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Spursh Parikh
www.sererra.com
Aspen Technology, Inc. (NASDAQ: AZPN), a leading provider of software
and services to the process industries, today announced financial
results for its second quarter of fiscal year 2013, ended December 31,
2012.
“AspenTech delivered strong second quarter results that exceeded our
guidance on all key metrics. We continue to see strong customer demand
and product usage patterns, which contributed to our solid
year-over-year annual spend growth of nearly 13% during the second
quarter,” said Mark Fusco, President and Chief Executive Officer. “The
company’s operational execution remains at a high level, which is
evidenced by free cash flow generation of $34.5 million during the
quarter. With over $50 million of free cash flow generated during the
first half of our fiscal year, we feel very good about the company’s
position as we are heading into our seasonally strongest cash flow
quarter.”
Fusco added, “Looking ahead, we are encouraged by the strength of our
pipeline and business momentum. We believe the company is tracking well
against each of our key full year objectives, including growth, cash
flow, revenue and profitability.”
Second Quarter Fiscal 2013 and Recent Business Highlights
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 $320 million at the end of the second
quarter of fiscal 2013, an increase of 12.7% compared to the second
quarter of fiscal 2012, and 2.6% sequentially.
The license portion of total contract value was $1.54 billion at the
end of the second quarter of fiscal 2013, an increase of 13.5%
compared to the second quarter of fiscal 2012, and 2.9% sequentially.
Total contract value, including the value of bundled maintenance, was
$1.78 billion at the end of the second quarter of fiscal 2013, an
increase of 15.5% compared to the second quarter of fiscal 2012, and
3.3% sequentially.
Summary of Second Quarter Fiscal Year 2013 Financial Results
AspenTech’s total revenue of $77.3 million increased 16% from $66.6
million in the second quarter of the prior year.
Subscription and software revenue was $59.5 million in the
second quarter of fiscal 2013, an increase from $46.5 million in the
second quarter of fiscal 2012.
Services & other revenue was $17.9 million in the second
quarter of fiscal 2013, compared to $20.1 million in the second
quarter of fiscal 2012.
For the quarter ended December 31, 2012, AspenTech reported income from
operations of $14.9 million, compared to income from operations of $7.0
million for the same period last fiscal year.
Net income was $9.9 million for the quarter ended December 31, 2012,
leading to net income per share of $0.10, compared to $0.04 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 $18.6 million for the
second quarter of fiscal 2013, compared to $10.1 million in the same
period last fiscal year.
Non-GAAP net income was $12.3 million, or $0.13 per share, for the
second quarter of fiscal 2013, compared to non-GAAP net income of $6.0
million, or $0.06 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 cash and cash equivalents of $175.2 million at December
31, 2012, an increase of $11.9 million from the end of the prior quarter
after using $19.7 million in cash to repurchase shares of common stock
and reducing secured borrowings by $5.6 million. AspenTech has now fully
repaid its secured borrowings. During the second quarter, the company
generated $35.7 million in cash flow from operations and $34.5 million
in free cash flow after taking into consideration $1.2 million in
capital expenditures and capitalized software.
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, January 29,
2013, at 4:30 p.m. (Eastern Time), to discuss the company's financial
results for the second quarter fiscal year 2013 as well as the company’s
business outlook. The live dial-in number is (877) 245-0126, conference
ID code 86327489. 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 86327489,
through March 1, 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.
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 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; risks associated with operations outside the
United States; weaknesses in AspenTech’s internal controls; 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 and in thousands, except per share data)
Three Months Ended
Six Months Ended
December 31,
December 31,
2012
2011
2012
2011
Revenue:
Subscription and software
$
59,457
$
46,502
$
113,537
$
78,412
Services and other
17,852
20,053
35,229
39,368
Total revenue
77,309
66,555
148,766
117,780
Cost of revenue:
Subscription and software
3,100
2,622
6,290
5,346
Services and other
9,273
10,303
18,421
21,400
Total cost of revenue
12,373
12,925
24,711
26,746
Gross profit
64,936
53,630
124,055
91,034
Operating expenses:
Selling and marketing
23,303
22,318
44,894
45,764
Research and development
15,039
12,767
30,805
26,536
General and administrative
11,671
11,490
24,439
27,377
Restructuring charges
(6
)
14
34
(59
)
Total operating expenses
50,007
46,589
100,172
99,618
Income (loss) from operations
14,929
7,041
23,883
(8,584
)
Interest income
955
2,034
2,054
4,265
Interest expense
