Aspen Technology Announces Financial Results for the Fourth Quarter and Fiscal Year 2015

August 13, 2015
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BEDFORD, Mass.--(BUSINESS WIRE)--Aug. 13, 2015-- 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 ended June 30, 2015.

“AspenTech reported solid fourth quarter results that exceeded our expectations from both a revenue and profitability perspective,” said Antonio Pietri, President and Chief Executive Officer of AspenTech. “Our ability to deliver double-digit annual spend growth against the backdrop of an increasingly challenging macro environment reflects the strength of AspenTech’s model and the mission critical nature of our solutions.”

Pietri added, “Our strong balance sheet and significant free cash flow, driven in part by our expense discipline, enabled us to repurchase approximately 7.7 million shares of common stock during fiscal 2015. As we enter fiscal 2016, we will continue to focus on driving increased usage across the aspenONE suite in order to deliver continued top and bottom line growth and shareholder value.”

Fourth Quarter and Fiscal Year 2015 Business Highlights

  • The license portion of total contract value was $2.07 billion at the end of fiscal 2015, which increased 2.2% from March 31, 2015 and 11.8% compared to the end of fiscal 2014.
  • Total contract value, including the value of bundled maintenance, was $2.46 billion at the end of fiscal 2015, which increased 2.2% from March 31, 2015 and 12.3% compared to the end of fiscal 2014.
  • Annual spend, which the company defines as the annualized value of all term license and term maintenance contracts at the end of the quarter, was $419 million at the end of fiscal 2015, an increase of 1.9% from March 31, 2015 and 10.5% from the end of fiscal 2014.
  • GAAP operating margin was 41.1%, compared to 36.8% in the fourth quarter of fiscal 2014. Non-GAAP operating margin was 44.2%, compared to 39.9% in the fourth quarter of fiscal 2014.
  • We repurchased nearly 1.8 million shares of our common stock for $73.6 million in the fourth quarter of fiscal 2015.

Summary of Fourth Quarter Fiscal Year 2015 Financial Results

AspenTech’s total revenue of $114.2 million increased 12.5% from $101.5 million in the fourth quarter of the prior fiscal year.

  • Subscription and software revenue was $105.6 million in the fourth quarter of fiscal 2015, an increase from $91.6 million in the fourth quarter of fiscal 2014.
  • Services and other revenue was $8.5 million in the fourth quarter of fiscal 2015, a decrease from $10.0 million in the fourth quarter of fiscal 2014.

For the quarter ended June 30, 2015, AspenTech reported income from operations of $46.9 million, compared to income from operations of $37.4 million for the quarter ended June 30, 2014.

Net income was $30.8 million for the quarter ended June 30, 2015, leading to net income per share of $0.36, compared to net income per share of $0.29 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 $50.5 million for the fourth quarter of fiscal 2015, compared to non-GAAP income from operations of $40.5 million in the same period last fiscal year. Non-GAAP net income was $33.1 million, or $0.39 per share, for the fourth quarter of fiscal 2015, compared to non-GAAP net income of $28.7 million, or $0.31 per share, in the same period last fiscal year.

AspenTech had cash and marketable securities of $218.5 million at June 30, 2015, compared to $225.0 million at the end of the prior quarter after using $74.4 million in cash to repurchase shares of common stock. During the fourth quarter, the company generated $53.6 million in cash flow from operations. On a non-GAAP basis, cash flow from operations was $68.7 million and free cash flow was $67.0 million after taking into consideration $1.8 million in capital expenditures and capitalized software. Both non-GAAP figures include $15.2 million of excess tax benefits from stock-based compensation.

Summary of Fiscal Year 2015 Financial Results

AspenTech’s total revenue of $440.4 million increased 12.5% from $391.5 million for fiscal year 2014.

  • Subscription and software revenue was $405.6 million, an increase from $350.5 million for fiscal year 2014.
  • Services and other revenue was $34.8 million, compared to $41.0 million for fiscal year 2014.

For the fiscal year ended June 30, 2015, AspenTech reported income from operations of $179.8 million, an improvement from income from operations of $129.7 million for fiscal year 2014.

Net income was $118.4 million for the fiscal year ended June 30, 2015, leading to net income per share of $1.33, compared to net income per share of $0.92 for fiscal year 2014.

Non-GAAP income from operations was $198.4 million for fiscal year 2015, an improvement compared to non-GAAP income from operations of $149.5 million for fiscal year 2014. Non-GAAP net income was $130.3 million, or $1.46 per share, for fiscal year 2015, an improvement compared to non-GAAP net income of $98.5 million, or $1.05 per share, for fiscal year 2014.

