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Aspen Technology Announces Financial Results For The First Quarter Of Fiscal 2024

By Business Wire

Business Wire
Overall Rating

BEDFORD, Mass.--(BUSINESS WIRE)--Aspen Technology, Inc. (AspenTech) (NASDAQ: AZPN), a global leader in industrial software, today announced financial results for its first quarter in fiscal 2024, ended September 30, 2023.

“We delivered solid results in the first quarter, once again achieving double-digit ACV growth on strong demand across most markets,” said Antonio Pietri, President and Chief Executive Officer of AspenTech. “While our first year as new AspenTech was centered on building the foundation, our focus in fiscal 2024 is on execution and expansion. Our work in these areas is off to a strong start, and we remain committed to helping our customers to run their assets safer, greener, longer, and faster through our expanded portfolio and greater market reach.”

Pietri continued, “AspenTech solutions are mission-critical to customers around the world. We are seeing numerous opportunities to help asset-intensive companies better meet their profitability and sustainability objectives as well as promising signs of growth across many different sustainability pathways. We remain confident in our business outlook and are reiterating our guidance for fiscal 2024.”

First Quarter Fiscal Year 2024 Recent Business Highlights

  • Annual contract value1 (“ACV”) was $897.6 million at the end of the first quarter of fiscal 2024, increasing 10.9% year over year and 1.4% quarter over quarter.
  • Operating cash flow was $17.0 million for the first quarter of fiscal 2024, compared to $5.1 million in the first quarter of fiscal 2023.
  • Free cash flow2 was $16.0 million for the first quarter of fiscal 2024, compared to $3.7 million in the first quarter of fiscal 2023.

Summary of First Quarter Fiscal Year 2024 Financial Results

AspenTech’s total revenue was $249.3 million in the first quarter of fiscal 2024 and included the following:

  • License and solutions revenue, which represents the portion of a term license agreement allocated to the initial license and Open Systems International, Inc. (OSI) revenue where software, hardware and professional services are recognized as one performance obligation, was $148.6 million in the first quarter of fiscal 2024, compared to $160.2 million in the first quarter of fiscal 2023.
  • Maintenance revenue, which represents the portion of customer agreements related to ongoing support and the right to future product enhancements, was $85.0 million in the first quarter of fiscal 2024, compared to $78.4 million in the first quarter of fiscal 2023.
  • Services and other revenue, which represents the portion of customer agreements related to professional services and training services, was $15.7 million in the first quarter of fiscal 2024, compared to $12.2 million in the first quarter of fiscal 2023.

Loss from operations was $60.2 million in the first quarter of fiscal 2024, compared to loss from operations of $51.2 million in the first quarter of fiscal 2023. Non-GAAP income from operations was $77.8 million in the first quarter of fiscal 2024, compared to $92.6 million in the first quarter of fiscal 2023. A reconciliation of GAAP to non-GAAP results is presented in the financial tables included in this press release.

Net loss was $34.5 million, or $0.54 per diluted share, in the first quarter of fiscal 2024, compared to a net loss of $11.2 million, or $0.17 per diluted share, in the first quarter of fiscal 2023. AspenTech has increased amortization of intangible assets following the close of its transaction with Emerson Electric Co. As a result, AspenTech expects its amortization of intangible assets to remain at higher levels for the next several years as the related asset balance is amortized over the respective expected useful lives of the intangible assets.

Non-GAAP net income was $74.9 million, or $1.16 per share, in the first quarter of fiscal 2024, compared to non-GAAP net income of $142.0 million, or $2.20 per share, in the first quarter of fiscal 2023. The year-over-year decrease in non-GAAP net income was mainly due to the lower benefit from income taxes in the first quarter of fiscal 2024, following AspenTech's change in approach to computing its tax provision, which initially occurred in the second quarter of fiscal 2023.

AspenTech had cash and cash equivalents of $120.5 million as of September 30, 2023, compared to $241.2 million as of June 30, 2023. The decrease in cash and cash equivalents was due to the impact of share repurchase activity under AspenTech’s $300.0 million share repurchase authorization in the first quarter of fiscal 2024. AspenTech had no borrowings and $197.7 million available under its revolving credit facility as of September 30, 2023.

AspenTech generated $17.0 million in cash flow from operations and $16.0 million in free cash flow2 in the first quarter of fiscal 2024, compared to $5.1 million in cash flow from operations and $3.7 million in free cash flow in the first quarter of fiscal 2023. Free cash flow is a non-GAAP metric that is calculated as net cash provided by operating activities adjusted for the net impact of purchases of property, equipment and leasehold improvements and payments for capitalized computer software development costs.

