Purchases of property, equipment and leasehold improvements | (26 | ) | (61 | ) | (206 | ) | (217 | ) | |||||||||||||
Payments for business acquisitions, net of cash | — | (22,900 | ) | — | (33,700 | ) | |||||||||||||||
Payments for capitalized computer software costs | (905 | ) | 57 | (1,094 | ) | (299 | ) | ||||||||||||||
Net cash used in investing activities | (931 | ) | (22,904 | ) | (1,300 | ) | (34,216 | ) | |||||||||||||
Cash flows from financing activities: | |||||||||||||||||||||
Exercises of stock options | 1,415 | 3,854 | 5,881 | 7,402 | |||||||||||||||||
Repurchases of common stock | (76,759 | ) | (49,328 | ) | (224,182 | ) | (154,365 | ) | |||||||||||||
Payments of tax withholding obligations related to restricted stock | (2,262 | ) | (1,945 | ) | (11,916 | ) | (5,412 | ) | |||||||||||||
Deferred business acquisition payments | (500 | ) | — | (1,700 | ) | (2,600 | ) | ||||||||||||||
Proceeds from credit agreement | — | 19,000 | 50,000 | 30,000 | |||||||||||||||||
Payments of credit agreement issuance costs | — | — | — | (351 | ) | ||||||||||||||||
Net cash used in financing activities | (78,106 | ) | (28,419 | ) | (181,917 | ) | (125,326 | ) | |||||||||||||
Effect of exchange rate changes on cash and cash equivalents | 162 | 628 | (492 | ) | 834 | ||||||||||||||||
Increase (decrease) in cash and cash equivalents | 11,164 | 22,372 | (30,573 | ) | (30,879 | ) | |||||||||||||||
Cash and cash equivalents, beginning of period | 54,428 | 48,703 | 96,165 | 101,954 | |||||||||||||||||
Cash and cash equivalents, end of period | $ | 65,592 | $ | 71,075 | $ | 65,592 | $ | 71,075 | |||||||||||||
Supplemental disclosure of cash flow information: | |||||||||||||||||||||
Income taxes paid, net | $ |
21,296 |
$ | 8,920 | $ |
39,123 |
$ | 38,662 | |||||||||||||
Interest paid | 2,187 | 1,417 | 5,728 | 3,456 |
ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES |
|||||||||||||||||||||
Three Months Ended March 31, |
Nine Months Ended March 31, |
||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
As Adjusted | As Adjusted | ||||||||||||||||||||
Total expenses |
|||||||||||||||||||||
GAAP total expenses (a) | $ | 77,153 | $ | 74,139 | $ | 230,997 | $ | 220,338 | |||||||||||||
Less: | |||||||||||||||||||||
Stock-based compensation (b) | (6,254 | ) | (5,353 | ) | (21,454 | ) | (17,222 | ) | |||||||||||||
Amortization of intangibles | (1,157 | ) | (526 | ) | (3,380 | ) | (1,578 | ) | |||||||||||||
Litigation judgment | — | — | — | (1,548 | ) | ||||||||||||||||
Acquisition related fees | (15 | ) | (378 | ) | (8 | ) | (706 | ) | |||||||||||||
Non-GAAP total expenses | $ | 69,727 | $ | 67,882 | $ | 206,155 | $ | 199,284 | |||||||||||||
Income from operations |
|||||||||||||||||||||
GAAP income from operations | $ | 70,831 | $ | 53,619 | $ | 171,579 | $ | 139,437 | |||||||||||||
Plus: | |||||||||||||||||||||
Stock-based compensation (b) | 6,254 | 5,353 | 21,454 | 17,222 | |||||||||||||||||
Amortization of intangibles | 1,157 | 526 | 3,380 | 1,578 | |||||||||||||||||
Litigation judgment | — | — | — | 1,548 | |||||||||||||||||
Acquisition related fees | 15 | 378 | 8 | 706 | |||||||||||||||||
Non-GAAP income from operations | $ | 78,257 | $ | 59,876 | $ | 196,421 | $ | 160,491 | |||||||||||||
Net income |
|||||||||||||||||||||
GAAP net income | $ | 61,587 | $ | 44,505 | $ | 158,869 | $ | 217,057 | |||||||||||||
Plus: | |||||||||||||||||||||
Stock-based compensation (b) | 6,254 | 5,353 | 21,454 | 17,222 | |||||||||||||||||