For the fiscal year ended June 30, 2015, the company generated $192.0 million in cash flow from operations, $231.6 million in non-GAAP cash flow from operations and $223.6 million in free cash flow. Both non-GAAP figures include the $2.6 million cash payment associated with the purchase of non-capitalized acquired technology and include $37.0 million of excess tax benefits from stock-based compensation.

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 13, 2015, at 4:30 p.m. (Eastern Time), to discuss the company's financial results for the fourth quarter and fiscal year 2015 as well as the company’s business outlook.

The live dial-in number is (877) 245-0126 or (706) 634-5625, conference ID code 90931889. 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 90931889, through September 13, 2015.

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 third 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.

© 2015 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*
(In thousands, except per share data)
                             
          Three Months Ended     Twelve Months Ended
          June 30,     June 30,
          (Unaudited)     (Audited)
          2015     2014     2015     2014
Revenue:                            
Subscription and software         $ 105,638       $ 91,570       $ 405,640       $ 350,486  
Services and other           8,548         9,962         34,761         40,967  
Total revenue           114,186         101,532         440,401         391,453  
Cost of revenue:                            
Subscription and software           5,352         5,167         21,165         20,141  
Services and other           7,269         7,712         28,411         32,547  
Total cost of revenue           12,621         12,879         49,576         52,688  
Gross profit           101,565         88,653         390,825         338,765  
Operating expenses:                            
Selling and marketing           25,137         23,451         92,736         94,827  
Research and development           17,036         15,769         69,584         68,410  
General and administrative           12,486         12,072         48,713         45,804  
Total operating expenses           54,659         51,292         211,033         209,041  
Income from operations           46,906         37,361         179,792         129,724  
Interest income           98         155         487         1,124  
Interest expense           (22 )       (5 )       (30 )       (37 )
Other income (expense), net           (1,132 )       (471 )       (778 )       (2,278 )
Income before provision for income taxes           45,850         37,040         179,471         128,533  
Provision for income taxes           15,044         10,362         61,064         42,750  
Net income         $ 30,806       $ 26,678       $ 118,407       $ 85,783  
Net income per common share:                            
Basic         $ 0.36       $ 0.29       $ 1.34       $ 0.93  
Diluted         $ 0.36       $ 0.29       $ 1.33       $ 0.92  
Weighted average shares outstanding:                            
Basic           85,056         91,916         88,398         92,648  
Diluted           85,585         92,710         89,016         93,665  
                             
                             
(*)- Certain items in prior period Consolidated Statements of Operations have been reclassified to conform to the current period presentation.
                 
ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Audited in thousands, except share data)
                 
          June 30,     June 30,
          2015     2014
                 
ASSETS                
Current assets:                
Cash and cash equivalents         $ 156,249       $ 199,526  
Short-term marketable securities           59,197         67,619  
Accounts receivable, net           30,721         38,532  
Current portion of installments receivable, net           1,589         640  
Unbilled services           1,108         1,656  
Prepaid expenses and other current assets           8,055         10,567  
Prepaid income taxes           542         605  
Current deferred tax assets           6,169         10,537  
Total current assets           263,630         329,682  
Long-term marketable securities           3,047         31,270  
Non-current installments receivable, net           253         811  
Property, equipment and leasehold improvements, net           18,039         7,588  
Computer software development costs, net           1,026         1,390  
Goodwill           17,360         19,276  
Non-current deferred tax assets           10,444         12,765  
Other non-current assets           1,562         5,190  
Total assets         $ 315,361       $ 407,972  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)                
Current liabilities:                
Accounts payable         $ 5,240       $ 412  
Accrued expenses and other current liabilities           38,483         34,984  
Income taxes payable           1,775         2,168  
Current deferred revenue           250,968         228,940  
Total current liabilities           296,466         266,504  
Non-current deferred revenue           37,919         45,942  
Other non-current liabilities           29,522         11,850  
Commitments and contingencies                
Series D redeemable convertible preferred stock, $0.10 par value—                
Authorized— 3,636 shares as of June 30, 2015 and 2014                
Issued and outstanding— none as of June 30, 2015 and 2014           -        
Stockholders’ equity (deficit):                
Common stock, $0.10 par value— Authorized—210,000,000 shares                
Issued— 101,607,520 shares at June 30, 2015 and 101,033,740 shares at June 30, 2014                
Outstanding— 84,504,202 shares at June 30, 2015 and 91,661,850 shares at June 30, 2014           10,161         10,103  
Additional paid-in capital           641,883         591,324  
Accumulated deficit           (145,627 )       (264,034 )
Accumulated other comprehensive income           6,470         9,372  
Treasury stock, at cost—17,103,318 shares of common stock at June 30, 2015