Recent Developments

Chief Financial Officer Transition

On October 19, 2023, AspenTech announced that Chantelle Breithaupt had informed the Company that she plans to step down as Chief Financial Officer for another opportunity. Ms. Breithaupt will continue in her role through December 31, 2023. Christopher Stagno, who currently serves as SVP, Chief Accounting Officer, will assume the role of Interim CFO, effective January 1, 2024, should a permanent CFO not have been named.

Share Repurchase Programs Update

AspenTech settled its $100 million accelerated share repurchase program in the first quarter of fiscal 2024, which resulted in the delivery of an additional 107,045 shares of AspenTech common stock, for a total of 594,671 shares delivered under the program. Upon completion of the accelerated share repurchase program, AspenTech began purchasing shares pursuant to its $300.0 million share repurchase authorization announced on August 1, 2023. During the first quarter of fiscal 2024, AspenTech repurchased 579,798 shares for $114.2 million under the share repurchase authorization. The total value remaining under the share repurchase authorization as of September 30, 2023, was $185.8 million, which AspenTech expects to utilize in the remainder of fiscal 2024.

Fiscal Year 2024 Business Outlook

Based on information as of today, November 6, 2023, AspenTech is issuing the following guidance for fiscal 2024.

  • ACV1 growth of at least 11.5% year-over-year
  • GAAP operating cash flow of at least $378 million
  • Free cash flow2 of at least $360 million
  • Total bookings of at least $1.04 billion
  • Total revenue of at least $1.12 billion
  • GAAP total expense of approximately $1.22 billion
  • Non-GAAP total expense of approximately $675 million
  • GAAP operating loss at or better than $100 million
  • Non-GAAP operating income of at least $445 million
  • GAAP net loss at or better than $7 million
  • Non-GAAP net income of at least $424 million
  • GAAP net loss per share at or better than $0.11
  • Non-GAAP net income per share of at least $6.57

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.

Conference Call and Webcast

AspenTech will host a conference call and webcast presentation on Monday, November 6, 2023, at 4:30 p.m. ET to discuss its financial results, business outlook, and related corporate and financial matters. A live webcast of the call will be available on AspenTech's Investor Relations website, ir.aspentech.com, via its “Webcasts” page. To access the call by phone, please use the following registration link. To avoid delays, we encourage participants to dial into the conference call fifteen minutes ahead of the scheduled start time. A replay of the webcast also will be available for a limited time at http://ir.aspentech.com/.

AspenTech has provided an earnings presentation for its first quarter of fiscal 2024. The Company asks that shareholders refer to this presentation in conjunction with today’s conference call, which can be found at ir.aspentech.com.

Footnotes

  1. AspenTech defines ACV as the estimate of the annual value of our 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 our business.
  2. Effective January 1, 2023, we no longer exclude acquisition and integration planning related payments from our computation of free cash flow. Free cash flow for all prior periods presented has been revised to the current period computation.

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 capital-intensive industries can run their assets safer, greener, longer and faster to improve their operational excellence. To learn more, visit AspenTech.com.

Forward-Looking Statements

Statements in this press release that are not strictly historical may be “forward-looking” statements for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties, and AspenTech undertakes no obligation to update any such statements to reflect later developments. These forward-looking statements include, but are not limited to, our guidance for fiscal 2024, our expectations regarding cash collections and completion of our share repurchase authorization. In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “strategy,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing,” “opportunity” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. These risks and uncertainties include, without limitation: the failure to realize the anticipated benefits of our transaction with Emerson Electric Co.; risks resulting from our status as a controlled company; the scope, duration and ultimate impacts of the Russia-Ukraine war, and the Israeli-Hamas conflict; as well as economic and currency conditions, market demand (including related to the pandemic and adverse changes in the process or other capital-intensive industries such as materially reduced spending budgets due to oil and gas price declines and volatility), pricing, protection of intellectual property, cybersecurity, natural disasters, tariffs, sanctions, competitive and technological factors, and inflation; and others, as set forth in AspenTech’s most recent Annual Report on Form 10-K and subsequent reports filed with the Securities and Exchange Commission. The outlook contained herein represents AspenTech’s expectation for its consolidated results, other than as noted herein.

© 2023 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 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.

ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three Months Ended September 30,

2023

2022

(Dollars and Shares in Thousands, Except per share data)

Revenue:

License and solutions

$

148,648

$

160,224

Maintenance

84,968

78,366

Services and other

15,692

12,229

Total revenue

249,308

250,819

Cost of revenue:

License and solutions

71,578

69,513

Maintenance

10,200

9,217

Services and other

16,282

12,400

Total cost of revenue

98,060

91,130

Gross profit

151,248

159,689

Operating expenses:

Selling and marketing

122,378

118,274

Research and development

53,676

49,740

General and administrative

35,405

42,848

Restructuring costs

9

Total operating expenses

211,459

210,871

Loss from operations

(60,211

)

(51,182

)

Other expense, net

(5,830

)

