Aspen Technology Announces Financial Results for the Fourth Quarter And Fiscal Year 2013

August 15, 2013
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BURLINGTON, Mass.--(BUSINESS WIRE)--Aug. 15, 2013-- Aspen Technology, Inc. (NASDAQ: AZPN), a leading provider of software and services to the process industries, today announced financial results for its fourth quarter and fiscal year 2013, ended June 30, 2013.

Mark Fusco, Chief Executive Officer of AspenTech, said, “The fourth quarter completed another very strong year for AspenTech. The company outperformed on each of its key financial metrics during fiscal 2013, highlighted by 13% total license contract value growth, 43% free cash flow growth, and better than expected profitability. We are seeing continued customer interest in our aspenONE® subscription software offering, and believe we have a significant opportunity to increase the product penetration rate and usage levels among our large base of blue chip customers.”

Fourth Quarter and Fiscal Year 2013 and Recent Business Highlights

  • The license portion of total contract value was $1.65 billion at the end of fiscal 2013, which increased 4.7% sequentially and 13.0% compared to the end of fiscal 2012.
  • Total contract value, including the value of bundled maintenance, was $1.9 billion at the end of fiscal 2013, which increased 5.5% sequentially and 15.1% compared to the end of fiscal 2012.
  • Annual spend, which the company defines as the annualized value of all term license and maintenance revenue contracts at the end of the quarter, was approximately $338 million at the end of fiscal 2013, which increased 4.9% sequentially and 11.1% compared to the end of fiscal 2012.

Summary of Fourth Quarter Fiscal Year 2013 Financial Results

AspenTech’s total revenue of $83.3 million increased 30.1% from $64.0 million in the fourth quarter of the prior year.

  • Subscription and software revenue was $65.2 million in the fourth quarter of fiscal 2013, an increase from $45.8 million in the fourth quarter of fiscal 2012.
  • Services & other revenue was $18.0 million in the fourth quarter of fiscal 2013, compared to $18.2 million in the fourth quarter of fiscal 2012.

For the quarter ended June 30, 2013, AspenTech reported income from operations of $15.4 million, compared to a loss from operations of $3.6 million for the quarter ended June 30, 2012.

Net income was $20.4 million for the quarter ended June 30, 2013, leading to net income per share of $0.21, compared to a net loss per share of ($0.06) in the same period last fiscal year.

Non-GAAP income from operations, which adds back stock-based compensation expense, restructuring charges and amortization of intangibles associated with acquisitions, was $18.9 million for the fourth quarter of fiscal 2013, compared to a non-GAAP loss from operations of $0.9 million in the same period last fiscal year. Non-GAAP net income was $22.7 million, or $0.24 per share, for the fourth quarter of fiscal 2013, compared to a non-GAAP net loss of $3.5 million, or ($0.04) per share, in the same period last fiscal year.

For the fourth quarter of fiscal 2013, both GAAP and non-GAAP net income included a non-cash tax benefit of $9.8 million as a result of simplifying the company’s Canadian corporate structure.

A reconciliation of GAAP to non-GAAP results is included in the financial tables included in this press release.

AspenTech had a cash and marketable securities balance of $224.8 million at June 30, 2013, an increase of $10.7 million from the end of the prior quarter. During the fourth quarter, the company generated $33.9 million in cash flow from operations and $31.9 million in free cash flow after taking into consideration $2.1 million in capital expenditures and capitalized software.

Summary of Fiscal Year 2013 Financial Results

AspenTech’s total revenue of $311.4 million increased 28% from $243.1 million for fiscal year 2012.

  • Subscription and software revenue was $239.7 million, an increase from $166.7 million for fiscal year 2012.
  • Services & other revenue was $71.7 million, compared to $76.4 million for fiscal year 2012.

For the fiscal year ended June 30, 2013, AspenTech reported income from operations of $55.6 million, an improvement from a loss from operations of $15.0 million for fiscal year 2012.

Net income was $45.3 million for the fiscal year ended June 30, 2013, leading to net income per diluted share of $0.47, compared to a net loss per basic and diluted share of ($0.15) for fiscal year 2012.

Non-GAAP income from operations, which adds back stock-based compensation expense, restructuring charges and amortization of intangibles associated with acquisitions, was $70.9 million for fiscal year 2013, an improvement compared to a non-GAAP loss from operations of $2.8 million for fiscal year 2012. Non-GAAP net income was $55.1 million, or $0.58 per share, for fiscal year 2013, an improvement compared to a non-GAAP net loss of $5.2 million, or ($0.06) per share, for fiscal year 2012. A reconciliation of GAAP to non-GAAP results is included in the financial tables included in this press release.

