Aspen Technology Announces Financial Results for Fiscal 2006 Third-Quarter; Strong License Revenue Growth Drives Significant Upside on Profitability
CAMBRIDGE, Mass.--(BUSINESS WIRE)--May 9, 2006--Aspen Technology, Inc. (Nasdaq: AZPN), a leading provider of software and services to the process industries, today announced its financial results for its fiscal 2006 third quarter, ended March 31, 2006.
For the quarter ended March 31, 2006, AspenTech reported total revenue of $77.1 million, an increase of 20% from the prior year period. Strong top line results were driven by license revenue of $41.7 million, an increase of 34% from the prior year period. Services revenue was $35.4 million, an increase of 7% from the prior year period.
Mark Fusco, President and CEO of AspenTech, stated, "We are extremely pleased with our third quarter results, which were strong across all key income statement, balance sheet and cash flow metrics. We continue to make progress toward our goal of returning AspenTech to a growth company that is able to deliver significant profitability and consistent financial results." Fusco added, "The momentum in our business is being driven by strong fundamentals in our end user markets, our market leadership position and growing market acceptance of our unique, integrated aspenONE solutions."
For the quarter ended March 31, 2006, AspenTech's income from operations and net income applicable to common shareholders, determined in accordance with generally accepted accounting principles (GAAP), were $9.3 million and $3.2 million, respectively. This represents an increase from a GAAP loss from operations of ($9.4) million and net loss applicable to common shareholders of ($13.7) million in the same period last year. GAAP net income per share applicable to common shareholders on a diluted basis was $0.06 for the quarter ended March 31, 2006, compared with a net loss per share applicable to common shareholders of ($0.32) in the same period last year.
For the quarter ended March 31, 2006, non-GAAP net income, which excludes items covered in the attached non-GAAP reconciliation table, was $10.8 million, resulting in non-GAAP earnings per share of $0.12, compared to management's guidance given in February 2006 of $0.06 to $0.08 per share.
A reconciliation of GAAP to non-GAAP results has been provided in the financial statement tables included with this press release. An explanation of these measures is included below under the heading "Non-GAAP Financial Measures." The company is reporting these non-GAAP financial results for the fiscal 2006 third quarter solely for the purpose of providing consistency with previously issued guidance, which was presented on a non-GAAP basis. Beginning with the fiscal 2006 fourth quarter, AspenTech will provide guidance only on a GAAP basis.
Charles Kane, CFO of AspenTech, stated, "In addition to rapid revenue growth and expanding profitability, AspenTech also continued to strengthen the balance sheet and improve cash flow during the March quarter. The scalability of our business model is being demonstrated with the return to improved top line growth."
Conference Call and Webcast
AspenTech will host a conference call and webcast today, May 9, 2006, at 4:45 pm (EST) to discuss the Company's financial results, business outlook, and related corporate and financial matters. The live dial in number is: 1-877-239-3024, conference ID code: 7899945. Interested parties may also listen to a live webcast of the call by logging on to AspenTech's website: http://www.aspentech.com and clicking on the "webcast" link under the Investor Relations section of the site. A replay of the call will be archived on AspenTech's website and will also be available via telephone at: 1-800-642-1687 or 1-706-645-9291, conference ID code 7899945, through May 16, 2006.
Non-GAAP Results
This release contains non-GAAP financial measures, consisting of non-GAAP total expenses, non-GAAP net income and non-GAAP earnings per share, that exclude the following items:
-- amortization of technology related intangible assets
associated with intellectual property acquired in business
combinations completed in fiscal years 2001 and 2002, which
represents a non-cash recurring charge;
-- stock-based compensation costs accounted for under Statement
of Financial Accounting Standards No. 123R "Share-Based
Payment", which was adopted in fiscal year 2006 and has no
comparative amount in the prior year period;
-- restructuring charges primarily related to reductions in
headcount and closure of facilities, which do not contribute
to the ongoing operations of the Company's business;
-- reversal of a sales-tax reserve originally recorded in fiscal
2005, which represented a non-cash, non-recurring charge that
the Company's management considered to be unusual at the time;
and
-- preferred stock discount and dividend accretion related to the
Company's redeemable convertible series D preferred stock,
which management considers to be a non-cash recurring charge.