(116
)
(1,015
)
(373
)
(2,107
)
Other expense, net
(57
)
(425
)
(334
)
(2,457
)
Income (loss) before provision for (benefit from) income taxes
15,711
7,635
25,230
(8,883
)
Provision for (benefit from) income taxes
5,774
3,799
10,880
(983
)
Net income (loss)
$
9,937
$
3,836
$
14,350
$
(7,900
)
Net Income (loss) per common share:
Basic
$
0.11
$
0.04
$
0.15
$
(0.08
)
Diluted
$
0.10
$
0.04
$
0.15
$
(0.08
)
Weighted average shares outstanding:
Basic
93,512
93,902
93,470
93,983
Diluted
95,463
96,267
95,541
93,983
ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands, except share data)
December 31,
June 30,
2012
2012
ASSETS
Current assets:
Cash and cash equivalents
$
175,224
$
165,242
Accounts receivable, net
39,531
31,450
Current portion of installments receivable, net
20,923
33,184
Collateralized receivables
-
6,297
Unbilled services
1,006
1,592
Prepaid expenses and other current assets
7,990
16,219
Prepaid income taxes
133
283
Current deferred tax assets
6,770
7,196
Total current assets
251,577
261,463
Non-current installments receivable, net
8,089
14,046
Property, equipment and leasehold improvements, net
7,727
7,037
Computer software development costs, net
1,618
1,689
Goodwill
19,851
19,399
Non-current deferred tax assets
49,173
58,559
Other non-current assets
7,403
6,142
Total assets
$
345,438
$
368,335
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Secured borrowings
$
-
$
10,756
Accounts payable
4,502
2,566
Accrued expenses and other current liabilities
29,248
37,989
Income taxes payable
295
598
Current deferred revenue
141,538
143,578
Current deferred tax liabilities
232
232
Total current liabilities
175,815
195,719
Non-current deferred revenue
50,358
43,595
Other non-current liabilities
14,968
15,429
Commitments and contingencies
Series D redeemable convertible preferred stock, $0.10 par value—
Authorized— 3,636 shares at December 31, 2012 and June 30, 2012
Issued and outstanding— none at December 31, 2012 and June 30, 2012
-
-
Stockholders’ equity:
Common stock, $0.10 par value— Authorized—210,000,000 shares
Issued— 98,294,064 shares at December 31, 2012 and 96,663,580 shares
at June 30, 2012
Outstanding— 93,615,934 shares at December 31, 2012 and 93,465,955
shares at June 30, 2012
9,829
9,666
Additional paid-in capital
559,983
547,546
Accumulated deficit
(380,729
)
(395,079
)
Accumulated other comprehensive income
8,702
8,095
Treasury stock, at cost—4,678,130 shares of common stock at December
31, 2012 and 3,197,625 at June 30, 2012
(93,488
)
(56,636
)
Total stockholders’ equity
104,297
113,592
Total liabilities and stockholders' equity
$
345,438
$
368,335
ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited and in thousands)
Three Months Ended
Six Months Ended
December 31,
December 31,
2012
2011
2012
2011
Cash flows from operating activities:
Net income (loss)
$
9,937
$
3,836
$
14,350
$
(7,900
)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization
1,370
1,281
2,687
2,693
Net foreign currency (gain) loss
(183
)
(57
)
(304
)
1,218
Stock-based compensation
3,453
3,071
7,768
6,779
Deferred income taxes
5,636
3,044
9,858
(2,310
)
Provision for bad debts
65
(553
)
162
(403
)
Other non-cash activities
25
-
28
13
Changes in assets and liabilities:
Accounts receivable
(16,852
)
(13,662
)
(7,957
)
(8,068
)
Unbilled services
568
1,294
606
1,905
Prepaid expenses, prepaid income taxes, and other assets
1,462
(419
)
5,905
768
Installments and collateralized receivables
14,071
18,399
25,101
26,728
Accounts payable, accrued expenses, income taxes payable and other
liabilities
4,750
(1,694
)
(8,503
)
(8,592
)
Deferred revenue
11,377
8,467
4,439
15,449
Net cash provided by operating activities
35,679
23,007
54,140
28,280
Cash flows from investing activities:
Purchase of property, equipment and leasehold improvements
(767
)
(536
)
(2,567
)
(922
)
Insurance proceeds
-
-
2,222
-
Purchase of technology intangibles
-
-
(527
)
-
Capitalized computer software development costs
(435
)
(192
)
(435
)
(392
)
Net cash used in investing activities
(1,202
)
(728
)
(1,307
)
(1,314
)
Cash flows from financing activities:
Exercise of stock options and warrants
5,072
1,874
9,120
4,106
Proceeds from secured borrowings
-
3,574
-
4,982
Repayments of secured borrowings
(5,616
)
(18,188
)
(11,010
)
(20,420
)
Repurchases of common stock
(19,689
)
(11,068
)
(36,852
)
(20,240
)
Payment of tax withholding obligations related to restricted stock
(2,312
)
(582
)
(4,288
)
(1,769
)
Net cash used in financing activities
(22,545
)
(24,390
)
(43,030
)
(33,341
)
Effects of exchange rate changes on cash and cash equivalents
(71
)
10
179
(355
)
Increase (decrease) in cash and cash equivalents
11,861
(2,101
)
9,982
(6,730
)
Cash and cash equivalents, beginning of period
163,363
145,356
165,242
149,985
Cash and cash equivalents, end of period
$
175,224
$
143,255
$
175,224
$
143,255
Supplemental disclosure of cash flow information:
Income tax paid (refunded), net
$
778
$
(293
)
$
1,812
$
338
Interest paid
116
1,015
373
2,107
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 and in thousands, except per share data)
Three Months Ended
December 31,
Six Months Ended
December 31,
2012
2011
2012
2011
Total expenses
GAAP total expenses (a)
