Aspen Technology Announces Financial Results for the Fourth Quarter And Fiscal Year 2013

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Aspen Technology Announces Financial Results for the Fourth Quarter And Fiscal Year 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 fourth quarter and fiscal year 2013, ended June 30, 2013.

Mark Fusco, Chief Executive Officer of AspenTech, said, "The fourth quarter completed another very strong year for AspenTech. The company outperformed on each of its key financial metrics during fiscal 2013, highlighted by 13% total license contract value growth, 43% free cash flow growth, and better than expected profitability. We are seeing continued customer interest in our aspenONE® subscription software offering, and believe we have a significant opportunity to increase the product penetration rate and usage levels among our large base of blue chip customers."


Fourth Quarter and Fiscal Year 2013 and Recent Business Highlights

  • The license portion of total contract value was $1.65 billion at the end of fiscal 2013, which increased 4.7% sequentially and 13.0% compared to the end of fiscal 2012.
  • Total contract value, including the value of bundled maintenance, was $1.9 billion at the end of fiscal 2013, which increased 5.5% sequentially and 15.1% compared to the end of fiscal 2012.
  • 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 $338 million at the end of fiscal 2013, which increased 4.9% sequentially and 11.1% compared to the end of fiscal 2012.

Summary of Fourth Quarter Fiscal Year 2013 Financial Results

AspenTech's total revenue of $83.3 million increased 30.1% from $64.0 million in the fourth quarter of the prior year.

  • Subscription and software revenue was $65.2 million in the fourth quarter of fiscal 2013, an increase from $45.8 million in the fourth quarter of fiscal 2012.
  • Services & other revenue was $18.0 million in the fourth quarter of fiscal 2013, compared to $18.2 million in the fourth quarter of fiscal 2012.

For the quarter ended June 30, 2013, AspenTech reported income from operations of $15.4 million, compared to a loss from operations of $3.6 million for the quarter ended June 30, 2012.

Net income was $20.4 million for the quarter ended June 30, 2013, leading to net income per share of $0.21, compared to a net loss per share of ($0.06) 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 $18.9 million for the fourth quarter of fiscal 2013, compared to a non-GAAP loss from operations of $0.9 million in the same period last fiscal year. Non-GAAP net income was $22.7 million, or $0.24 per share, for the fourth quarter of fiscal 2013, compared to a non-GAAP net loss of $3.5 million, or ($0.04) per share, in the same period last fiscal year.

For the fourth quarter of fiscal 2013, both GAAP and non-GAAP net income included a non-cash tax benefit of $9.8 million as a result of simplifying the company's Canadian corporate structure.

A reconciliation of GAAP to non-GAAP results is included in the financial tables included in this press release.

AspenTech had a cash and marketable securities balance of $224.8 million at June 30, 2013, an increase of $10.7 million from the end of the prior quarter. During the fourth quarter, the company generated $33.9 million in cash flow from operations and $31.9 million in free cash flow after taking into consideration $2.1 million in capital expenditures and capitalized software.

Summary of Fiscal Year 2013 Financial Results

AspenTech's total revenue of $311.4 million increased 28% from $243.1 million for fiscal year 2012.

  • Subscription and software revenue was $239.7 million, an increase from $166.7 million for fiscal year 2012.
  • Services & other revenue was $71.7 million, compared to $76.4 million for fiscal year 2012.

For the fiscal year ended June 30, 2013, AspenTech reported income from operations of $55.6 million, an improvement from a loss from operations of $15.0 million for fiscal year 2012.

Net income was $45.3 million for the fiscal year ended June 30, 2013, leading to net income per diluted share of $0.47, compared to a net loss per basic and diluted share of ($0.15) for fiscal year 2012.

Non-GAAP income from operations, which adds back stock-based compensation expense, restructuring charges and amortization of intangibles associated with acquisitions, was $70.9 million for fiscal year 2013, an improvement compared to a non-GAAP loss from operations of $2.8 million for fiscal year 2012. Non-GAAP net income was $55.1 million, or $0.58 per share, for fiscal year 2013, an improvement compared to a non-GAAP net loss of $5.2 million, or ($0.06) per share, for fiscal year 2012. A reconciliation of GAAP to non-GAAP results is included in the financial tables included in this press release.

For fiscal year 2013, both GAAP and non-GAAP net income included a non-cash tax benefit described above.

For the twelve months ended June 30, 2013, the company generated $146.6 million in cash flow from operations and $143.1 million in free cash flow.

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, August 15, 2013, at 4:30 p.m. (Eastern Time), to discuss the company's financial results for the fourth quarter and fiscal year 2013 as well as the company's business outlook.