A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures is included in the financial statement tables presented in this release.
AspenTech is reporting these non-GAAP financial results for the fiscal 2006 third quarter solely for the purpose of providing consistency with previously issued guidance, which was presented on a non-GAAP basis. Beginning with the fiscal 2006 fourth quarter, AspenTech will provide guidance only on a GAAP basis.
These non-GAAP financial measures should not be considered in isolation to, or as a substitute for, the financial results presented in accordance with GAAP.
These non-GAAP measures have inherent limitations because they do not include all items of income and expense that impact AspenTech's operations and because they lack comparability to the GAAP financial results of AspenTech's competitors.
About AspenTech
Aspen Technology, Inc. provides industry-leading software and professional services that help process companies improve efficiency and profitability by enabling them to model, manage and control their operations. The new generation of integrated aspenONE (TM) solutions are aligned with the key industry business processes, providing manufacturers the capabilities they need to optimize operational performance, make real-time decisions and synchronize the plant and supply chain. Over 1,500 leading companies already rely on AspenTech's software, including Bayer, BASF, BP, Chevron Corporation, DuPont, ExxonMobil, Fluor, GlaxoSmithKline, Sanofi-Aventis, Shell and Total. For more information, visit www.aspentech.com.
AspenTech, aspenONE and the aspen leaf logo are trademarks of Aspen Technology, Inc., Cambridge, Mass.
ASPEN TECHNOLOGY, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended Nine Months Ended
March 31, March 31, March 31, March 31,
2006 2005 2006 2005
--------- --------- --------- ---------
(Unaudited)
REVENUES:
Software licenses $41,750 $31,097 $107,757 $93,102
Service and other 35,351 33,121 105,788 106,011
--------- --------- --------- ---------
Total revenues 77,101 64,218 213,545 199,113
--------- --------- --------- ---------
COST OF REVENUES:
Cost of software licenses 4,518 4,035 12,544 12,707
Cost of service and other 18,231 19,215 53,334 63,236
Amortization of technology
related intangible assets 1,776 1,778 5,331 5,330
--------- --------- --------- ---------
Total cost of revenues 24,525 25,028 71,209 81,273
--------- --------- --------- ---------
Gross profit 52,576 39,190 142,336 117,840
OPERATING COSTS:
Selling and marketing 21,325 24,299 60,596 70,075
Research and development 11,844 11,552 33,749 35,309
General and administrative 9,498 12,746 29,567 35,867
Restructuring charges 534 (97) 3,728 21,630
Loss (gain) on sales and
disposals of assets 103 81 480 (276)
--------- --------- --------- ---------
Total operating costs 43,304 48,581 128,120 162,605
--------- --------- --------- ---------
Income (loss) from
operations 9,272 (9,391) 14,216 (44,765)
Other income (expense), net 304 (16) 696 (58)
Interest income, net 558 477 953 1,788
--------- --------- --------- ---------
Income (loss) before income
tax benefit (provision) 10,134 (8,930) 15,865 (43,035)
Income tax benefit
(provision) (3,083) (1,133) (5,803) (220)
--------- --------- --------- ---------
Net income (loss) 7,051 (10,063) 10,062 (43,255)
Accretion of preferred
stock discount and
dividend (3,888) (3,630) (11,509) (10,747)
--------- --------- --------- ---------
Net income (loss)
applicable to common
shareholders $3,163 $(13,693) $(1,447) $(54,002)
========= ========= ========= =========
EARNINGS PER SHARE:
Net income (loss) per share
applicable to common
shareholders - Basic $0.07 $(0.32) $(0.03) $(1.28)
========= ========= ========= =========
Net income (loss) per share
applicable to common
shareholders - Diluted $0.06 $(0.32) $(0.03) $(1.28)
========= ========= ========= =========
Weighted average shares
outstanding - Basic 44,561 42,639 43,843 42,193
========= ========= ========= =========
Weighted average shares
outstanding - Diluted 55,497 42,639 43,843 42,193
========= ========= ========= =========
NON-GAAP EARNINGS PER SHARE:
Non-GAAP net income excludes Accretion of preferred stock discount
and dividend, Amortization of technology related intangible
assets, Stock- based compensation costs, Restructuring charges,
and the reversal of a sales tax reserve accrual. Non-GAAP weighted
average shares outstanding assumes the conversion of the Series D
preferred stock to common stock.