Amortization of intangibles | 1,157 | 526 | 3,380 | 1,578 | |||||||||||||||||
Litigation judgment | — | — | — | 1,548 | |||||||||||||||||
Acquisition related fees | 15 | 378 | 8 | 706 | |||||||||||||||||
Less: | |||||||||||||||||||||
Income tax effect on Non-GAAP items (c) | (1,559 | ) | (1,758 | ) | (5,217 | ) | (5,916 | ) | |||||||||||||
Non-GAAP net income | $ | 67,454 | $ | 49,004 | $ | 178,494 | $ | 232,195 | |||||||||||||
Diluted income per share |
|||||||||||||||||||||
GAAP diluted income per share | $ | 0.88 | $ | 0.61 | $ | 2.23 | $ | 2.97 | |||||||||||||
Plus: | |||||||||||||||||||||
Stock-based compensation (b) | 0.08 | 0.06 | 0.30 | 0.23 | |||||||||||||||||
Amortization of intangibles | 0.02 | 0.01 | 0.05 | 0.02 | |||||||||||||||||
Litigation judgment | — | — | — | 0.02 | |||||||||||||||||
Acquisition related fees | — | 0.01 | — | 0.01 | |||||||||||||||||
Less: | |||||||||||||||||||||
Income tax effect on Non-GAAP items (c) | (0.02 | ) | (0.02 | ) | (0.07 | ) | (0.08 | ) | |||||||||||||
Non-GAAP diluted income per share | $ | 0.96 | $ | 0.67 | $ | 2.51 | $ | 3.17 | |||||||||||||
Shares used in computing Non-GAAP diluted income per share | 70,160 | 72,663 | 71,142 | 73,136 | |||||||||||||||||
Three Months Ended March 31, |
Nine Months Ended March 31, |
||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
As Adjusted | As Adjusted | ||||||||||||||||||||
Free Cash Flow |
|||||||||||||||||||||
GAAP cash flow from operating activities | $ | 90,039 | $ | 73,067 | $ | 153,136 | $ | 127,829 | |||||||||||||
Purchase of property, equipment and leasehold improvements | (26 | ) | (61 | ) | (206 | ) | (217 | ) | |||||||||||||
Capitalized computer software development costs | (905 | ) | 57 | (1,094 | ) | (299 | ) | ||||||||||||||
Non-capitalized acquired technology (d) | — | — | — | 75 | |||||||||||||||||
Acquisition related fee payments | 16 | 780 | 27 | 868 | |||||||||||||||||
Litigation related payments | — | 4,286 | — | 4,286 | |||||||||||||||||
Free Cash Flow | $ | 89,124 | $ | 78,129 | $ | 151,863 | $ | 132,542 | |||||||||||||
(a) GAAP total expenses | |||||||||||||||||||||
Three Months Ended March 31, |
Nine Months Ended March 31, |
||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
As Adjusted | As Adjusted | ||||||||||||||||||||
Total costs of revenue | $ | 14,360 | $ | 12,776 | $ | 42,326 | $ | 37,597 | |||||||||||||
Total operating expenses | 62,793 | 61,363 | 188,671 | 182,741 | |||||||||||||||||
GAAP total expenses | $ | 77,153 | $ | 74,139 | $ | 230,997 | $ | 220,338 | |||||||||||||
(b) Stock-based compensation expense was as follows: | |||||||||||||||||||||
Three Months Ended March 31, |
Nine Months Ended March 31, |
||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
Cost of maintenance | $ | 379 | $ | — | $ | 916 | $ | — | |||||||||||||
Cost of services and other | 366 | 345 | 1,038 | 1,119 | |||||||||||||||||
Selling and marketing | 1,228 | 979 | 3,687 | 2,870 | |||||||||||||||||
Research and development | 1,518 | 1,892 | 5,451 | 5,679 | |||||||||||||||||
General and administrative | 2,763 | 2,137 | 10,362 | 7,554 | |||||||||||||||||
Total stock-based compensation | $ | 6,254 | $ | 5,353 | $ | 21,454 | $ | 17,222 |
(c) The income tax effect on non-GAAP items for the three and nine |
(d) In the nine months ended March 31, 2018, 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. |
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