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

     (561,433 )       (263,089 )
Total stockholders’ equity (deficit)           (48,546 )       83,676  
Total liabilities and stockholders' equity (deficit)         $ 315,361       $ 407,972  
                             
ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS*
(In thousands)
                               
            Three Months Ended     Twelve Months Ended
            June 30,     June 30,
            (Unaudited)     (Audited)
            2015     2014     2015     2014
  Cash flows from operating activities:                            
  Net income         $ 30,806       $ 26,678       $ 118,407       $ 85,783  
  Adjustments to reconcile net income to net cash provided by operating activities:                            
  Depreciation and amortization           1,600         1,360         6,216         5,215  
  Net foreign currency (gains) losses           1,163         490         (1,552 )       1,934  
  Stock-based compensation           3,462         2,954         14,584         14,056  
  Deferred income taxes           (1,205 )       8,769         20,112         34,596  
  Provision for bad debts           (42 )       649         (513 )       1,793  
  Tax benefits from stock-based compensation           15,181         590         37,024         727  
  Excess tax benefits from stock-based compensation           (15,181 )       (590 )       (37,024 )       (727 )
  Other non-cash operating activities           218         489         1,619         1,847  
  Changes in assets and liabilities:           -         -              
  Accounts receivable           (2,493 )       (8,245 )       8,028         (3,179 )
  Unbilled services           41         (366 )       526         301  
  Prepaid expenses, prepaid income taxes, and other assets           (692 )       (3,380 )       4,070         947  
  Installments receivable           (1,186 )       1,674         (364 )       13,607  
  Accounts payable, accrued expenses, and other liabilities           7,131         2,154         5,933         906  
  Deferred revenue           14,765         25,016         14,919         42,325  
  Net cash provided by operating activities           53,568         58,242         191,985         200,131  
  Cash flows from investing activities:                            
  Purchases of marketable securities           -         (32,814 )       (50,065 )       (68,356 )
  Maturities of marketable securities           18,612         26,903         85,535         60,265  
  Purchases of property, equipment and leasehold improvements           (1,731 )       (1,381 )       (7,645 )       (4,011 )
  Purchases of technology intangibles           -         -         -         (400 )
  Capitalized computer software development costs           (44 )       (84 )       (359 )       (685 )
  Net cash provided by (used in) investing activities           16,837         (7,376 )       27,466         (13,187 )
  Cash flows from financing activities:                            
  Exercises of stock options           2,616         1,235         4,662         8,710  
  Repurchases of common stock           (74,368 )       (32,857 )       (297,246 )       (121,776 )
  Payments of tax withholding obligations related to restricted stock           (1,825 )       (1,896 )       (5,699 )       (7,831 )
  Excess tax benefits from stock-based compensation           15,181         590         37,024         727  
  Net cash used in financing activities           (58,396 )       (32,928 )       (261,259 )       (120,170 )
  Effect of exchange rate changes on cash and cash equivalents           278         105         (1,469 )       320  
  Increase (decrease) in cash and cash equivalents           12,287         18,043         (43,277 )       67,094  
  Cash and cash equivalents, beginning of period           143,962         181,483         199,526         132,432  
  Cash and cash equivalents, end of period         $ 156,249       $ 199,526       $ 156,249       $ 199,526  
                               
  Supplemental disclosure of cash flow information:                            
  Income taxes paid, net         $ 779       $ 1,440       $

3,712

      

$

7,157

  
  Interest paid           30         5        

30

        

37

  
 

 

 
 

(*)- Certain items for the three and twelve months ended June 30, 2014 presented
in the Consolidated Statements of Cash Flows have been reclassified to conform to the current period presentation.

