Aspen Technology Announces Financial Results For The Fourth Quarter And Fiscal Year 2013

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 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 Ended Twelve Months Ended
June 30, June 30,
2013 2012 2013 2012
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 software 3,269 2,554 12,788 10,617
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 marketing 25,803 26,357 93,655 96,400
Research and development 15,939 15,259 62,516 56,218
General and administrative 13,149 13,067 49,273 53,547
Restructuring charges   2     (158 )   (5 )   (301 )
Total operating expenses   54,893     54,525     205,439     205,864  
Income (loss) from operations 15,383 (3,609 ) 55,600 (15,007 )
Interest income 518 1,537 3,379 7,578
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 taxes 15,097 (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:
Basic 93,680 93,563 93,586 93,780
Diluted 95,257 93,563 95,410 93,780
 
ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited in thousands, except share data)
   
June 30, June 30,
2013 2012
 
ASSETS
Current assets:
Cash and cash equivalents $ 132,432 $ 165,242
Short-term marketable securities 57,015 -
Accounts receivable, net 36,988 31,450
Current portion of installments receivable, net 13,769 33,184
Collateralized receivables - 6,297
Unbilled services 1,965 1,592
Prepaid expenses and other current assets 9,665 16,219
Prepaid income taxes 288 283
Current deferred tax assets   33,229     7,196  
Total current assets   285,351     261,463  
Long-term marketable securities 35,353 -
Non-current installments receivable, net 963 14,046
Property, equipment and leasehold improvements, net 7,829 7,037
Computer software development costs, net 1,742 1,689
Goodwill 19,132 19,399
Non-current deferred tax assets 25,250 58,559
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 payable 846 2,566
Accrued expenses and other current liabilities 34,421 37,989
Income taxes payable 1,697 598
Current deferred revenue 178,341 143,578
Current deferred tax liabilities   156     232  
Total current liabilities   215,461     195,719  
Non-current deferred revenue 53,012 43,595
Other non-current liabilities 12,377 15,429
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
9,995 9,666
Additional paid-in capital 575,770 547,546
Accumulated deficit (349,817 ) (395,079 )
Accumulated other comprehensive income 7,263 8,095
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 Ended Twelve Months Ended
June 30, June 30,
2013 2012 2013 2012
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 amortization 1,115 1,294 5,229 5,278
Net foreign currency (gain) loss (285 ) 169 (952 ) 953
Stock-based compensation 3,342 2,802 14,637 12,406
Deferred income taxes (10,541 ) (1,162 ) 5,127 (4,827 )
Provision for bad debts 458 (82 ) 489 22
Excess tax benefits from stock-based compensation (478 ) - (478 ) -
Other non-cash operating activities 453 (2,181 ) 818 (1,695 )
Changes in assets and liabilities:
Accounts receivable (8,489 ) (3,894 ) (6,094 ) (4,285 )
Unbilled services 265 (463 ) (380 ) 734
Prepaid expenses, prepaid income taxes, and other assets (1,061 ) (3,848 ) 3,827 (3,918 )
Installments and collateralized receivables 7,054 14,493 39,419 57,003
Accounts payable, accrued expenses and other liabilities 6,239 7,626 (4,947 ) (1,583 )
Deferred revenue   15,467     12,301     44,605     58,357  
Net cash provided by operating activities   33,938     21,667     146,562     104,637  
Cash flows from investing activities:
Purchase of marketable securities (21,884 ) - (97,597 ) -
Maturities of marketable securities 4,549 - 4,549 -
Purchase of property, equipment and leasehold improvements (1,489 ) (3,066 ) (4,507 ) (4,241 )
Insurance proceeds - - 2,222 -
Purchase of technology intangibles - - (902 ) -
Payments for acquisitions, net of cash acquired - - - (2,617 )
Capitalized computer software development costs   (563 )   (24 )   (1,156 )   (511 )
Net cash used in investing activities   (19,387 )   (3,090 )   (97,391 )   (7,369 )
Cash flows from financing activities:
Exercise of stock options and warrants 5,713 2,332 21,143 8,913
Proceeds from secured borrowings - - - 4,982
Repayments of secured borrowings - (22,622 ) (11,010 ) (44,892 )
Repurchases of common stock (25,426 ) (13,986 ) (84,677 ) (46,105 )
Payment of tax withholding obligations related to restricted stock (1,947 ) (1,472 ) (7,705 ) (4,597 )
Excess tax benefits from stock-based compensation   478     -     478     -  
Net cash used in financing activities (21,182 ) (35,748 ) (81,771 ) (81,699 )
Effects of exchange rate changes on cash and cash equivalents   21     (151 )   (210 )   (312 )
(Decrease) increase in cash and cash equivalents (6,610 ) (17,322 ) (32,810 ) 15,257
Cash and cash equivalents, beginning of period   139,042     182,564     165,242     149,985  
Cash and cash equivalents, end of period $ 132,432   $ 165,242   $ 132,432   $ 165,242  
 
