Aspen Technology Announces Financial Results for the Third Quarter of Fiscal 2013
Aspen Technology Announces Financial Results for the Third Quarter of Fiscal 2013
BURLINGTON, Mass.--(BUSINESS WIRE)-- Aspen Technology, Inc. (NAS: AZPN) , a leading provider of software and services to the process industries, today announced financial results for its third quarter of fiscal 2013, ended March 31, 2013.
Mark Fusco, Chief Executive Officer of AspenTech, said, "AspenTech delivered strong fiscal third quarter results that exceeded our guidance on all key metrics, including approximately 13% year-over-year growth in total license contract value. Customer demand remains solid across our key vertical markets and geographies, and we are increasingly seeing customers use a broader cross-section of our product suite."
Fusco added, "The combination of solid growth, lower than expected expense, and strong working capital management led to approximately $58 million of free cash flow during the third quarter. Through the first nine months of fiscal 2013 AspenTech has generated $111 million of free cash flow, which is up 37% from the year ago period. We believe AspenTech is well positioned to continue driving strong cash flow, which we believe will provide us with opportunities to enhance shareholder value."
Third Quarter Fiscal 2013 and Recent Business Highlights
The license portion of total contract value was $1.58 billion for the third quarter of fiscal 2013, an increase of 12.9% compared to the third quarter of fiscal 2012 and 2.4% sequentially.
Total contract value, including the value of bundled maintenance, was $1.83 billion for the third quarter of fiscal 2013, an increase of 15.0% compared to the third quarter of fiscal 2012 and 2.8% 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 $322.2 million at the end of the third quarter, an increase of approximately 11% compared to the end of the third quarter of fiscal 2012.
Summary of Third Quarter Fiscal Year 2013 Financial Results
AspenTech's total revenue of $79.4 million increased 29.4% from $61.3 million in the third quarter of the prior year.
Subscription and software revenue was $60.9 million in the third quarter of fiscal 2013, an increase from $42.4 million in the third quarter of fiscal 2012.
Services & other revenue was $18.5 million in the third quarter of fiscal 2013, compared to $18.9 million in the third quarter of fiscal 2012.
For the quarter ended March 31, 2013, AspenTech reported income from operations of $16.3 million, compared to a loss from operations of $2.8 million for the quarter ended March 31, 2012.
Net income was $10.5 million for the quarter ended March 31, 2013, leading to a net income per share of $0.11, compared to a net loss per share of $0.01 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 $20.0 million for the third quarter of fiscal 2013, compared to a non-GAAP loss from operations of $37 thousand in the same period last fiscal year. Non-GAAP net income was $12.9 million, or $0.14 per share, for the third quarter of fiscal 2013, compared to a non-GAAP net income of $1.4 million, or $0.01 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 marketable securities of $214 million at March 31, 2013, an increase of $38.9 million from the end of the prior quarter after using $22.4 million in cash to repurchase shares of common stock. During the third quarter, the company generated $58.5 million in cash flow from operations and $57.9 million in free cash flow after taking into consideration approximately $600,000 in capital expenditures and capitalized software. For the nine months ended March 31, 2013, the company generated $112.6 million in cash flow from operations and $111.2 million in free cash flow.
Board of Directors Approves $150 Million Share Repurchase Program
AspenTech's Board of Directors approved a share repurchase program for up to $150 million. This program replaces the company's existing share repurchase program, which had approximately $65 million remaining as of March 31, 2013. The timing and amount of any shares repurchased will be determined by AspenTech based on its evaluation of market conditions and other factors. Repurchases may also be made under a Rule 10b5-1 plan, which would permit shares to be repurchased when AspenTech might otherwise be precluded from doing so under applicable insider trading laws and regulations. The repurchase program may be suspended or discontinued at any time.
Use ofNon-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, April 30, 2013, at 4:30 p.m. (Eastern Time), to discuss the company's financial results for the third quarter fiscal 2013 as well as the company's business outlook.
The live dial-in number is (877) 245-0126, conference ID code 28487382. 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 28487382, through June 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.
© 2013 Aspen Technology, Inc. AspenTech, aspenONE and the Aspen leaf logo are trademarks of Aspen Technology, Inc. All rights reserved. All other trademarks are property of their respective owners.
