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TMCNet: Aspen Technology Announces Financial Results for the Third Quarter Fiscal 2012

[May 01, 2012]

Aspen Technology Announces Financial Results for the Third Quarter Fiscal 2012

BURLINGTON, Mass. --(Business Wire)--

Aspen Technology, Inc. (NASDAQ: AZPN), a leading provider of software and services to the process industries, today announced financial results for its third quarter of fiscal 2012, ended March 31, 2012.

Mark Fusco, Chief Executive Officer of AspenTech, said, "AspenTech delivered strong fiscal third quarter results that exceeded our guidance on all key metrics, and was highlighted by approximately 15% year-over-year growth and 3% sequential growth in total license contract value. Customers continue to embrace our subscription-based offerings, and we are seeing strong demand and product usage patterns across our product suite, key vertical markets and geographies."

Fusco added, "The combination of solid growth, lower than expected expenses and strong working capital management contributed to record quarterly free cash flow of $54 million during the third quarter. In addition, free cash flow of approximately $81 million for the first nine months of fiscal 2012 exceeds our free cash flow guidance for the full fiscal year. 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 2012 and Recent Business Highlights

  • The license portion of total contract value was $1.40 billion for the third quarter of fiscal 2012, an increase of 14.5% compared to the third quarter of fiscal 2011 and 2.9% sequentially.
  • Total contract value, including the value of bundled maintenance, was $1.59 billion for the third quarter of fiscal 2012, an increase of 19.0% compared to the third quarter of fiscal 2011 and 3.3% 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 $292 million at the end of the third quarter, an increase of approximately 13% compared to the end of the third quarter of fiscal 2011.

Summary of Third Quarter Fiscal Year 2012 Financial Results

AspenTech's total revenue of $61.3 million increased 17% from $52.6 million in the third quarter of the prior year.

  • Subscription and software revenue was $42.4 million in the third quarter of fiscal 2012, an increase of 38% from $30.7 million in the third quarter of fiscal 2011.
  • Services & other revenue was $18.9 million in the third quarter of fiscal 2012, compared to $21.9 million in the third quarter of fiscal 2011.

For the quarter ended March 31, 2012, AspenTech reported a loss from operations of $2.8 million, compared to a loss from operations of $7.2 million for the quarter ended March 31, 2011.

Net loss was $0.5 million for the quarter ended March 31, 2012, leading to a net loss per share of $0.01, compared to a net loss per share of $0.06 in the same period last fiscal year.

Non-GAAP loss from operations, which adds back stock-based compensation expense and restructuring charges, was $0.1 million for the third quarter of fiscal 2012, compared to a non-GAAP loss from operations of $5.2 million in the same period last fiscal year. Non-GAAP net income was $1.4 million, or $0.01 per share, for the third quarter of fiscal 2012, compared to a non-GAAP net loss of $3.8 million, or ($0.04) 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 a cash balance of $182.6 million at March 31, 2012, an increase of $39.3 million from the end of the prior quarter after using $11.9 million in cash to repurchase shares of common stock and reducing secured borrowings by $1.9 million. During the third quarter, the company generated $54.7 million in cash flow from operations and $54.3 million in free cash flow after taking into consideration $0.3 million in capital expenditures and capitalized software. For the nine months ended March 31, 2012, the company generated $83.0 million in cash flow from operations and $81.3 million in free cash flow after taking into consideration $1.7 million in capitalized expenditures and capitalized software.

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, May 1, 2012, at 4:30 p.m. (Eastern Time), to discuss the company's financial results for the third quarter fiscal 2012 as well as the company's business outlook.

The live dial-in number is (877) 245-0126, conference ID code 70103052. 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 70103052, through May 8, 2012.

About AspenTech

AspenTech is a leading global provider of mission-critical process optimization software solutions, which are designed to manage and optimize plant and process design, operational performance, and supply chain planning. AspenTech's aspenONE® software and related services have been developed specifically for companies in the process industries, including energy, chemicals, pharmaceuticals, and engineering and construction. Customers use AspenTech's solutions to improve their competitiveness and profitability by increasing throughput and productivity, reducing operating costs, enhancing capital efficiency, and decreasing working capital requirements. To see how the world's leading process manufacturers rely on AspenTech to achieve their operational excellence goals, visit www.aspentech.com.

