Aspen Technology Announces Financial Results for the First Quarter of Fiscal 2015

October 28, 2014
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BURLINGTON, Mass.--(BUSINESS WIRE)--Oct. 28, 2014-- Aspen Technology, Inc. (NASDAQ: AZPN), a leading provider of software and services to the process industries, today announced financial results for its first quarter of fiscal year 2015, ended September 30, 2014.

Antonio Pietri, President and Chief Executive Officer of AspenTech, said, “AspenTech delivered solid first quarter results highlighted by 46% non-GAAP operating margin, $37 million of free cash flow, and double-digit year-over-year growth in total license contract value. The pipeline of opportunities to drive increased usage across the aspenONE suites continues to grow. We believe we are well positioned to generate double-digit total license contract value growth as well as strong profitability and free cash flow in fiscal year 2015.”

First Quarter Fiscal 2015 and Recent Business Highlights

  • The license portion of total contract value was $1.88 billion at the end of the first quarter of fiscal 2015, which increased 11.3% compared to the first quarter of fiscal 2014 and 1.7% sequentially.
  • Total contract value, including the value of bundled maintenance, was $2.23 billion at the end of the first quarter of fiscal 2015, which increased 12.5% compared to the first quarter of fiscal 2014 and 1.7% sequentially.
  • 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 $385 million at the end of the first quarter of fiscal 2015, which increased 11.2% compared to the first quarter of fiscal 2014 and 1.4% sequentially.
  • GAAP operating margin was 41.7%, compared to 28.4% in the first quarter of fiscal 2014. Non-GAAP operating margin was 45.8%, compared to 33.7% in the first quarter of fiscal 2014.
  • We repurchased 1.1 million shares of our common stock for $45 million in the first quarter of fiscal 2015.

Summary of First Quarter Fiscal Year 2015 Financial Results

AspenTech’s total revenue of $107.1 million increased 22.3% from $87.6 million in the first quarter of the prior year.

  • Subscription and software revenue was $98.7 million in the first quarter of fiscal 2015, an increase from $78.7 million in the first quarter of fiscal 2014.
  • Services and other revenue was $8.4 million in the first quarter of fiscal 2015, compared to $8.9 million in the first quarter of fiscal 2014.

For the quarter ended September 30, 2014, AspenTech reported income from operations of $44.6 million, compared to income from operations of $24.8 million for the quarter ended September 30, 2013.

Net income was $29.0 million for the quarter ended September 30, 2014, leading to net income per share of $0.32, compared to net income per share of $0.16 in the same period last fiscal year.

Non-GAAP income from operations, which adds back stock-based compensation expense, restructuring charges, amortization of intangibles associated with acquisitions and non-capitalized acquired technology, was $49.1 million for the first quarter of fiscal 2015, compared to non-GAAP income from operations of $29.5 million in the same period last fiscal year. Non-GAAP net income was $31.8 million, or $0.35 per share, for the first quarter of fiscal 2015, compared to non-GAAP net income of $18.0 million, or $0.19 per share, in the same period last fiscal year. 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 $289.1 million at September 30, 2014, a decrease of $9.3 million from the end of the prior quarter after using $45.0 million in cash to repurchase shares of common stock. During the first quarter, the company generated $39.9 million in cash flow from operations and $37.0 million in free cash flow after taking into consideration $3.0 million in capital expenditures and capitalized software.

Use of Non-GAAP Financial Measures

This press release contains “non-GAAP financial measures,” which 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 28, 2014, at 4:30 p.m. (Eastern Time), to discuss the company's financial results for the first quarter fiscal year 2015 as well as the company’s business outlook.

The live dial-in number is (866) 604-6127 or (706) 634-5625, conference ID code 17625435. 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 17625435, through November 28, 2014.

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.