Supplemental disclosure of cash flow information:
Income tax paid, net $ 1,953 $ 1,108 $ 4,645 $ 2,707
Interest paid 39 1,488 424 4,206
 
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 in thousands, except per share data)
       

Three Months Ended

June 30,
Twelve Months Ended

June 30,
2013 2012 2013 2012

Total expenses
GAAP total expenses (a) $ 67,881 $ 67,626 $ 255,787 $ 258,141
Less:
Stock-based compensation (b) (3,342 ) (2,802 ) (14,637 ) (12,406 )
Restructuring charges (2 ) 158 5 301
Amortization of purchased technology intangibles (199 ) (106 ) (702 ) (142 )
                 
Non-GAAP total expenses   $ 64,338     $ 64,876     $ 240,453     $ 245,894  
 

Income (loss) from operations
GAAP income (loss) from operations $ 15,383 $ (3,609 ) $ 55,600 $ (15,007 )
Plus:
Stock-based compensation (b) 3,342 2,802 14,637 12,406
Restructuring charges 2 (158 ) (5 ) (301 )
Amortization of purchased technology intangibles 199 106 702 142
                 
Non-GAAP income (loss) from operations   $ 18,926     $ (859 )   $ 70,934     $ (2,760 )
 

Net income (loss)
GAAP net income (loss) $ 20,399 $ (5,388 ) $ 45,262 $ (13,808 )
Plus:
Stock-based compensation (b) 3,342 2,802 14,637 12,406
Restructuring charges 2 (158 ) (5 ) (301 )
Amortization of purchased technology intangibles 199 106 702 142
Less:
Income tax effect on Non-GAAP items (c) (1,279 ) (814 ) (5,536 ) (3,609 )
                 
Non-GAAP net income (loss)   $ 22,663     $ (3,452 )   $ 55,060     $ (5,170 )
 

Diluted income (loss) per share
GAAP diluted income (loss) per share $ 0.21 $ (0.06 ) $ 0.47 $ (0.15 )
Plus:
Stock-based compensation (b) 0.04 0.03 0.15 0.13
Restructuring charges - - - -
Amortization of purchased technology intangibles - - 0.01 -
Less:
Income tax effect on Non-GAAP items (c) (0.01 ) (0.01 ) (0.06 ) (0.04 )
                 
Non-GAAP diluted income (loss) per share   $ 0.24     $ (0.04 )   $ 0.58     $ (0.06 )
 
Shares used in computing Non-GAAP diluted income (loss) per share 95,257 93,563 95,410 93,780
 
(a) GAAP total expenses
Three Months Ended

June 30,
Twelve Months Ended

June 30,
2013 2012 2013 2012
Total costs of revenue $ 12,988 $ 13,101 $ 50,348 $ 52,277
Total operating expenses   54,893     54,525     205,439     205,864  
GAAP total expenses $ 67,881 $ 67,626 $ 255,787 $ 258,141
 
(b) Stock-based compensation expense was as follows:
Three Months Ended

June 30,
Twelve Months Ended

June 30,
2013 2012 2013 2012
Cost of services and other $ 297 $ 271 $ 1,281 $ 1,168
Selling and marketing 947 1,099 3,890 4,601
Research and development 716 314 2,969 1,334
General and administrative   1,382     1,118     6,497     5,303  
Total stock-based compensation $ 3,342 $ 2,802 $ 14,637 $ 12,406
 

(c) The income tax effect on Non-GAAP items for the three and twelve months ended June 30, 2013 is calculated utilizing an estimate of our future effective tax rate.

Copyright Business Wire 2010

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