$
62,380
$
59,514
$
124,883
$
126,364
Less:
Stock-based compensation (b)
(3,453
)
(3,071
)
(7,768
)
(6,779
)
Restructuring charges
6
(14
)
(34
)
59
Amortization of purchased intangibles
(199
)
-
(302
)
-
Non-GAAP total expenses
$
58,734
$
56,429
$
116,779
$
119,644
Income (loss) from operations
GAAP income (loss) from operations
$
14,929
$
7,041
$
23,883
$
(8,584
)
Plus:
Stock-based compensation (b)
3,453
3,071
7,768
6,779
Restructuring charges
(6
)
14
34
(59
)
Amortization of purchased intangibles
199
-
302
-
Non-GAAP income (loss) from operations
$
18,575
$
10,126
$
31,987
$
(1,864
)
Net income (loss)
GAAP net income (loss)
$
9,937
$
3,836
$
14,350
$
(7,900
)
Plus:
Stock-based compensation (b)
3,453
3,071
7,768
6,779
Restructuring charges
(6
)
14
34
(59
)
Amortization of purchased intangibles
199
-
302
-
Less:
Income tax effect on Non-GAAP items (c)
(1,316
)
(941
)
(2,926
)
(1,970
)
Non-GAAP net income (loss)
$
12,267
$
5,980
$
19,528
$
(3,150
)
Diluted income (loss) per share
GAAP diluted income (loss) per share
$
0.10
$
0.04
$
0.15
$
(0.08
)
Plus:
Stock-based compensation (b)
0.04
0.03
0.08
0.07
Restructuring charges
-
-
-
-
Amortization of intangible assets
-
-
-
-
Less:
Income tax effect on Non-GAAP items (c)
(0.01
)
(0.01
)
(0.03
)
(0.02
)
Non-GAAP diluted income (loss) per share
$
0.13
$
0.06
$
0.20
$
(0.03
)
Shares used in computing diluted income (loss) per share
95,463
96,267
95,541
93,983
(a) GAAP total expenses
Three Months Ended
December 31,
Six Months Ended
December 31,
2012
2011
2012
2011
Total costs of revenue
$
12,373
$
12,925
$
24,711
$
26,746
Total operating expenses
50,007
46,589
100,172
99,618
GAAP total expenses
$
62,380
$
59,514
$
124,883
$
126,364
(b) Stock-based compensation expense was as follows:
Three Months Ended
December 31,
Six Months Ended
December 31,
2012
2011
2012
2011
Cost of services and other
$
316
$
314
$
659
$
617
Selling and marketing
972
1,229
1,949
2,399
Research and development
742
353
1,483
701
General and administrative
1,423
1,175
3,677
3,062
Total stock-based compensation
$
3,453
$
3,071
$
7,768
$
6,779
(c) The income tax effect on Non-GAAP items for the three and six
months ended December 31, 2012 is calculated utilizing an estimate
of our future effective tax rate.
Back in the good old 1990s we were actually concerned with software application performance factors such as processing power clock speed along with system memory and storage. While memory is still an important determining factor, the questions of microprocessor megahertz and total syst...
By working with IT across the software development lifecycle via cloud-based DevOps, development teams can decrease software bottlenecks, increase code output and be seen as drivers of the business.
I have a confession. I am Shadow IT. I am the guilty party operations and security lo...
Precautions to safeguard client data & infrastructure is an MSPs responsibility-this extends beyond client's sphere of access to MSP employees & consultants. MSPs must employ some degree of security to cover their own access, not just that of their clients.
A man walks into the doctor...
A few months ago experts predicted 2013 would be the Year of Big Data. To a large extent, those predictions have been spot on, with big data investment on the rise and success stories emerging across a variety of industries from insurance to pharma to professional basketball.
The big ...
In Part 1 I talked about how there’s nothing new about subscription services since they’ve been around for generations.
Now I’ll relent a little and admit that there is something new about many of the subscription services out there. What’s new is what is no longer there. Traditionall...
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Back in the good old 1990s we were actually concerned with software application performance factors such as processing power clock speed along with system memory and storage. While memory is still an important determining factor, the questions of microprocessor megahertz and total syst...
By working with IT across the software development lifecycle via cloud-based DevOps, development teams can decrease software bottlenecks, increase code output and be seen as drivers of the business.
I have a confession. I am Shadow IT. I am the guilty party operations and security lo...
Precautions to safeguard client data & infrastructure is an MSPs responsibility-this extends beyond client's sphere of access to MSP employees & consultants. MSPs must employ some degree of security to cover their own access, not just that of their clients.
A man walks into the doctor...
A few months ago experts predicted 2013 would be the Year of Big Data. To a large extent, those predictions have been spot on, with big data investment on the rise and success stories emerging across a variety of industries from insurance to pharma to professional basketball.
The big ...
In Part 1 I talked about how there’s nothing new about subscription services since they’ve been around for generations.
Now I’ll relent a little and admit that there is something new about many of the subscription services out there. What’s new is what is no longer there. Traditionall...