Net income $10,751
=========
Diluted net income per
share $0.12
=========
Weighted average shares
outstanding - diluted 91,834
=========
Supplemental information -
Three Months Ended Nine Months Ended
March 31, March 31, March 31, March 31,
2006 2005 2006 2005
--------- --------- --------- ---------
(Unaudited)
Stock-based compensation costs
included in the Statements of
Operations
Effective July 1, 2005, AspenTech adopted SFAS 123R, "Share-Based
Payment," and uses the modified prospective method to value its
share-based payments. Accordingly, for the three and six months
ended December 31, 2005, stock-based compensation was accounted
for under SFAS 123R while for the three and six months ended
December 31, 2004, stock-based compensation was accounted for
under APB 25, Accounting for Stock Issued to Employees, as
permitted by SFAS 123. The amounts in the attached Statements of
Operations include stock-based compensation as follows:
Cost of service and other $293 $- $825 $-
Selling and marketing 543 - 1,501 -
Research and development 240 - 676 -
General and administrative 549 - 1,995 -
--------- --------- --------- ---------
Total stock-based
compensation $1,625 $- $4,997 $-
========= ========= ========= =========
Reconciliation of total
expenses to non-GAAP total
expenses
Total expenses (cost of
revenues and operating costs) $67,829
Amortization of technology
related intangible assets (1,776)
Stock-based compensation (1,625)
Restructuring charges (534)
Sales-tax reserve accrual,
included in Selling and
Marketing costs 235
---------
Non-GAAP total expenses (cost
of revenues and operating
costs) $64,129
=========
Reconciliation of Net income
to non-GAAP Net income
Net income applicable to common
shareholders $3,163
Adjustments to net income
applicable to common
shareholders
Net effect of adjustments
to cost of revenues and
operating costs 3,700
Preferred stock discount
and dividend accretion 3,888
---------
Non-GAAP net income $10,751
=========
ASPEN TECHNOLOGY, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
March 31, June 30,
2006 2005
--------- ---------
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $70,089 $68,149
Accounts receivable, net 51,690 52,254
Unbilled services 9,541 9,826
Current portion of long-term installments
receivable, net 10,586 5,355
Deferred tax asset 701 692
Prepaid expenses and other current assets 8,351 11,483
--------- ---------
Total current assets 150,958 147,759
--------- ---------
Long-term installments receivable, net 32,551 19,425
Retained interest in sold receivables, net 17,396 16,667
Equipment and leasehold improvements, net 8,764 11,388
Computer software development costs, net 14,627 17,411
Intangible assets, net 21,555 26,852
Purchased intellectual property, net 306 730
Deferred tax asset 1,290 1,354
Other assets 2,466 2,656
--------- ---------
Total assets $249,913 $244,242
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term debt $232 $1,042
Accounts payable and accrued expenses 64,068 84,407
Deferred revenue 64,380 58,334
--------- ---------
Total current liabilities 128,680 143,783
--------- ---------
Long-term debt, less current maturities 188 338
Deferred revenue, less current portion 2,126 2,093
Deferred tax liability 2,780 2,760
Other liabilities 21,683 23,143
Redeemable preferred stock 132,720 121,210
Total stockholders' equity (deficit) (38,264) (49,085)
--------- ---------
Total liabilities and stockholders' equity
(deficit) $249,913 $244,242
========= =========
CONTACT:
Media:
Aspen Technology, Inc.
Elisa Logan, 617-949-1398
elisa.logan@aspentech.com
Investor:
Integrated Corporate Relations
Kori Doherty, 617-217-2084
kdoherty@icrinc.com