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