aspentechnologylogoa29.jpg

Contacts:     
 Media Contact
 
 Investor Contact
 David Grip
 
 Brian Denyeau
 AspenTech
 
 ICR
 +1 781-221-5273
 
 +1 646-277-1251
 david.grip@aspentech.com
 
 brian.denyeau@icrinc.com

Aspen Technology Announces Financial Results for the
First Quarter of Fiscal 2019

Bedford, Mass. - October 24, 2018 - Aspen Technology, Inc. (NASDAQ: AZPN), the asset optimization software company, today announced financial results for its first quarter of fiscal year 2019 ended September 30, 2018.

“We are pleased with our first quarter performance, which was highlighted by 8% year-over-year annual spend growth driven by solid performance across the company in each major geography and product suite. We are benefiting from broadening signs of demand among Engineering & Construction customers, in addition to continued positive trends among owner-operator customers,” said Antonio Pietri, President and Chief Executive Officer of AspenTech.

Pietri continued, “We are also pleased with the progress in our APM business. We are seeing growing market recognition of the technical superiority of our product offering, which is helping drive customer wins in our core verticals and the Global Economy Industries. APM represents an exciting, and sizable, growth opportunity in the early days of a market where we believe we are well positioned to win.”

Pietri concluded, “We continue to execute on our strategic priorities while also delivering high levels of profitability and free cash flow on an annual basis. As a reminder, now that we have adopted Topic 606, we will experience significant variability on our income statement, due to the timing of renewals and the fact that a significant amount of license revenue is now recognized up front instead of ratably. However, the fundamental business drivers and the value we provide customers have not changed under Topic 606.”

First Quarter Fiscal 2019 and Recent Business Highlights

All results for the first fiscal quarter of 2019 and the comparable periods are presented under ASC Topic 606, which the company adopted on July 1st, 2018. As a reminder, AspenTech’s income statement results are impacted by the adoption of Topic 606, which impacts both the timing and method of revenue recognition for term license contracts.

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 $498 million at the end of the first quarter of fiscal 2019, which increased 8.1% compared to the first quarter of fiscal 2018 and 1.9% sequentially.

AspenTech repurchased approximately 473,000 shares of its common stock for $50.0 million in the first quarter of fiscal 2019.






Summary of First Quarter Fiscal Year 2019 Financial Results

AspenTech’s total revenue of $114.2 million included:

License revenue, which represents the portion of a term license agreement allocated to the initial license, was $63.8 million in the first quarter of fiscal 2019, compared to $78.9 million in the first 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 $43.0 million in the first quarter of fiscal 2019, compared to $40.3 million in the first quarter of fiscal 2018.

Services and other revenue: was $7.4 million in the first quarter of fiscal 2019, compared to $7.3 million in the first quarter of fiscal 2018.

For the quarter ended September 30, 2018, AspenTech reported income from operations of $37.0 million, compared to income from operations of $55.7 million for the quarter ended September 30, 2017.

Net income was $38.1 million for the quarter ended September 30, 2018, leading to net income per share of $0.53, compared to net income per share of $0.55 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 $46.9 million for the first quarter of fiscal 2019, compared to non-GAAP income from operations of $62.8 million in the same period last fiscal year. Non-GAAP net income was $45.9 million, or $0.64 per share, for the first quarter of fiscal 2019, compared to non-GAAP net income of $45.0 million, or $0.61 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 $52.0 million and borrowings of $170.0 million at September 30, 2018.

During the first quarter, the company generated $5.6 million in cash flow from operations and $5.4 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; non-capitalized acquired technology, and other nonrecurring items, such as acquisition related payments.

Use of Non-GAAP Financial Measures

This press release contains “non-GAAP financial measures” under the rules of the U.S. Securities and Exchange Commission. Non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles. This non-GAAP information supplements, and is not intended to represent a measure of performance in accordance with, disclosures required by generally accepted accounting principles, or GAAP. Non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP. A reconciliation of GAAP to non-GAAP results is included in the financial tables included in this press release.