© 2012 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: demand for, or usage of, aspenONE software declines for any reason; AspenTech's failure to realize the anticipated financial (including cash flow) and operational benefits of the aspenONE subscription offering; unforeseen difficulties or uncertainties in the application of accounting standards; 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
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited and in thousands, except per share data)
       
Three Months Ended Nine Months Ended
March 31, March 31,
2012 2011 2012 2011
Revenue:
Subscription and software $ 42,444 $ 30,655 $ 120,856 $ 74,955
Services and other   18,893     21,946     58,261     70,554  
Total revenue   61,337     52,601     179,117     145,509  
Cost of revenue:
Subscription and software 2,717 (1,725 ) 8,063 2,369
Services and other   9,713     12,117     31,113     34,826  
Total cost of revenue   12,430     10,392     39,176     37,195  
Gross profit   48,907     42,209     139,941     108,314  
Operating expenses:
Selling and marketing 24,279 22,922 70,043 63,227
Research and development 14,423 12,331 40,959 37,002
General and administrative 13,103 14,515 40,480 44,497
Restructuring charges   (84 )   (315 )   (143 )   (160 )
Total operating expenses   51,721     49,453     151,339     144,566  
Loss from operations (2,814 ) (7,244 ) (11,398 ) (36,252 )
Interest income 1,776 3,093 6,041 10,329
Interest expense (611 ) (1,182 ) (2,718 ) (4,079 )
Other (expense) income, net   (26 )   7     (2,483 )   1,936  
Loss before income taxes (1,675 ) (5,326 ) (10,558 ) (28,066 )
(Benefit from) provision for income taxes   (1,155 )   361     (2,138 )   3,358  
Net loss $ (520 ) $ (5,687 ) $ (8,420 ) $ (31,424 )
Net loss per common share:
Basic $ (0.01 ) $ (0.06 ) $ (0.09 ) $ (0.34 )
Diluted $ (0.01 ) $ (0.06 ) $ (0.09 ) $ (0.34 )
Weighted average shares outstanding:
Basic 93,583 93,862 93,851 93,298
Diluted 93,583 93,862 93,851 93,298
 
 
ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands, except share data)
   
March 31, June 30,
2012 2011
 
ASSETS
Current assets:
Cash and cash equivalents $ 182,564 $ 149,985
Accounts receivable, net 27,864 27,866
Current portion of installments receivable, net 36,321 38,703
Current portion of collateralized receivables, net 11,144 15,748
Unbilled services 1,132 2,319
Prepaid expenses and other current assets 9,009 10,819
Prepaid income taxes 1,152 1,151
Deferred income taxes- current   7,352     7,272  
Total current assets   276,538     253,863  
Non-current installments receivable, net 20,597 47,773
Non-current collateralized receivables, net 333 9,291
Property, equipment and leasehold improvements, net 5,337 6,730
Computer software development costs, net 1,946 2,813
Goodwill 19,812 18,624
Deferred income taxes- non-current 72,711 69,242
Other non-current assets   6,720     3,639  
Total assets $ 403,994   $ 411,975  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of secured borrowings $ 15,095 $ 15,756
Accounts payable 2,389 2,099
Accrued expenses and other current liabilities 49,414 64,467
Income taxes payable 1,029 672
Deferred revenue   130,397     90,681  
Total current liabilities   198,324     173,675  
Long-term secured borrowings 335 9,157
Long-term deferred revenue 44,603 38,262
Other non-current liabilities 30,842 33,078
Commitments and contingencies
Series D redeemable convertible preferred stock, $0.10 par value-
Authorized- 3,636 shares at March 31, 2012 and June 30, 2011
Issued and outstanding- none at March 31, 2012 and June 30, 2011 - -
Stockholders' equity:
Common stock, $0.10 par value- Authorized-210,000,000 shares
Issued- 96,196,001 shares at March 31, 2012 and 94,939,400 shares at June 30, 2011
Outstanding- 93,657,576 shares at March 31, 2012 and 94,238,370 shares at June 30, 2011 9,620 9,494
Additional paid-in capital 543,930 530,996
Accumulated deficit (389,691 ) (381,271 )
Accumulated other comprehensive income 8,681 9,115

Treasury stock, at cost-2,538,425 shares of common stock at March 31, 2012 and 701,030 at June 30, 2011

  (42,650 )   (10,531 )
Total stockholders' equity   129,890     157,803  
Total liabilities and stockholders' equity $ 403,994   $ 411,975  
 
 
ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited and in thousands)
         
