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

BEDFORD, Mass.--()--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”

“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.

Contacts

Media Contact
AspenTech
David Grip, +1-781-221-5273
david.grip@aspentech.com
or
Investor Contact
ICR
Brian Denyeau, +1-646-277-1251
brian.denyeau@icrinc.com

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