Management considers both GAAP and non-GAAP financial results in managing AspenTech’s business. As the result of adoption of new licensing models, management believes that a number of AspenTech’s performance indicators based on GAAP, including revenue, gross profit, operating income and net income, should be viewed in conjunction with certain non-GAAP and other business measures in assessing AspenTech’s performance, growth and financial condition. Accordingly, management utilizes a number of non-GAAP and other business metrics, including the non-GAAP metrics set forth in this press release, to track AspenTech’s business performance. None




of these non-GAAP metrics should be considered as an alternative to any measure of financial performance calculated in accordance with GAAP.

Conference Call and Webcast

AspenTech will host a conference call and webcast today, October 24, 2018, at 4:30 p.m. (Eastern Time), to discuss the company's financial results for the first 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 5091359. 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 5091359, through November 25, 2018.

About AspenTech

AspenTech is a leading software supplier for optimizing asset performance. Our products thrive in complex, industrial environments where it is critical to optimize the asset design, operation and maintenance lifecycle. AspenTech uniquely combines decades of process modeling expertise with big data machine learning. Our purpose-built software platform automates knowledge work and builds sustainable competitive advantage by delivering high returns over the entire asset lifecycle. As a result, companies in capital-intensive industries can maximize uptime and push the limits of performance, running their assets faster, safer, longer and greener. Visit AspenTech.com to find out more.

Forward-Looking Statements

The second, third and fourth paragraphs of this press release contain forward-looking statements for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results may vary significantly from AspenTech’s expectations based on a number of risks and uncertainties, including, without limitation: AspenTech’s failure to increase usage and product adoption of aspenONE offerings or grow the aspenONE APM business, and failure to continue to provide innovative, market-leading solutions; the demand for, or usage of, aspenONE software declines for any reason, including declines due to adverse changes in the process or other capital-intensive industries; unfavorable economic and market conditions or a lessening demand in the market for asset process optimization software; risks of foreign operations or transacting business with customers outside the United States; risks of competition and other risk factors described from time to time in AspenTech’s periodic reports filed with the Securities and Exchange Commission. AspenTech cannot guarantee any future results, levels of activity, performance, or achievements. AspenTech expressly disclaims any obligation to update forward-looking statements after the date of this press release.

© 2018 Aspen Technology, Inc. AspenTech, aspenONE, and the Aspen leaf logo are trademarks of Aspen Technology, Inc. All rights reserved. All other trademarks are property of their respective owners.

Source: Aspen Technology, Inc.




ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited in Thousands, Except per Share Data)


 
 
Three Months Ended
September 30,
 
 
2018
 
2017
 
 
 
 
As Adjusted
Revenue:
 
 
 
 
License
 
$
63,755

 
$
78,890

Maintenance
 
43,039

 
40,264

Services and other
 
7,375

 
7,333

Total revenue
 
114,169

 
126,487

Cost of revenue:
 
 
 
 
License
 
1,665

 
1,231

Maintenance
 
3,993

 
4,552

Services and other
 
7,569

 
6,949

Total cost of revenue
 
13,227

 
12,732

Gross profit
 
100,942

 
113,755

Operating expenses:
 
 

 
 

Selling and marketing
 
26,812

 
23,516

Research and development
 
21,056

 
19,489

General and administrative
 
16,084

 
15,037

Total operating expenses
 
63,952

 
58,042

Income from operations
 
36,990

 
55,713

Interest income
 
7,069

 
6,306

Interest (expense)
 
(1,814
)
 
(1,206
)
Other income (expense), net
 
128

 
(615
)
Income before provision for income taxes
 
42,373

 
60,198

Provision for income taxes
 
4,307

 
19,677

Net income
 
$
38,066

 
$
40,521

Net income per common share:
 
 
 
 
Basic
 
$
0.54

 
$
0.55

Diluted
 
$
0.53

 
$
0.55

Weighted average shares outstanding:
 
 
 
 
Basic
 
70,988

 
73,024

Diluted
 
72,015

 
73,609





ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited in Thousands, Except Share and Per Share Data)


 
 
September 30,
2018
 
June 30,
2018
 
 
 