Three Months Ended Nine Months Ended
March 31, March 31,
2012 2011 2012 2011
Cash flows from operating activities:
Net loss $ (520 ) $ (5,687 ) $ (8,420 ) $ (31,424 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 1,291 1,325 3,984 3,925
Net foreign currency (gain) loss (434 ) (633 ) 784 (2,281 )
Stock-based compensation 2,825 2,356 9,604 7,398
Deferred income taxes (1,355 ) (30 ) (3,665 ) 44
Provision for bad debts 507 (1,024 ) 104 (927 )
Write-down of investment - 600 - 600
Other non-cash operating activities 473 12 486 427
Changes in assets and liabilities:
Accounts receivable 7,677 2,307 (391 ) 5,316
Unbilled services (708 ) (465 ) 1,197 165
Prepaid expenses, prepaid income taxes, and other assets (838 ) (2,450 ) (70 ) 3,695
Installments and collateralized receivables 15,782 25,057 42,510 55,196
Accounts payable, accrued expenses and other liabilities (617 ) (9,717 ) (9,209 ) (24,313 )
Deferred revenue   30,607     20,034     46,056     35,077  
Net cash provided by operating activities   54,690     31,685     82,970     52,898  
Cash flows from investing activities:
Purchase of property, equipment and leasehold improvements (253 ) (446 ) (1,175 ) (2,322 )
Payments for acquisitions, net of cash acquired (2,617 ) - (2,617 ) -
Capitalized computer software development costs   (95 )   (1,287 )   (487 )   (1,667 )
Net cash used in investing activities   (2,965 )   (1,733 )   (4,279 )   (3,989 )
Cash flows from financing activities:
Exercise of stock options and warrants 2,475 4,284 6,581 7,704
Proceeds from secured borrowings - - 4,982 2,500
Repayments of secured borrowings (1,850 ) (10,423 ) (22,270 ) (26,664 )
Repurchases of common stock (11,879 ) (2,921 ) (32,119 ) (4,163 )
Payment of tax withholding obligations related to restricted stock   (1,356 )   (1,735 )   (3,125 )   (2,733 )
Net cash used in financing activities (12,610 ) (10,795 ) (45,951 ) (23,356 )
Effects of exchange rate changes on cash and cash equivalents   194     239     (161 )   540  
Increase in cash and cash equivalents 39,309 19,396 32,579 26,093
Cash and cash equivalents, beginning of period   143,255     131,642     149,985     124,945  
Cash and cash equivalents, end of period $ 182,564   $ 151,038   $ 182,564   $ 151,038  
 
Supplemental disclosure of cash flow information:
Interest paid $ 611 $ 1,345 $ 2,718 $ 4,415
Income tax paid (refunded), net 1,261 1,963 1,599 (2,988 )
 
 
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 and in thousands, except per share data)
           

Three Months Ended
March 31,

 

Nine Months Ended
March 31,

  2012     2011     2012     2011  

Total expenses

GAAP total expenses (a) $ 64,151 $ 59,845 $ 190,515 $ 181,761
Less:
Stock-based compensation (b) (2,825 ) (2,356 ) (9,604 ) (7,398 )
Restructuring charges 84 315 143 160
                     
Non-GAAP total expenses       $ 61,410     $ 57,804     $ 181,054     $ 174,523  
 

Loss from operations

GAAP loss from operations $ (2,814 ) $ (7,244 ) $ (11,398 ) $ (36,252 )
Plus:
Stock-based compensation (b) 2,825 2,356 9,604 7,398
Restructuring charges (84 ) (315 ) (143 ) (160 )
                     
Non-GAAP loss from operations       $ (73 )   $ (5,203 )   $ (1,937 )   $ (29,014 )
 

Net income (loss)

GAAP net loss $ (520 ) $ (5,687 ) $ (8,420 ) $ (31,424 )
Plus:
Stock-based compensation (b) 2,825 2,356 9,604 7,398
Restructuring charges (84 ) (315 ) (143 ) (160 )
Less:
Income tax effect on Non-GAAP items (c) (815 ) (129 ) (2,785 ) (340 )
                     
Non-GAAP net income (loss)       $ 1,406     $ (3,775 )   $ (1,744 )   $ (24,526 )
 

Diluted income (loss) per share

GAAP diluted loss per share $ (0.01 ) $ (0.06 ) $ (0.09 ) $ (0.34 )
Plus:
Stock-based compensation (b) 0.03 0.03 0.10 0.08
Restructuring charges - - - -
Less:
Income tax effect on Non-GAAP items (c) (0.01 ) - (0.03 ) -
                     
Non-GAAP diluted income (loss) per share       $ 0.01     $ (0.04 )   $ (0.02 )   $ (0.27 )
 
Shares used in computing Non-GAAP diluted income (loss) per share 95,992 93,862 93,851 93,298
 
(a) GAAP total expenses

Three Months Ended
March 31,

 

Nine Months Ended
March 31,

  2012     2011     2012     2011  
Total costs of revenue $ 12,430 $ 10,392 $ 39,176 $ 37,195
Total operating expenses   51,721     49,453     151,339     144,566  
GAAP total expenses $ 64,151 $ 59,845 $ 190,515 $ 181,761
 
(b) Stock-based compensation expense was as follows:
Three Months Ended

March 31,

  Nine Months Ended

March 31,

  2012     2011     2012     2011  
Cost of service and other $ 280 $ 234 $ 897 $ 720
Selling and marketing 1,103 911 3,502 2,713
Research and development 319 297 1,020 874
General and administrative   1,123     914     4,185     3,091  
Total stock-based compensation $ 2,825 $ 2,356 $ 9,604 $ 7,398
 

(c) The income tax effect on Non-GAAP items is calculated utilizing our estimated effective tax rate. During the three and nine months ended March 31, 2011, we had a U.S. valuation allowance in place which resulted in a minimal income tax adjustment.


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