(58,632

)

Interest income, net

14,049

5,023

Loss before benefit for income taxes

(51,992

)

(104,791

)

Benefit for income taxes

(17,467

)

(93,547

)

Net loss

$

(34,525

)

$

(11,244

)

Net loss per common share:

Basic

$

(0.54

)

$

(0.17

)

Diluted

$

(0.54

)

$

(0.17

)

Weighted average shares outstanding:

Basic

64,319

64,454

Diluted

64,319

64,454

ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

September 30, 2023

June 30, 2023

(Dollars in Thousands, Except Share and Per Share Data)

ASSETS

Current assets:

Cash and cash equivalents

$

120,540

$

241,209

Accounts receivable, net

87,977

122,789

Current contract assets, net

369,019

367,539

Prepaid expenses and other current assets

32,010

27,728

Receivables from related parties

59,458

62,375

Prepaid income taxes

15,319

11,424

Total current assets

684,323

833,064

Property, equipment and leasehold improvements, net

17,484

18,670

Goodwill

8,328,192

8,330,811

Intangible assets, net

4,549,858

4,659,657

Non-current contract assets, net

547,617

536,104

Contract costs

17,138

15,992

Operating lease right-of-use assets

64,322

67,642

Deferred income tax assets

12,019

10,638

Other non-current assets

19,721

13,474

Total assets

$

14,240,674

$

14,486,052

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

15,301

$

20,299

Accrued expenses and other current liabilities

79,536

99,526

Due to related parties

29,253

22,019

Current operating lease liabilities

12,570

12,928

Income taxes payable

48,461

46,205

Current contract liabilities

117,110

151,450

Total current liabilities

302,231

352,427

Non-current contract liabilities

27,671

30,103

Deferred income tax liabilities

911,967

957,911

Non-current operating lease liabilities

52,485

55,442

Other non-current liabilities

19,401

19,240

Stockholders’ equity:

Common stock, $0.0001 par value

Authorized— 600,000,000 shares

Issued— 65,030,408 and 64,952,868 shares

Outstanding— 63,855,939 and 64,465,242 shares

6

6

Additional paid-in capital

13,230,178

13,194,028

Accumulated deficit

(75,916

)

(41,391

)

Accumulated other comprehensive (loss) income

(8,765

)

2,436

Treasury stock, at cost — 1,174,469 and 487,626 shares of common stock

(218,584

)

(84,150

)

Total stockholders’ equity

12,926,919

13,070,929

Total liabilities and stockholders’ equity

$

14,240,674

$

14,486,052

ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Three Months Ended September 30,

2023

2022

(Dollars in Thousands)

Cash flows from operating activities:

Net loss

$

(34,525

)

$

(11,244

)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

123,219

122,546

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

3,562

3,291

Net foreign currency losses

5,894

8,332

Stock-based compensation

16,699

17,736

Deferred income taxes

(51,080

)

(70,438

)

Provision for uncollectible receivables

1,788

3,609

Other non-cash operating activities

19

3,225

Changes in assets and liabilities:

Accounts receivable

29,417

8,009

Contract assets

(24,062

)

(68,357

)

Contract costs

(1,163

)

(3,451

)

Lease liabilities

(3,770

)

(1,659

)

Prepaid expenses, prepaid income taxes, and other assets

(17,022

)

(47,004

)

Liability from foreign currency forward contract

50,259

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

4,735

(13,476

)

Contract liabilities

(36,730

)

3,699

Net cash provided by operating activities

16,981

5,077

Cash flows from investing activities:

Purchases of property, equipment and leasehold improvements

(937

)

(1,321

)

Payments for business acquisitions, net of cash acquired

(8,273

)

(74,947

)

Payments for equity method investments

(98

)

Payments for capitalized computer software development costs

(99

)

Payments for asset acquisitions

(12,500

)

Net cash used in investing activities

(21,808

)

(76,367

)

Cash flows from financing activities:

Issuance of shares of common stock

3,285

8,470

Repurchases of common stock

(114,224

)

Payment of tax withholding obligations related to restricted stock

(1,938

)

(3,422

)

Deferred business acquisition payments

(1,363

)

Repayments of amounts borrowed under term loan

(6,000

)

Net transfers from Parent Company

3,890

12,446

Payments of debt issuance costs

(2,375

)

Net cash (used in) provided by financing activities

(108,987

)

7,756

Effect of exchange rate changes on cash and cash equivalents

(6,855

)

(3,733

)

Decrease in cash and cash equivalents

(120,669

)

(67,267

)

Cash and cash equivalents, beginning of period

241,209

449,725

Cash and cash equivalents, end of period

$

120,540

$

382,458

ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES

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

(Unaudited Dollars in Thousands, Except per Share Data)

Three Months Ended September 30,

2023

2022

Total expenses

GAAP total expenses (a)