 
As Adjusted
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
52,048

 
$
96,165

Accounts receivable, net
 
53,999

 
41,810

Current contract assets
 
317,967

 
304,378

Contract costs
 
21,296

 
20,500

Prepaid expenses and other current assets
 
12,992

 
10,509

Prepaid income taxes
 
1,422

 
2,601

Total current assets
 
459,724

 
475,963

Property, equipment and leasehold improvements, net
 
9,006

 
9,806

Computer software development costs, net
 
695

 
646

Goodwill
 
75,649

 
75,590

Intangible assets, net
 
34,192

 
35,310

Non-current contract assets
 
357,947

 
340,622

Non-current deferred tax assets
 
1,176

 
11,090

Other non-current assets
 
1,279

 
1,297

Total assets
 
$
939,668

 
$
950,324

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
2,501

 
$
4,230

Accrued expenses and other current liabilities
 
32,000

 
39,515

Income taxes payable
 
46,869

 
1,698

Borrowings under credit agreement
 
170,000

 
170,000

Current deferred revenue
 
23,737

 
15,150

Total current liabilities
 
275,107

 
230,593

Non-current deferred revenue
 
15,046

 
12,354

Deferred income taxes
 
159,563

 
214,125

Other non-current liabilities
 
16,833

 
17,068

Commitments and contingencies (Note 16)
 
 
 
 
Series D redeemable convertible preferred stock, $0.10 par value—
Authorized— 3,636 shares as of September 30, 2018 and June 30, 2018
Issued and outstanding— none as of September 30, 2018 and June 30, 2018
 

 

Stockholders’ equity:
 
 
 
 
Common stock, $0.10 par value— Authorized—210,000,000 shares
Issued— 103,279,138 shares at September 30, 2018 and 103,130,300 shares at June 30, 2018
Outstanding— 70,862,163 shares at September 30, 2018 and 71,186,701 shares at June 30, 2018
 
10,328

 
10,313

Additional paid-in capital
 
724,752

 
715,475

Retained earnings
 
1,103,573

 
1,065,507

Accumulated other comprehensive income
 
965

 
1,388

Treasury stock, at cost—32,416,975 shares of common stock at September 30, 2018 and 31,943,599 shares at June 30, 2018
 
(1,366,499
)
 
(1,316,499
)
Total stockholders’ equity
 
473,119

 
476,184

Total liabilities and stockholders’ equity
 
$
939,668

 
$
950,324





ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited in Thousands)


 
 
Three Months Ended
September 30,
 
 
2018
 
2017
 
 
 
 
As Adjusted
Cash flows from operating activities:
 
 
 
 
Net income
 
$
38,066

 
$
40,521

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
2,000

 
1,753

Net foreign currency (gains) losses
 
(200
)
 
936

Stock-based compensation
 
8,865

 
6,414

Deferred income taxes
 
(44,670
)
 
(33
)
Provision for bad debts
 
169

 
20

Other non-cash operating activities
 
107

 

Changes in assets and liabilities:
 
 
 
 
Accounts receivable, net
 
(12,529
)
 
(9,093
)
Contract assets
 
(30,914
)
 
(35,791
)
Contract costs
 
(796
)
 
(185
)
Prepaid expenses, prepaid income taxes, and other assets
 
(855
)
 
2,292

Accounts payable, accrued expenses, income taxes payable and other liabilities
 
34,924

 
6,764

Deferred revenue
 
11,403

 
(1,238
)
Net cash provided by operating activities
 
5,570

 
12,360

Cash flows from investing activities:
 
 
 
 
Purchases of property, equipment and leasehold improvements
 
(96
)
 
(123
)
Payments for capitalized computer software costs
 
(90
)
 
(65
)
Net cash used in investing activities
 
(186
)
 
(188
)
Cash flows from financing activities:
 
 
 
 
Exercises of stock options
 
4,054

 
2,411

Repurchases of common stock
 
(49,977
)
 
(55,109
)
Payments of tax withholding obligations related to restricted stock
 
(3,179
)
 
(1,650
)
Deferred business acquisition payments
 

 
(600
)
Payments of credit agreement issuance costs
 

 
(351
)
Net cash used in financing activities
 
(49,102
)
 
(55,299
)
Effect of exchange rate changes on cash and cash equivalents
 
(399
)
 
156

Decrease in cash and cash equivalents
 
(44,117
)
 
(42,971
)
Cash and cash equivalents, beginning of period
 
96,165

 
101,954

Cash and cash equivalents, end of period
 
$
52,048

 
$
58,983

 
 
 
 
 
Supplemental disclosure of cash flow information:
 
