Release Details

BEDFORD, Mass.--(BUSINESS WIRE)--Aug. 10, 2017-- Aspen Technology, Inc. (NASDAQ: AZPN), the asset optimization software company, today announced financial results for its fourth quarter and fiscal year ended June 30, 2017.

“AspenTech reported fourth quarter and fiscal year 2017 financial results that exceeded expectations and were highlighted by a positive performance across all geographies and product suites,” said Antonio Pietri, President and Chief Executive Officer of AspenTech. “During the fourth quarter we made significant strides in bringing continued innovation to market. We successfully launched aspenONE v10, which will deliver increased value to our customers through enhanced functionality and capabilities. In addition, we saw positive momentum with our APM suite as we closed several transactions and continued to generate strong customer interest.”

Pietri added, “We believe AspenTech enters fiscal year 2018 with a strong and expanded product portfolio and a substantial growth opportunity, which positions us to execute successfully against our strategic objectives and continue to deliver significant long-term value to our shareholders.”

Fourth Quarter and Fiscal Year 2017 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 $460 million at the end of fiscal 2017, an increase of 1.8% from March 31, 2017 and 4.1% from the end of fiscal 2016.
• GAAP operating margin was 39.6% in the fourth quarter of fiscal 2017, compared to 43.1% in the fourth quarter of fiscal 2016. Non-GAAP operating margin was 46.1% in the fourth quarter of fiscal 2017, compared to 46.1% in the fourth quarter of fiscal 2016.
• GAAP operating margin was 43.9% for fiscal year 2017, compared to 44.8% for fiscal year 2016. Non-GAAP operating margin was 48.8% for fiscal year 2017, compared to 49.3% for fiscal year 2016.
• AspenTech repurchased approximately 1.3 million shares of our common stock for $75.0 million in the fourth quarter of fiscal 2017.
• AspenTech repurchased approximately 7.3 million shares of common stock for $375.0 million in fiscal year 2017.

Summary of Fourth Quarter Fiscal Year 2017 Financial Results

AspenTech’s total revenue of $123.7 million increased 8.8% from $113.7 million in the fourth quarter of the prior fiscal year.

• Subscription and software revenue was $115.4 million in the fourth quarter of fiscal 2017, an increase from $106.7 million in the fourth quarter of fiscal 2016.
• Services and other revenue was $8.2 million in the fourth quarter of fiscal 2017, an increase from $7.0 million in the fourth quarter of fiscal 2016.

For the quarter ended June 30, 2017, AspenTech reported income from operations of $48.9 million, compared to income from operations of $49.0 million for the quarter ended June 30, 2016.

Net income was $54.4 million for the quarter ended June 30, 2017, leading to net income per share of $0.73, compared to net income per share of $0.41 in the same period last fiscal year.

Non-GAAP income from operations, which adds back stock-based compensation expense, amortization of intangibles associated with acquisitions, acquisition-related costs and non-capitalized acquired technology, was $57.0 million for the fourth quarter of fiscal 2017, compared to non-GAAP income from operations of $52.4 million in the same period last fiscal year. Non-GAAP net income was $59.1 million, or $0.79 per share, for the fourth quarter of fiscal 2017, compared to non-GAAP net income of $35.5 million, or $0.44 per share, in the same period last fiscal year.

During the quarter ended June 30, 2017, the company realized a $19 million tax benefit primarily resulting from the release of contingent tax reserves. The tax benefit resulted in a $0.26 per share benefit for both GAAP and non-GAAP net income per share in the quarter ended June 30, 2017.

AspenTech had cash and marketable securities of $102.0 million at June 30, 2017, compared to $101.7 million at the end of the prior quarter.

During the fourth quarter, the company generated $73.3 million in cash flow from operations and $76.8 million in free cash flow.

Summary of Fiscal Year 2017 Financial Results

AspenTech’s total revenue of $482.9 million increased 2.2% from $472.3 million for fiscal year 2016.

• Subscription and software revenue was $453.5 million, an increase from $440.4 million for fiscal year 2016.
• Services and other revenue was $29.4 million, compared to $31.9 million for fiscal year 2016.

For the fiscal year ended June 30, 2017, AspenTech reported income from operations of $212.0 million, an improvement from income from operations of $211.4 million for fiscal year 2016.