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 increase usage and product adoption of aspenONE offerings, and failure to continue to provide innovative, market-leading solutions; 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 obligation to update forward-looking statements after the date of this press release

© 2014 Aspen Technology, Inc. AspenTech, aspenONE and the Aspen leaf logo are registered 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
September 30,
          2014     2013
Revenue:                
Subscription and software         $ 98,743       $ 78,683  
Services and other           8,383         8,882  
Total revenue           107,126         87,565  
Cost of revenue:                
Subscription and software           5,201         4,620  
Services and other           7,180         7,458  
Total cost of revenue           12,381         12,078  
Gross profit           94,745         75,487  
Operating expenses:                
Selling and marketing           21,618         22,931  
Research and development           16,268         15,834  
General and administrative           12,225         11,876  
Restructuring charges           -         (3 )
Total operating expenses           50,111         50,638  
Income from operations           44,634         24,849  
Interest income           135         387  
Interest expense           (3 )       (18 )
Other income (expense), net           188         (804 )
Income before provision for income taxes           44,954         24,414  
Provision for income taxes           15,987         9,415  
Net income         $ 28,967       $ 14,999  
Net income per common share:                
Basic         $ 0.32       $ 0.16  
Diluted         $ 0.32       $ 0.16  
Weighted average shares outstanding:                
Basic           91,183         93,410  
Diluted           91,891         94,522  
           
ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited in thousands, except share data)
                 
          September 30,
2014		     June 30,
2014
                 
ASSETS                
Current assets:                
Cash and cash equivalents         $ 193,134       $ 199,526  
Short-term marketable securities           72,352         67,619  
Accounts receivable, net           24,775         38,532  
Current portion of installments receivable, net           412         640  
Unbilled services           1,113         1,656  
Prepaid expenses and other current assets           9,065         10,567  
Prepaid income taxes           701         605  
Current deferred tax assets           7,104         10,537  
Total current assets           308,656         329,682  
Long-term marketable securities           23,635         31,270  
Non-current installments receivable, net           551         811  
Property, equipment and leasehold improvements, net           9,513         7,588  
Computer software development costs, net           1,349         1,390  
Goodwill           18,596         19,276  
Non-current deferred tax assets           11,207         12,765  
Other non-current assets           4,728         5,190  
Total assets         $ 378,235       $ 407,972  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY                
Current liabilities:                
Accounts payable         $ 1,961       $ 412  
Accrued expenses and other current liabilities           26,136         34,984  
Income taxes payable           997         2,168  
Current deferred revenue           213,545         228,940  
Total current liabilities           242,639         266,504  
Non-current deferred revenue           43,267         45,942  
Other non-current liabilities           22,340         11,850  
Commitments and contingencies                
Series D redeemable convertible preferred stock, $0.10 par value—                
Authorized— 3,636 shares as of September 30, 2014 and June 30, 2014                
Issued and outstanding— none as of September 30, 2014 and June 30, 2014                
Stockholders’ equity:                
Common stock, $0.10 par value— Authorized—210,000,000 shares                
Issued— 101,188,994 shares at September 30, 2014 and 101,033,740 shares at June 30, 2014                
Outstanding— 90,766,389 shares at September 30, 2014 and 91,661,850 shares at June 30, 2014           10,119         10,103  
Additional paid-in capital           595,223         591,324  
Accumulated deficit           (235,067 )       (264,034 )
Accumulated other comprehensive income           7,803         9,372  
Treasury stock, at cost—10,422,605 shares of common stock at September 30, 2014

and 9,371,890 shares at June 30, 2014

           (308,089 )       (263,089 )
Total stockholders’ equity           69,989         83,676  
Total liabilities and stockholders' equity         $ 378,235       $ 407,972  
 

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

 

         Three Months Ended
September 30,
          2014     2013
Cash flows from operating activities:                
Net income         $ 28,967       $ 14,999  
Adjustments to reconcile net income to net cash provided by operating activities:                
Depreciation and amortization           1,352         1,202  
Net foreign currency (gains) losses           (660 )       564  
Stock-based compensation           4,204         4,387  
Deferred income taxes           15,560         8,618  
Provision for bad debts           (1,329 )       20  
Excess tax benefits from stock-based compensation           (72 )       (41 )
Other non-cash operating activities           462         73  
Changes in assets and liabilities:                
Accounts receivable           14,990         1,152  
Unbilled services           527         194  
Prepaid expenses, prepaid income taxes, and other assets           1,242         870  
Installments receivable           253         3,029  
Accounts payable, accrued expenses, and other liabilities           (7,889 )       (9,477 )
Deferred revenue           (17,664 )       323  
Net cash provided by operating activities           39,943         25,913  
Cash flows from investing activities:                
Purchase of marketable securities           (11,985 )       (7,974 )
Maturities of marketable securities           14,513         4,538  
Purchase of property, equipment and leasehold improvements           (2,891 )       (915 )
Capitalized computer software development costs           (136 )       (219 )
Net cash used in investing activities           (499 )       (4,570 )
Cash flows from financing activities:                
Exercise of stock options           1,050         2,933  
Repurchases of common stock           (45,000 )       (28,919 )
Payment of tax withholding obligations related to restricted stock           (1,411 )       (2,449 )
Excess tax benefits from stock-based compensation           72         41  
Net cash used in financing activities           (45,289 )       (28,394 )
Effect of exchange rate changes on cash and cash equivalents           (547 )       223  
Decrease in cash and cash equivalents           (6,392 )       (6,828 )
Cash and cash equivalents, beginning of period           199,526         132,432  
Cash and cash equivalents, end of period         $ 193,134       $ 125,604  
                 