The live dial-in number is (877) 245-0126 or (706) 634-5625, conference ID code 16733106. 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 16733106, through September 15, 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, the Aspen leaf logo, and OPTIMIZE are trademarks of Aspen Technology, Inc. All rights reserved. All other trademarks are property of their respective owners.

Forward-Looking Statements

The second 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 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; 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 in thousands, except per share data)
    
Three Months EndedTwelve Months Ended
June 30,June 30,
2013201220132012
Revenue:
Subscription and software$65,218$45,832$239,654$166,688
Services and other 18,046  18,185  71,733  76,446 
Total revenue 83,264  64,017  311,387  243,134 
Cost of revenue:
Subscription and software3,2692,55412,78810,617
Services and other 9,719  10,547  37,560  41,660 
Total cost of revenue 12,988  13,101  50,348  52,277 
Gross profit 70,276  50,916  261,039  190,857 
Operating expenses:
Selling and marketing25,80326,35793,65596,400
Research and development15,93915,25962,51656,218
General and administrative13,14913,06749,27353,547
Restructuring charges 2  (158) (5) (301)
Total operating expenses 54,893  54,525  205,439  205,864 
Income (loss) from operations15,383(3,609)55,600(15,007)
Interest income5181,5373,3797,578
Interest expense(39)(1,486)(424)(4,204)
Other expense, net (765) (1,036) (1,117) (3,519)
Income (loss) before (benefit from) provision for income taxes15,097(4,594)57,438(15,152)
(Benefit from) provision for income taxes (5,302) 794  12,176  (1,344)
Net income (loss)$20,399 $(5,388)$45,262 $(13,808)
Net income (loss) per common share:
Basic$0.22$(0.06)$0.48$(0.15)
Diluted$0.21$(0.06)$0.47$(0.15)
Weighted average shares outstanding:
Basic93,68093,56393,58693,780
Diluted95,25793,56395,41093,780
 
ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited in thousands, except share data)
  
June 30,June 30,
20132012
 
ASSETS
Current assets:
Cash and cash equivalents$132,432$165,242
Short-term marketable securities57,015-
Accounts receivable, net36,98831,450
Current portion of installments receivable, net13,76933,184
Collateralized receivables-6,297
Unbilled services1,9651,592
Prepaid expenses and other current assets9,66516,219
Prepaid income taxes288283
Current deferred tax assets 33,229  7,196 
Total current assets 285,351  261,463 
Long-term marketable securities35,353-
Non-current installments receivable, net96314,046
Property, equipment and leasehold improvements, net7,8297,037
Computer software development costs, net1,7421,689
Goodwill19,13219,399
Non-current deferred tax assets25,25058,559
Other non-current assets 7,128  6,142 
Total assets$382,748 $368,335 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Secured borrowings$-$10,756
Accounts payable8462,566
Accrued expenses and other current liabilities34,42137,989
Income taxes payable1,697598
Current deferred revenue178,341143,578
Current deferred tax liabilities 156  232 
Total current liabilities 215,461  195,719 
Non-current deferred revenue53,01243,595
Other non-current liabilities12,37715,429
Commitments and contingencies
Series D redeemable convertible preferred stock, $0.10 par value—
Authorized— 3,636 shares at June 30, 2013 and June 30, 2012
Issued and outstanding— none at June 30, 2013 and June 30, 2012--
Stockholders' equity:
Common stock, $0.10 par value— Authorized—210,000,000 shares
Issued— 99,945,545 shares at June 30, 2013 and 96,663,580 shares

at June 30, 2012

Outstanding— 93,683,769 shares at June 30, 2013 and 93,465,955 shares

at June 30, 2012

9,9959,666
Additional paid-in capital575,770547,546
Accumulated deficit(349,817)(395,079)
Accumulated other comprehensive income7,2638,095
Treasury stock, at cost—6,261,776 shares of common stock at June 30, 2013

and 3,197,625 at June 30, 2012

 (141,313) (56,636)
Total stockholders' equity 101,898  113,592 
Total liabilities and stockholders' equity$382,748 $368,335 
 
ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited in thousands)
     
Three Months EndedTwelve Months Ended
June 30,June 30,
2013201220132012
Cash flows from operating activities:
Net income (loss)$20,399$(5,388)$45,262$(13,808)

Adjustments to reconcile net income (loss) to net cash provided by

operating activities:

Depreciation and amortization1,1151,2945,2295,278
Net foreign currency (gain) loss(285)169(952)953
Stock-based compensation3,3422,80214,63712,406
Deferred income taxes(10,541)(1,162)5,127(4,827)
Provision for bad debts458(82)48922
Excess tax benefits from stock-based compensation
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