Net income was $162.2 million for the fiscal year ended June 30, 2017, leading to net income per share of $2.11, compared to net income per share of $1.68 for fiscal year 2016.

Non-GAAP income from operations was $235.8 million for fiscal year 2017, an improvement compared to non-GAAP income from operations of $232.7 million for fiscal year 2016. Non-GAAP net income was $177.4 million, or $2.30 per share, for fiscal year 2017, an improvement compared to non-GAAP net income of $155.8 million, or $1.87 per share, for fiscal year 2016.

For the fiscal year ended June 30, 2017, the company generated $182.4 million in cash flow from operations and $187.2 million in free cash flow.

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, August 10, 2017, at 4:30 p.m. (Eastern Time), to discuss the company's financial results for the fourth quarter and fiscal year 2017 as well as the company’s business outlook.

The live dial-in number is (866) 604-6127 or (443) 961-0460, conference ID code 60952917. 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://www.aspentech.com/corporate/investor.cfm, 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 60952917, through September 10, 2017.

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 and third 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 capital-intensive process industries; unfavorable economic and market conditions or a lessening demand in the market for asset process optimization software; 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.

© 2017 Aspen Technology, Inc. AspenTech, aspenONE, the Aspen leaf logo, Aspen Basic Engineering, Aspen Fidelis Reliability, Aspen Mtell, Aspen Unified PIMS and OPTIMIZE are trademarks of Aspen Technology, Inc. All rights reserved. All other trademarks are property of their respective owners.

ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited in thousands, except per share data)
			Three Months Ended June 30,										Twelve Months Ended June 30,
			2017					2016					2017					2016
Revenue:
Subscription and software			$	115,435				$	106,701				$	453,512				$	440,408
Services and other			8,247					6,979					29,430					31,936
Total revenue			123,682					113,680					482,942					472,344
Cost of revenue:
Subscription and software			5,285					4,901					21,051					20,376
Services and other			6,829					6,830					26,415					28,235
Total cost of revenue			12,114					11,731					47,466					48,611
Gross profit			111,568					101,949					435,476					423,733
Operating expenses:
Selling and marketing			26,510					24,832					92,633					91,536
Research and development			21,953					16,754					79,530					67,152
General and administrative			14,157					11,391					51,297					53,664
Total operating expenses			62,620					52,977					223,460					212,352
Income from operations			48,948					48,972					212,016					211,381
Interest income			143					198					808					441
Interest (expense)			(1,066		)			(868		)			(3,787		)			(1,212		)
Other income (expense), net			21					1,976					1,309					29
Income before provision for income taxes			48,047					50,278					210,346					210,639
Provision for income taxes			(6,305		)			16,952					48,150					70,688
Net income			$	54,352				$	33,326				$	162,196				$	139,951
Net income per common share:
Basic			$	0.73				$	0.41				$	2.12				$	1.69
Diluted			$	0.73				$	0.41				$	2.11				$	1.68
Weighted average shares outstanding:
Basic			74,294					81,282					76,491					82,892
Diluted			74,830					81,599					76,978					83,309

ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited in thousands, except share data)
			June 30, 2017					June 30, 2016
ASSETS
Current assets:
Cash and cash equivalents			$	101,954				$	318,336
Short-term marketable securities			—					3,006
Accounts receivable, net			27,670					20,476
Prepaid expenses and other current assets			12,061					13,948
Prepaid income taxes			4,501					5,557
Total current assets			146,186					361,323
Property, equipment and leasehold improvements, net			13,400					15,825
Computer software development costs, net			667					720
Goodwill			51,248					23,438
Intangible assets, net			20,789					5,000
Non-current deferred tax assets			14,352					12,236
Other non-current assets			1,300					1,196
Total assets			$	247,942				$	419,738
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable			$	5,467				$	3,559
Accrued expenses and other current liabilities			48,149					36,105
Income taxes payable			1,603					439
Borrowings under credit agreement			140,000					140,000
Current deferred revenue			272,024					252,520
Total current liabilities			467,243					432,623
Non-current deferred revenue			28,335					29,558
Other non-current liabilities			13,148					32,591
Commitments and contingencies (Note 16)
Series D redeemable convertible preferred stock, $0.10 par value—Authorized—3,636 shares as of June 30, 2017 and 2016 Issued and outstanding—none as of June 30, 2017 and 2016			—					—
Stockholders' deficit:
Common stock, $0.10 par value—Authorized—210,000,000 shares Issued—102,567,129 shares at June 30, 2017 and 102,031,960 shares at June 30, 2016 Outstanding—73,421,153 shares at June 30, 2017 and 80,177,950 shares at June 30, 2016			10,257					10,203
Additional paid-in capital			687,479					659,287
Retained earnings (deficit)			156,520					(5,676		)
Accumulated other comprehensive income			1,459					2,651
Treasury stock, at cost—29,145,976 shares of common stock at June 30, 2017 and 21,854,010 shares at June 30, 2016			(1,116,499		)			(741,499		)
Total stockholders' deficit			(260,784		)			(75,034		)
Total liabilities and stockholders' deficit			$	247,942				$	419,738

ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited in thousands)
			Three Months Ended June 30,										Twelve Months Ended June 30,
			2017					2016					2017					2016
Operating activities:
Net income			$	54,352				$	33,326				$	162,196				$	139,951
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			1,412					1,542					6,405					6,061
Net foreign currency losses (gains)			984					(5,087		)			(1,036		)			(3,666		)
Stock-based compensation expense			4,493					3,414					18,800					15,727
Deferred income taxes			(5,455		)			1,804					(4,286		)			2,499
Provision for (recovery from) bad debts			(26		)			86					199					260
Tax benefits from stock-based compensation			3,621					330					5,965					2,208
Excess tax benefits from stock-based compensation			(3,621		)			(330		)			(5,965		)			(2,208		)
Other non-cash operating activities			172					64					602					321
Changes in assets and liabilities, excluding initial effects of acquisitions:
Accounts receivable			7,464					869					(7,480		)			9,382
Prepaid expenses, prepaid income taxes, and other assets			(6,069		)			(9,552		)			(2,421		)			(6,106		)
Accounts payable, accrued expenses, income taxes payable and other liabilities			(16,018		)			1,094					(9,070		)			(4,489		)
Deferred revenue			32,039					17,289					18,477					(6,196		)
Net cash provided by operating activities			73,348					44,849					182,386					153,744
Investing activities:
Purchases of marketable securities			—					—					(683,748		)			—
Maturities of marketable securities			17,130					6,008					686,346					58,973
Purchase of property, equipment and leasehold improvements			(569		)			(953		)			(2,720		)			(3,483		)
Acquisition related deposits			—					255,067					—					—
Payments for business acquisitions, net of cash acquired			—					(8,000		)			(36,171		)			(8,000		)
Payments for capitalized computer software costs			(279		)			(269		)			(405		)			(269		)
Net cash provided by (used in) investing activities			16,282					251,853					(36,698		)			47,221
Financing activities:
Exercise of stock options			1,381					1,062					9,273					3,924
Repurchases of common stock			(75,849		)			(75,476		)			(371,491		)			(178,604		)
Payment of tax withholding obligations related to restricted stock			(1,418		)			(1,076		)			(5,764		)			(4,480		)
Excess tax benefits from stock-based compensation			3,621					330					5,965					2,208
Proceeds from credit agreement			—					—					—					140,000
Payments of credit agreement issuance costs			—					(120		)			—					(1,707		)
Net cash used in financing activities			(72,265		)			(75,280		)			(362,017		)			(38,659		)
Effect of exchange rate changes on cash and cash equivalents			37					4					(53		)			(219		)
Increase (decrease) in cash and cash equivalents			17,402					221,426					(216,382		)			162,087
Cash and cash equivalents, beginning of year			84,552					96,910					318,336					156,249
Cash and cash equivalents, end of year			$	101,954				$	318,336				$	101,954				$	318,336
Supplemental disclosure of cash flow information:
Income tax paid, net			$	23,794				$	17,416				$	65,536				$	69,028
Interest paid			945					619					3,444					963