Forward-Looking Statements
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 | Nine Months Ended | |||||||||||||||
March 31, | March 31, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Revenue: | ||||||||||||||||
Subscription and software | $ | 60,899 | $ | 42,444 | $ | 174,436 | $ | 120,856 | ||||||||
Services and other | 18,458 | 18,893 | 53,687 | 58,261 | ||||||||||||
Total revenue | 79,357 | 61,337 | 228,123 | 179,117 | ||||||||||||
Cost of revenue: | ||||||||||||||||
Subscription and software | 3,229 | 2,717 | 9,519 | 8,063 | ||||||||||||
Services and other | 9,420 | 9,713 | 27,841 | 31,113 | ||||||||||||
Total cost of revenue | 12,649 | 12,430 | 37,360 | 39,176 | ||||||||||||
Gross profit | 66,708 | 48,907 | 190,763 | 139,941 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling and marketing | 22,958 | 24,279 | 67,852 | 70,043 | ||||||||||||
Research and development | 15,772 | 14,423 | 46,577 | 40,959 | ||||||||||||
General and administrative | 11,685 | 13,103 | 36,124 | 40,480 | ||||||||||||
Restructuring charges | (41 | ) | (84 | ) | (7 | ) | (143 | ) | ||||||||
Total operating expenses | 50,374 | 51,721 | 150,546 | 151,339 | ||||||||||||
Income (loss) from operations | 16,334 | (2,814 | ) | 40,217 | (11,398 | ) | ||||||||||
Interest income | 807 | 1,776 | 2,861 | 6,041 | ||||||||||||
Interest expense | (12 | ) | (611 | ) | (385 | ) | (2,718 | ) | ||||||||
Other expense, net | (18 | ) | (26 | ) | (352 | ) | (2,483 | ) | ||||||||
Income (loss) before provision for (benefit from) income taxes | 17,111 | (1,675 | ) | 42,341 | (10,558 | ) | ||||||||||
Provision for (benefit from) income taxes | 6,598 | (1,155 | ) | 17,478 | (2,138 | ) | ||||||||||
Net income (loss) | $ | 10,513 | $ | (520 | ) | $ | 24,863 | $ | (8,420 | ) | ||||||
Net income (loss) per common share: | ||||||||||||||||
Basic | $ | 0.11 | $ | (0.01 | ) | $ | 0.27 | $ | (0.09 | ) | ||||||
Diluted | $ | 0.11 | $ | (0.01 | ) | $ | 0.26 | $ | (0.09 | ) | ||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 93,730 | 93,583 | 93,556 | 93,851 | ||||||||||||
Diluted | 95,400 | 93,583 | 95,475 | 93,851 | ||||||||||||
ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
(Unaudited and in thousands, except share data) | ||||||||
March 31, | June 30, | |||||||
2013 | 2012 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 139,042 | $ | 165,242 | ||||
Short-term marketable securities | 30,535 | - | ||||||
Accounts receivable, net | 28,996 | 31,450 | ||||||
Current portion of installments receivable, net | 18,969 | 33,184 | ||||||
Collateralized receivables | - | 6,297 | ||||||
Unbilled services | 2,217 | 1,592 | ||||||
Prepaid expenses and other current assets | 8,884 | 16,219 | ||||||
Prepaid income taxes | 151 | 283 | ||||||
Current deferred tax assets | 6,755 | 7,196 | ||||||
Total current assets | 235,549 | 261,463 | ||||||
Long-term marketable securities | 44,538 | - | ||||||
Non-current installments receivable, net | 2,645 | 14,046 | ||||||
Property, equipment and leasehold improvements, net | 7,176 | 7,037 | ||||||
Computer software development costs, net | 1,480 | 1,689 | ||||||
Goodwill | 19,465 | 19,399 | ||||||
Non-current deferred tax assets | 43,318 | 58,559 | ||||||
Other non-current assets | 7,490 | 6,142 | ||||||
Total assets | $ | 361,661 | $ | 368,335 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Secured borrowings | $ | - | $ | 10,756 | ||||
Accounts payable | 1,432 | 2,566 | ||||||
Accrued expenses and other current liabilities | 29,416 | 37,989 | ||||||
Income taxes payable | 875 | 598 | ||||||
Current deferred revenue | 163,623 | 143,578 | ||||||
Current deferred tax liabilities | 232 | 232 | ||||||
Total current liabilities | 195,578 | 195,719 | ||||||
Non-current deferred revenue | 52,251 | 43,595 | ||||||
Other non-current liabilities | 14,005 | 15,429 | ||||||
Commitments and contingencies | ||||||||
Series D redeemable convertible preferred stock, $0.10 par value— | ||||||||
Authorized— 3,636 shares at March 31, 2013 and June 30, 2012 | ||||||||
Issued and outstanding— none at March 31, 2013 and June 30, 2012 | - | - | ||||||
Stockholders' equity: | ||||||||
Common stock, $0.10 par value— Authorized—210,000,000 shares | ||||||||
Issued— 99,316,649 shares at March 31, 2013 and 96,663,580 shares at June 30, 2012 | ||||||||
Outstanding— 93,900,675 shares at March 31, 2013 and 93,465,955 shares at June 30, 2012 | 9,932 | 9,666 | ||||||
Additional paid-in capital | 568,247 | 547,546 | ||||||
Accumulated deficit | (370,216 | ) | (395,079 | ) | ||||
Accumulated other comprehensive income | 7,751 | 8,095 | ||||||
Treasury stock, at cost—5,415,974 shares of common stock at March 31, 2013 and 3,197,625 at June 30, 2012 | (115,887 | ) | (56,636 | ) | ||||
Total stockholders' equity | 99,827 | 113,592 | ||||||
Total liabilities and stockholders' equity | $ | 361,661 | $ | 368,335 | ||||
ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES | ||||||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||||
(Unaudited and in thousands) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
March 31, | March 31, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net income (loss) | $ | 10,513 | $ | (520 | ) | $ | 24,863 | $ | (8,420 | ) | ||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||||||
Depreciation and amortization | 1,427 | 1,291 | 4,114 | 3,984 | ||||||||||||
Net foreign currency (gain) loss | (363 | ) | (434 | ) | (667 | ) | 784 | |||||||||
Stock-based compensation | 3,527 | 2,825 | 11,295 | 9,604 | ||||||||||||
Deferred income taxes | 5,810 | (1,355 | ) | 15,668 | (3,665 | ) | ||||||||||
Provision for bad debts | (131 | ) | 507 | 31 | ||||||||||||