 

  
                               
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

June 30,

       Twelve Months Ended

June 30,
          2015     2014       2015     2014

Total expenses

                              
GAAP total expenses (a)         $ 67,280       $ 64,171         $ 260,609       $ 261,729  
Less:                              
Stock-based compensation (b)           (3,462 )       (2,954 )         (14,584 )       (14,056 )
Non-capitalized acquired technology (e)           -         -           (3,277 )       (4,856 )
Restructuring charges           -                 -         15  
Amortization of purchased technology intangibles           (113 )       (224 )         (748 )       (922 )
                               
Non-GAAP total expenses         $ 63,705       $ 60,993         $ 242,000       $ 241,910  
                               

Income from operations

                              
GAAP income from operations         $ 46,906       $ 37,361         $ 179,792       $ 129,724  
Plus:                              
Stock-based compensation (b)           3,462         2,954           14,584         14,056  
Non-capitalized acquired technology (e)           -         -           3,277         4,856  
Restructuring charges           -         -           -         (15 )
Amortization of purchased technology intangibles           113         224           748         922  
                               
Non-GAAP income from operations         $ 50,481       $ 40,539         $ 198,401       $ 149,543  
                               

Net income

                              
GAAP net income         $ 30,806       $ 26,678         $ 118,407       $ 85,783  
Plus:                              
Stock-based compensation (b)           3,462         2,954           14,584         14,056  
Non-capitalized acquired technology (e)           -                 3,277         4,856  
Restructuring charges           -         -           -         (15 )
Amortization of purchased technology intangibles           113         224           748         922  
Less:                              
Income tax effect on Non-GAAP items (c)           (1,287 )       (1,144 )         (6,699 )       (7,135 )
                               
Non-GAAP net income         $ 33,094       $ 28,712         $ 130,317       $ 98,467  
                               

Diluted income per share

                              
GAAP diluted income per share         $ 0.36       $ 0.29         $ 1.33       $ 0.92  
Plus:                              
Stock-based compensation (b)           0.04         0.03           0.16         0.15  
Non-capitalized acquired technology (e)           -         -           0.04         0.05  
Restructuring charges           -         -           -         -  
Amortization of purchased technology intangibles           -         -           0.01         0.01  
Less:                              
Income tax effect on Non-GAAP items (c)           (0.02 )       (0.01 )         (0.08 )       (0.08 )
                               
Non-GAAP diluted income per share         $ 0.39       $ 0.31         $ 1.46       $ 1.05  
                               
Shares used in computing Non-GAAP diluted income per share           85,585         92,710           89,016         93,665  
                               
                               
          Three Months Ended

June 30,

       Twelve Months Ended

June 30,
          2015     2014       2015     2014

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

                        
GAAP cash flows from operating activities         $ 53,568       $ 58,242         $ 191,985       $ 200,131  
Plus:                              
Non-capitalized acquired technology (e)           -         -           2,621         3,856  
Excess tax benefits from stock-based compensation (d)           15,181         590           37,024         727  
                               
Non-GAAP Cash Flows from Operating Activities         $ 68,749  

 

   $ 58,832         $ 231,630    

 

 $ 204,714  
                               
Less:                              
Purchases of property, equipment and leasehold improvements           (1,731 )       (1,381 )         (7,645 )       (4,011 )
Capitalized computer software development costs           (44 )       (84 )         (359 )       (685 )
                               
Free Cash Flow         $ 66,974       $ 57,367         $ 223,626       $ 200,018  
                               
(a) GAAP total expenses                              
          Three Months Ended

June 30,

       Twelve Months Ended

June 30,
          2015     2014       2015     2014
Total costs of revenue         $ 12,621       $ 12,879         $ 49,576       $ 52,688  
Total operating expenses           54,659         51,292           211,033         209,041  
GAAP total expenses         $ 67,280       $ 64,171         $ 260,609       $ 261,729  
                               
(b) Stock-based compensation expense was as follows:                              
          Three Months Ended

June 30,

       Twelve Months Ended

June 30,
          2015     2014       2015     2014
Cost of services and other         $ 337       $ 329         $ 1,351       $ 1,239  
Selling and marketing           774         627           3,056         3,280  
Research and development           958         862           3,881         4,129  
General and administrative           1,393         1,136           6,296         5,408  
Total stock-based compensation         $ 3,462       $ 2,954         $ 14,584       $ 14,056  
                                               

(c) The income tax effect on non-GAAP items for the three and twelve months ended June 30, 2015 and 2014 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-K for the period ended June 30, 2015 for additional details.

(e) During the three months ended March 31, 2015 and 2014, we acquired certain technology for $3.3 million and $4.9 million, respectively, as a part of projects initiated during these periods to develop commercially available products. At the time of these purchases, the projects did not meet the accounting definition of having reached technological feasibility, and, as such, the costs of the acquired technology were expensed during the three and nine months ended March 31, 2015 and 2014. During the three and nine months ended March 31, 2015 and 2014, we excluded the payments of $2.6 million and $3.9 million for the acquired technology from non-GAAP cash flows from operating activities and free cash flow to be consistent with the treatment of other transactions where acquired assets are capitalized.

 

Source: Aspen Technology, Inc.

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