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 June 30,										Twelve Months Ended June 30,
			2017					2016					2017					2016
Total expenses
GAAP total expenses (a)			$	74,734				$	64,708				$	270,926				$	260,963
Less:
Stock-based compensation (b)			(4,493		)			(3,414		)			(18,800		)			(15,727		)
Non-capitalized acquired technology (e)			(1,900		)			—					(2,250		)			(250		)
Amortization of intangibles			(434		)			—					(950		)			(147		)
Acquisition related fees			(1,261		)			—					(1,754		)			(5,213		)
Non-GAAP total expenses			$	66,646				$	61,294				$	247,172				$	239,626
Income from operations
GAAP income from operations			$	48,948				$	48,972				$	212,016				$	211,381
Plus:
Stock-based compensation (b)			4,493					3,414					18,800					15,727
Non-capitalized acquired technology (e)			1,900					—					2,250					250
Amortization of intangibles			434					—					950					147
Acquisition related fees			1,261					—					1,754					5,213
Non-GAAP income from operations			$	57,036				$	52,386				$	235,770				$	232,718
Net income
GAAP net income			$	54,352				$	33,326				$	162,196				$	139,951
Plus:
Stock-based compensation (b)			4,493					3,414					18,800					15,727
Non-capitalized acquired technology (e)			1,900					—					2,250					250
Amortization of intangibles			434					—					950					147
Acquisition related fees			1,261					—					1,754					8,649
Less:
Income tax effect on Non-GAAP items (c)			(3,303		)			(1,229		)			(8,551		)			(8,918		)
Non-GAAP net income			$	59,137				$	35,511				$	177,399				$	155,806
Diluted income per share
GAAP diluted income per share			$	0.73				$	0.41				$	2.11				$	1.68
Plus:
Stock-based compensation (b)			0.05					0.05					0.24					0.19
Non-capitalized acquired technology (e)			0.03					—					0.03					0.01
Amortization of intangibles			0.01					—					0.01					—
Acquisition related fees			0.01					—					0.02					0.10
Less:
Income tax effect on Non-GAAP items (c)			(0.04		)			(0.02		)			(0.11		)			(0.11		)
Non-GAAP diluted income per share			$	0.79				$	0.44				$	2.30				$	1.87
Shares used in computing Non-GAAP diluted income per share			74,830					81,599					76,978					83,309
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 June 30,										Twelve Months Ended June 30,
			2017					2016					2017					2016
Free Cash Flow
GAAP cash flow from operating activities			$	73,348				$	44,849				$	182,386				$	153,744
Purchase of property, equipment and leasehold improvements			(569		)			(953		)			(2,720		)			(3,483		)
Capitalized computer software development costs			(279		)			(269		)			(405		)			(269		)
Non-capitalized acquired technology (e)			1,400					—					2,246					1,250
Excess tax benefits from stock-based compensation (d)			3,621					330					5,965					2,208
Acquisition related fee payments			—					2,581					448					8,649
Litigation related (receipts) payments			(721		)			960					(721		)			3,040
Free Cash Flow			$	76,800				$	47,498				$	187,199				$	165,139
(a) GAAP total expenses
			Three Months Ended June 30,										Twelve Months Ended June 30,
			2017					2016					2017					2016
Total costs of revenue			$	12,114				$	11,731				$	47,466				$	48,611
Total operating expenses			62,620					52,977					223,460					212,352
GAAP total expenses			$	74,734				$	64,708				$	270,926				$	260,963
(b) Stock-based compensation expense was as follows:
			Three Months Ended June 30,										Twelve Months Ended June 30,
			2017					2016					2017					2016
Cost of services and other			$	371				$	341				$	1,477				$	1,390
Selling and marketing			715					804					3,652					4,351
Research and development			1,629					880					5,806					3,423
General and administrative			1,778					1,389					7,865					6,563
Total stock-based compensation			$	4,493				$	3,414				$	18,800				$	15,727

(c) The income tax effect on non-GAAP items for the three and twelve months ended June 30, 2017 and 2016 is calculated utilizing the Company's estimated federal and state tax rate.

(d) Excess tax benefits are related to stock-based compensation tax deductions in excess of book compensation expense and reduce our income taxes payable. We have included the impact of excess tax benefits in free cash flow to be consistent with the treatment of other tax activity.

(e) In the twelve months ended June 30, 2017 and March 31, 2016, we acquired technology that did not meet the accounting requirements for capitalization and therefore the cost of the acquired technology was expensed as research and development. We have excluded the expense of the acquired technology from non-GAAP operating income to be consistent with transactions where the acquired assets were capitalized. In the twelve months ended June 30, 2017 and 2016, we have excluded payments of $2.3 million and $1.3 million, respectively, for the non-capitalized acquired technology (including $0.5 million and $1 million, respectively 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.

View source version on businesswire.com: http://www.businesswire.com/news/home/20170810006071/en/

Source: Aspen Technology, Inc.

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