Supplemental disclosure of cash flow information:                
Income taxes paid, net         $ 1,551       $ 1,330  
Interest paid           3         18  
 

ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Results of Operations and Cash Flows
The following tables reflect a reconciliation of selected Aspen Technology GAAP to Non-GAAP results of
operations and cash flows.
(unaudited in thousands, except per share data)

 
                 
         

Three Months Ended
September 30,
          2014     2013

Total expenses

                
GAAP total expenses (a)         $ 62,492       $ 62,716  
Less:                
Stock-based compensation (b)           (4,204 )       (4,387 )
Restructuring charges           -         3  
Amortization of purchased technology intangibles           (224 )       (250 )
                 
Non-GAAP total expenses         $ 58,064       $ 58,082  
                 

Income from operations

                
GAAP income from operations         $ 44,634       $ 24,849  
Plus:                
Stock-based compensation (b)           4,204         4,387  
Restructuring charges           -         (3 )
Amortization of purchased technology intangibles           224         250  
                 
Non-GAAP income from operations         $ 49,062       $ 29,483  
                 

Net income

                
GAAP net income         $ 28,967       $ 14,999  
Plus:                
Stock-based compensation (b)           4,204         4,387  
Restructuring charges           -         (3 )
Amortization of purchased technology intangibles           224         250  
Less:                
Income tax effect on Non-GAAP items (c)           (1,594 )       (1,668 )
                 
Non-GAAP net income         $ 31,801       $ 17,965  
                 

Diluted income per share

                
GAAP diluted income per share         $ 0.32       $ 0.16  
Plus:                
Stock-based compensation (b)           0.05         0.05  
Restructuring charges           -         -  
Amortization of purchased technology intangibles           -         -  
Less:                
Income tax effect on Non-GAAP items (c)           (0.02 )       (0.02 )
                 
Non-GAAP diluted income per share         $ 0.35       $ 0.19  
                 
Shares used in computing Non-GAAP diluted income per share           91,891         94,522  
                 
                 
          Three Months Ended

September 30,
          2014     2013

Non-GAAP Cash Flows from Operating Activities and Free Cash Flow

          
GAAP cash flows from operating activities         $ 39,943       $ 25,913  
Plus:                
Excess tax benefits from stock-based compensation (d)           72         41  
                 

Non-GAAP Cash Flows from Operating Activities

         $ 40,015    

 

 $ 25,954  
                 
Less:                
Purchase of property, equipment and leasehold improvements           (2,891 )       (915 )
Capitalized computer software development costs           (136 )       (219 )
                 
Free Cash Flow         $ 36,988       $ 24,820  
                 
(a) GAAP total expenses                
          Three Months Ended

September 30,
          2014     2013
Total costs of revenue         $ 12,381       $ 12,078  
Total operating expenses           50,111         50,638  
GAAP total expenses         $ 62,492       $ 62,716  
                 
(b) Stock-based compensation expense was as follows:                
          Three Months Ended

September 30,
          2014     2013
Cost of services and other         $ 338       $ 301  
Selling and marketing           750         1,111  
Research and development           991         856  
General and administrative           2,125         2,119  
Total stock-based compensation         $ 4,204       $ 4,387  
                 

(c) The income tax effect on non-GAAP items for the three months ended September 30, 2014 and 2013 is calculated utilizing the Company's estimated federal and state tax rate of 36%.

(d) Excess tax benefits from stock-based compensation are included in non-GAAP cash flows from operating activities and free cash flow to be consistent with the treatment of other tax benefits. Refer to the Company's Form 10-Q for the period ended September 30, 2014 for additional details.

Source: Aspen Technology, Inc.

Media Contact
AspenTech
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david.grip@aspentech.com
or
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