For fiscal year 2013, both GAAP and non-GAAP net income included a non-cash tax benefit described above.

For the twelve months ended June 30, 2013, the company generated $146.6 million in cash flow from operations and $143.1 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, for the next few years, a number of AspenTech’s performance indicators based on GAAP, including revenue, gross profit, operating income (loss) and net income (loss), will be of limited value in assessing AspenTech’s performance, growth and financial condition. Accordingly, management instead is focusing on certain 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 15, 2013, at 4:30 p.m. (Eastern Time), to discuss the company's financial results for the fourth quarter and fiscal year 2013 as well as the company’s business outlook.

The live dial-in number is (877) 245-0126 or (706) 634-5625, conference ID code 16733106. 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, 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 16733106, through September 15, 2013.

About AspenTech

AspenTech is a leading supplier of software that optimizes process manufacturing – for energy, chemicals, engineering and construction, and other industries that manufacture and produce products from a chemical process. With integrated aspenONE solutions, process manufacturers can implement best practices for optimizing their engineering, manufacturing and supply chain operations. As a result, AspenTech customers are better able to increase capacity, improve margins, reduce costs and become more energy efficient. To see how the world’s leading process manufacturers rely on AspenTech to achieve their operational excellence goals, visit www.aspentech.com.

© 2013 Aspen Technology, Inc. AspenTech, aspenONE, the Aspen leaf logo, and OPTIMIZE are trademarks of Aspen Technology, Inc. All rights reserved. All other trademarks are property of their respective owners.

Forward-Looking Statements

The second 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 AspenTech’s expectations based on a number of risks and uncertainties, including, without limitation: AspenTech’s failure to develop new software products, enhance existing products and services, or penetrate new vertical markets; demand for, or usage of, aspenONE software declines for any reason; unfavorable economic and market conditions or a lessening demand in the market for 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 current intention to update forward-looking statements after the date of this press release.

ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited in thousands, except per share data)
                 
    Three Months Ended   Twelve Months Ended
    June 30,   June 30,
    2013   2012   2013   2012
Revenue:                
Subscription and software   $ 65,218     $ 45,832     $ 239,654     $ 166,688  
Services and other     18,046       18,185       71,733       76,446  
Total revenue     83,264       64,017       311,387       243,134  
Cost of revenue:                
Subscription and software     3,269       2,554       12,788       10,617  
Services and other     9,719       10,547       37,560       41,660  
Total cost of revenue     12,988       13,101       50,348       52,277  
Gross profit     70,276       50,916       261,039       190,857  
Operating expenses:                
Selling and marketing     25,803       26,357       93,655       96,400  
Research and development     15,939       15,259       62,516       56,218  
General and administrative     13,149       13,067       49,273       53,547  
Restructuring charges     2       (158 )     (5 )     (301 )
Total operating expenses     54,893       54,525       205,439       205,864  
Income (loss) from operations     15,383       (3,609 )     55,600       (15,007 )
Interest income     518       1,537       3,379       7,578  
Interest expense     (39 )     (1,486 )     (424 )     (4,204 )
Other expense, net     (765 )     (1,036 )     (1,117 )     (3,519 )
Income (loss) before (benefit from) provision for income taxes     15,097       (4,594 )     57,438       (15,152 )
(Benefit from) provision for income taxes     (5,302 )     794       12,176       (1,344 )
Net income (loss)   $ 20,399     $ (5,388 )   $ 45,262     $ (13,808 )
Net income (loss) per common share:                
Basic   $ 0.22     $ (0.06 )   $ 0.48     $ (0.15 )
Diluted   $ 0.21     $ (0.06 )   $ 0.47     $ (0.15 )
Weighted average shares outstanding:                
Basic     93,680       93,563       93,586       93,780  
Diluted     95,257       93,563       95,410       93,780  
                 
ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited in thousands, except share data)
         
    June 30,   June 30,
    2013   2012
         
ASSETS        
Current assets:        
Cash and cash equivalents   $ 132,432     $ 165,242  
Short-term marketable securities     57,015       -  
Accounts receivable, net     36,988       31,450  
Current portion of installments receivable, net     13,769       33,184  
Collateralized receivables     -       6,297  
Unbilled services     1,965       1,592  
Prepaid expenses and other current assets     9,665       16,219  
Prepaid income taxes     288       283  
Current deferred tax assets     33,229       7,196  
Total current assets     285,351       261,463  
Long-term marketable securities     35,353       -  
Non-current installments receivable, net     963       14,046  
Property, equipment and leasehold improvements, net     7,829       7,037  
Computer software development costs, net     1,742       1,689  
Goodwill     19,132       19,399  
Non-current deferred tax assets     25,250       58,559  
Other non-current assets     7,128       6,142  
Total assets   $ 382,748     $ 368,335  
         