 
 
 
Income taxes paid, net
 
$
2,755

 
$
1,243

Interest paid
 
1,538

 
968





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,
 
 
2018
 
2017
 
 
 
 
As Adjusted
Total expenses
 
 
 
 
GAAP total expenses (a)
 
$
77,179

 
$
70,774

Less:
 
 
 
 
 Stock-based compensation (b)
 
(8,865
)
 
(6,414
)
 Amortization of intangibles
 
(1,067
)
 
(526
)
 Acquisition related fees
 
7

 
(130
)
 
 
 
 
 
Non-GAAP total expenses
 
$
67,254

 
$
63,704

 
 
 
 
 
Income from operations
 
 
 
 
GAAP income from operations
 
$
36,990

 
$
55,713

Plus:
 
 
 
 
 Stock-based compensation (b)
 
8,865

 
6,414

 Amortization of intangibles
 
1,067

 
526

 Acquisition related fees
 
(7
)
 
130

 
 
 
 
 
Non-GAAP income from operations
 
$
46,915

 
$
62,783

 
 
 
 
 
Net income
 
 
 
 
GAAP net income
 
$
38,066

 
$
40,521

Plus:
 
 
 
 
 Stock-based compensation (b)
 
8,865

 
6,414

 Amortization of intangibles
 
1,067

 
526

 Acquisition related fees
 
(7
)
 
130

Less:
 
 
 
 
 Income tax effect on Non-GAAP items (c)
 
(2,084
)
 
(2,545
)
 
 
 
 
 
Non-GAAP net income
 
$
45,907

 
$
45,046

 
 
 
 
 
Diluted income per share
 
 
 
 
GAAP diluted income per share
 
$
0.53

 
$
0.55

Plus:
 
 
 
 
 Stock-based compensation (b)
 
0.13

 
0.08

 Amortization of intangibles
 
0.01

 
0.01

 Acquisition related fees
 

 

Less:
 
 
 
 
 Income tax effect on Non-GAAP items (c)
 
(0.03
)
 
(0.03
)
 
 
 
 
 
Non-GAAP diluted income per share
 
$
0.64

 
$
0.61

 
 
 
 
 
Shares used in computing Non-GAAP diluted income per share
 
72,015

 
73,609

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



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,
 
 
 
2018
 
2017
 
 
 
 
 
As Adjusted
 
Free Cash Flow
 
 
 
 
 
GAAP cash flow from operating activities
 
$
5,570

 
$
12,360

 
 
 
 
 
 
 
 Purchase of property, equipment and leasehold improvements
 
(96
)
 
(123
)
 
 Capitalized computer software development costs
 
(90
)
 
(65
)
 
 Non-capitalized acquired technology (d)
 

 
75

 
 Acquisition related fee payments
 
12

 

 
Free Cash Flow
 
$
5,396

 
$
12,247

 
 
 
 
 
 
 
(a) GAAP total expenses
 
 
 
 
 
 
 
Three Months Ended
September 30,
 
 
 
2018
 
2017
 
 
 
 
 
As Adjusted
 
Total costs of revenue
 
$
13,227

 
$
12,732

 
Total operating expenses
 
63,952

 
58,042

 
 GAAP total expenses
 
$
77,179

 
$
70,774

 
 
 
 
 
 
 
(b) Stock-based compensation expense was as follows:
 
 
 
 
 
 
 
Three Months Ended
September 30,
 
 
 
2018
 
2017
 
Cost of services and other
 
$
465

 
$
450

 
Selling and marketing
 
1,331

 
885

 
Research and development
 
2,295

 
1,896

 
General and administrative
 
4,774

 
3,183

 
Total stock-based compensation
 
$
8,865

 
$
6,414

 
 
 
 
 
 
 
(c) The income tax effect on non-GAAP items for the three months ended September 30, 2018 is calculated utilizing the Company's statutory tax rate, of 21 percent.  The income tax effect on non-GAAP items for the three months ended September 30, 2017 is calculated utilizing the Company's estimated federal and state tax rate.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(d) In the three months ended September 30, 2017, the Company has excluded $0.1 million of final payments related to non-capitalized acquired technology from prior fiscal periods from free cash flow to be consistent with the treatment of other transactions where the acquired assets were capitalized.
 



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