$

309,519

$

302,001

Less:

Stock-based compensation (b)

(16,699

)

(17,736

)

Amortization of intangibles (c)

(121,587

)

(121,160

)

Acquisition and integration planning related fees

255

(4,858

)

Non-GAAP total expenses

$

171,488

$

158,247

(Loss) income from operations

GAAP loss from operations

$

(60,211

)

$

(51,182

)

Plus:

Stock-based compensation (b)

16,699

17,736

Amortization of intangibles (c)

121,587

121,160

Acquisition and integration planning related fees

(255

)

4,858

Non-GAAP income from operations

$

77,820

$

92,572

Net (loss) income

GAAP net loss

$

(34,525

)

$

(11,244

)

Plus:

Stock-based compensation (b)

16,699

17,736

Amortization of intangibles (c)

121,587

121,160

Acquisition and integration planning related fees

(255

)

4,858

Unrealized loss on foreign currency forward contract

50,259

Less:

Income tax effect on Non-GAAP items (d)

(28,621

)

(40,730

)

Non-GAAP net income

$

74,885

$

142,039

Diluted (loss) income per share

GAAP diluted loss per share

$

(0.54

)

$

(0.17

)

Plus:

Stock-based compensation (b)

0.26

0.28

Amortization of intangibles (c)

1.88

1.88

Acquisition and integration planning related fees

0.07

Unrealized loss on foreign currency forward contract

0.77

Less:

Income tax effect on Non-GAAP items (d)

(0.44

)

(0.63

)

Non-GAAP diluted income per share

$

1.16

$

2.20

Shares used in computing Non-GAAP diluted income per share

64,658

64,454

Three Months Ended September 30,

2023

2022

Free Cash Flow (2)

Net cash provided by operating activities (GAAP)

$

16,981

$

5,077

Purchases of property, equipment and leasehold improvements

(937

)

(1,321

)

Payments for capitalized computer software development costs

(99

)

Free cash flow (non-GAAP)

$

16,044

$

3,657

(a) GAAP total expenses

Three Months Ended September 30,

2023

2022

Total costs of revenue

$

98,060

$

91,130

Total operating expenses

211,459

210,871

GAAP total expenses

$

309,519

$

302,001

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

Three Months Ended September 30,

2023

2022

Cost of license and solutions

$

680

$

742

Cost of maintenance

488

561

Cost of services and other

498

408

Selling and marketing

2,942

3,347

Research and development

4,553

3,611

General and administrative

7,538

9,067

Total stock-based compensation

$

16,699

$

17,736

(c) Amortization of intangible assets was as follows:

Three Months Ended September 30,

2023

2022

Cost of license and solutions

$

48,035

$

47,670

Selling and marketing

73,552

73,490

Total amortization of intangible assets

$

121,587

$

121,160

(d) The income tax effect on non-GAAP items for the three months ended September 30, 2023 and 2022, respectively, is calculated utilizing the Company's combined US federal and state statutory tax rate as following:

Three Months Ended September 30,

2023

2022

U.S. Statutory Rate

21.79

%

21.79

%

ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES

Reconciliation of Forward-Looking Guidance

(Unaudited Dollars in Thousands, Except per Share Data)

Twelve Months Ended June 30, 2024 (3)

Guidance - Total expenses

GAAP expectation - total expenses

$

1,220,000

Less:

Stock-based compensation

(59,000

)

Amortization of intangible assets

(486,000

)

Non-GAAP expectation - total expenses

$

675,000

Guidance - (Loss) income from operations

GAAP expectation - loss from operations

$

(100,000

)

Plus:

Stock-based compensation

59,000

Amortization of intangible assets

486,000

Non-GAAP expectation - income from operations

$

445,000

Guidance - Net (loss) income and diluted (loss) income per share

GAAP expectation - net loss and diluted loss per share

$

(7,000

)

$

(0.11

)

Plus:

Stock-based compensation

59,000

Amortization of intangible assets

486,000

Less:

Income tax effect on Non-GAAP items (4)

(114,000

)

Non-GAAP expectation - net income and diluted income per share

$

424,000

$

6.57

Shares used in computing guidance for Non-GAAP diluted income per share

64,560

Guidance - Free Cash Flow (5)

GAAP expectation - Net cash provided by operating activities

$

378,000

Less:

Purchases of property, equipment and leasehold improvements

(17,500

)

Payments for capitalized computer software development costs

(500

)

Free cash flow expectation (non-GAAP)

$

360,000


Contacts

Media
Len Dieterle
Aspen Technology
+1 781-221-4291
len.dieterle@aspentech.com

Investors
Brian Denyeau
ICR for Aspen Technology
+1 646-277-1251
ir@aspentech.com


Read full story here

First published on Tue, Nov 7, 2023

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