LIABILITIES AND STOCKHOLDERS’ EQUITY        
Current liabilities:        
Secured borrowings   $ -     $ 10,756  
Accounts payable     846       2,566  
Accrued expenses and other current liabilities     34,421       37,989  
Income taxes payable     1,697       598  
Current deferred revenue     178,341       143,578  
Current deferred tax liabilities     156       232  
Total current liabilities     215,461       195,719  
Non-current deferred revenue     53,012       43,595  
Other non-current liabilities     12,377       15,429  
Commitments and contingencies        
Series D redeemable convertible preferred stock, $0.10 par value—        
Authorized— 3,636 shares at June 30, 2013 and June 30, 2012        
Issued and outstanding— none at June 30, 2013 and June 30, 2012     -       -  
Stockholders’ equity:        
Common stock, $0.10 par value— Authorized—210,000,000 shares        
Issued— 99,945,545 shares at June 30, 2013 and 96,663,580 shares

at June 30, 2012

        
Outstanding— 93,683,769 shares at June 30, 2013 and 93,465,955 shares

at June 30, 2012

     9,995       9,666  
Additional paid-in capital     575,770       547,546  
Accumulated deficit     (349,817 )     (395,079 )
Accumulated other comprehensive income     7,263       8,095  
Treasury stock, at cost—6,261,776 shares of common stock at June 30, 2013

and 3,197,625 at June 30, 2012

     (141,313 )     (56,636 )
Total stockholders’ equity     101,898       113,592  
Total liabilities and stockholders' equity   $ 382,748     $ 368,335  
         
ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited in thousands)
                   
      Three Months Ended   Twelve Months Ended
      June 30,   June 30,
      2013   2012   2013   2012
  Cash flows from operating activities:                
  Net income (loss)   $ 20,399     $ (5,388 )   $ 45,262     $ (13,808 )
 

Adjustments to reconcile net income (loss) to net cash provided by

operating activities:

                
  Depreciation and amortization     1,115       1,294       5,229       5,278  
  Net foreign currency (gain) loss     (285 )     169       (952 )     953  
  Stock-based compensation     3,342       2,802       14,637       12,406  
  Deferred income taxes     (10,541 )     (1,162 )     5,127       (4,827 )
  Provision for bad debts     458       (82 )     489       22  
  Excess tax benefits from stock-based compensation     (478 )     -       (478 )     -  
  Other non-cash operating activities     453       (2,181 )     818       (1,695 )
  Changes in assets and liabilities:                
  Accounts receivable     (8,489 )     (3,894 )     (6,094 )     (4,285 )
  Unbilled services     265       (463 )     (380 )     734  
  Prepaid expenses, prepaid income taxes, and other assets     (1,061 )     (3,848 )     3,827       (3,918 )
  Installments and collateralized receivables     7,054       14,493       39,419       57,003  
  Accounts payable, accrued expenses and other liabilities     6,239       7,626       (4,947 )     (1,583 )
  Deferred revenue     15,467       12,301       44,605       58,357  
  Net cash provided by operating activities     33,938       21,667       146,562       104,637  
  Cash flows from investing activities:                
  Purchase of marketable securities     (21,884 )     -       (97,597 )     -  
  Maturities of marketable securities     4,549       -       4,549       -  
  Purchase of property, equipment and leasehold improvements     (1,489 )     (3,066 )     (4,507 )     (4,241 )
  Insurance proceeds     -       -       2,222       -  
  Purchase of technology intangibles     -       -       (902 )     -  
  Payments for acquisitions, net of cash acquired     -       -       -       (2,617 )
  Capitalized computer software development costs     (563 )     (24 )     (1,156 )     (511 )
  Net cash used in investing activities     (19,387 )     (3,090 )     (97,391 )     (7,369 )
  Cash flows from financing activities:                
  Exercise of stock options and warrants     5,713       2,332       21,143       8,913  
  Proceeds from secured borrowings     -       -       -       4,982  
  Repayments of secured borrowings     -       (22,622 )     (11,010 )     (44,892 )
  Repurchases of common stock     (25,426 )     (13,986 )     (84,677 )     (46,105 )
  Payment of tax withholding obligations related to restricted stock     (1,947 )     (1,472 )     (7,705 )     (4,597 )
  Excess tax benefits from stock-based compensation     478       -       478       -  
  Net cash used in financing activities     (21,182 )     (35,748 )     (81,771 )     (81,699 )
  Effects of exchange rate changes on cash and cash equivalents     21       (151 )     (210 )     (312 )
  (Decrease) increase in cash and cash equivalents     (6,610 )     (17,322 )     (32,810 )     15,257  
  Cash and cash equivalents, beginning of period     139,042       182,564       165,242       149,985  
  Cash and cash equivalents, end of period   $ 132,432     $ 165,242     $ 132,432     $ 165,242  
                   
  Supplemental disclosure of cash flow information:                
  Income tax paid, net   $ 1,953     $ 1,108     $ 4,645     $ 2,707  
  Interest paid     39       1,488       424       4,206  
                   
ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
GAAP Results Reconciled to Non-GAAP Results
The following table reflects selected Aspen Technology GAAP results reconciled to Non-GAAP results.

(unaudited in thousands, except per share data)
                 
   

Three Months Ended

June 30,

   Twelve Months Ended

June 30,
    2013   2012   2013   2012

Total expenses

                
GAAP total expenses (a)   $ 67,881     $ 67,626     $ 255,787     $ 258,141  
Less:                
Stock-based compensation (b)     (3,342 )     (2,802 )     (14,637 )     (12,406 )
Restructuring charges     (2 )     158       5       301  
Amortization of purchased technology intangibles     (199 )     (106 )     (702 )     (142 )
                 
Non-GAAP total expenses   $ 64,338     $ 64,876     $ 240,453     $ 245,894  
                 

Income (loss) from operations

                
GAAP income (loss) from operations   $ 15,383     $ (3,609 )   $ 55,600     $ (15,007 )
Plus:                
Stock-based compensation (b)     3,342       2,802       14,637       12,406  
Restructuring charges     2       (158 )     (5 )     (301 )
Amortization of purchased technology intangibles     199       106       702       142  
                 
Non-GAAP income (loss) from operations   $ 18,926     $ (859 )   $ 70,934     $ (2,760 )
                 

Net income (loss)

                
GAAP net income (loss)   $ 20,399     $ (5,388 )   $ 45,262     $ (13,808 )
Plus:                
Stock-based compensation (b)     3,342       2,802       14,637       12,406  
Restructuring charges     2       (158 )     (5 )     (301 )
Amortization of purchased technology intangibles     199       106       702       142  
Less:                
Income tax effect on Non-GAAP items (c)     (1,279 )     (814 )     (5,536 )     (3,609 )
                 
Non-GAAP net income (loss)   $ 22,663     $ (3,452 )   $ 55,060     $ (5,170 )
                 

Diluted income (loss) per share

                
GAAP diluted income (loss) per share   $ 0.21     $ (0.06 )   $ 0.47     $ (0.15 )
Plus:                
Stock-based compensation (b)     0.04       0.03       0.15       0.13  
Restructuring charges     -       -       -       -  
Amortization of purchased technology intangibles     -       -       0.01       -  
Less:                
Income tax effect on Non-GAAP items (c)     (0.01 )     (0.01 )     (0.06 )     (0.04 )
                 
Non-GAAP diluted income (loss) per share   $ 0.24     $ (0.04 )   $ 0.58     $ (0.06 )
                 
Shares used in computing Non-GAAP diluted income (loss) per share     95,257       93,563       95,410       93,780  
                 
(a) GAAP total expenses                
    Three Months Ended

June 30,

   Twelve Months Ended

June 30,
    2013   2012   2013   2012
Total costs of revenue   $ 12,988     $ 13,101     $ 50,348     $ 52,277  
Total operating expenses     54,893       54,525       205,439       205,864  
GAAP total expenses   $ 67,881     $ 67,626     $ 255,787     $ 258,141  
                 
(b) Stock-based compensation expense was as follows:                
    Three Months Ended

June 30,

   Twelve Months Ended

June 30,
    2013   2012   2013   2012
Cost of services and other   $ 297     $ 271     $ 1,281     $ 1,168  
Selling and marketing     947       1,099       3,890       4,601  
Research and development     716       314       2,969       1,334  
General and administrative     1,382       1,118       6,497       5,303  
Total stock-based compensation   $ 3,342     $ 2,802     $ 14,637     $ 12,406  
                 

(c) The income tax effect on Non-GAAP items for the three and twelve months ended June 30, 2013 is calculated utilizing an estimate of our future effective tax rate.

Source: Aspen Technology, Inc.

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