Aspen Technology, Inc. (AspenTech), a global leader in industrial software, announced financial results for its fourth quarter and fiscal year 2022, ended June 30, 2022.
“AspenTech ended fiscal year 2022 with strong fourth quarter results highlighted by 8.5% annual spend growth for the heritage AspenTech business. We have continued to see improvement in demand across our business due to the strength of our customers' end markets and the growing need for our customers to operate their assets in a more sustainable and efficient manner,” said Antonio Pietri, President and Chief Executive Officer of AspenTech.
Pietri added, “The completion of our transaction with Emerson was transformational for AspenTech. Together we have created one of the world’s leading industrial software companies that is well positioned to help our customers address the Dual Challenge of meeting the increasing global demand for resources in a sustainable manner. We believe we are uniquely positioned to deliver even greater value to our customers and shareholders over time.”
Fourth Quarter and Fiscal Year 2022 Recent Business Highlights
- Annual spend for heritage AspenTech, which the company defines as the annualized value of all term license and maintenance contracts at the end of the quarter for the businesses other than OSI and SSE, was approximately $674 million at the end of the fourth quarter of fiscal 2022, which increased 8.5% compared to the fourth quarter of fiscal 2021 and 2.8% sequentially.
Summary of Fourth Quarter and Fiscal Year 2022 Financial Results
As a result of the transaction between AspenTech and Emerson Electric (“Emerson”) the subsidiary Emerson created as part of the transaction, EmerSubCX, became the surviving entity when the transaction closed on May 16th, 2022. The financial results shown below reflect the full quarter results of the OSI and SSE businesses that were contributed to new AspenTech and the results of heritage AspenTech for the period of May 16th, 2022 to June 30th, 2022. In addition, in conjunction with the close of the transaction, EmerSubCX adjusted its fiscal year end from September 30th to June 30th to align with heritage AspenTech’s fiscal year end. As a result, the year-end financial results shown below are for the nine months of October 1st, 2021 to June 30th, 2022 and include the nine-month results of the Open Systems International, Inc. and Subsurface Science and Engineering businesses Emerson contributed to new AspenTech and the results of heritage AspenTech for the period of May 16th, 2022 to June 30th, 2022.
AspenTech’s total revenue of $238.9 million included:
- License and solutions revenue, which represents the portion of a term license agreement allocated to the initial license and OSI revenue recognized on a percentage of completion basis, was $177.3 million in the fourth quarter of fiscal 2022, compared to $45.7 million in the fourth quarter of fiscal 2021.
- Maintenance revenue, which represents the portion of customer agreements related to ongoing support and the right to future product enhancements, was $50.2 million in the fourth quarter of fiscal 2022, compared to $23.9 million in the fourth quarter of fiscal 2021.
- Services and other revenuewas $11.5 million in the fourth quarter of fiscal 2022, compared to $7.7 million in the fourth quarter of fiscal 2021.
For the quarter ended June 30, 2022, AspenTech reported income from operations of $39.2 million, compared to loss from operations of $8.8 million in the fourth quarter of fiscal 2021.
Net income was $57.2 million for the quarter ended June 30, 2022, leading to net income per share of $1.13, compared to net loss per share of $0.23 in the same period last fiscal year.
Non-GAAP income from operations was $128.9 million for the fourth quarter of fiscal 2022. Non-GAAP net income was $122.7 million, or $2.43 per share, for the fourth quarter of fiscal 2022. These non-GAAP results add back the impact of stock-based compensation expense, amortization of intangibles and fees related to acquisitions and integration planning. A reconciliation of GAAP to non-GAAP results is presented in the financial tables included in this press release.
AspenTech had cash and cash equivalents of $449.7 million and total borrowings, net of debt issuance costs, of $273.6 million at June 30, 2022.
During the fourth quarter, AspenTech used $0.3 million in cash flow from operations and generated $4.9 million in free cash flow. Free cash flow is calculated as net cash provided by operating activities adjusted for the net impact of: purchases of property, equipment and leasehold improvements; payments for capitalized computer software development costs; and other nonrecurring items, such as payments related to acquisitions and integration planning.
Business Outlook
Based on information as of today, August 8, 2022, AspenTech is issuing the following guidance for fiscal year 2023. Please note this guidance does not include any contribution from the pending acquisition of Micromine, which is currently expected to close in the second fiscal quarter of 2023, subject to regulatory approval.
- Annual Contract Value (“ACV”) growth of 10.5-13.5% year-over-year. The company defines ACV as the estimate of the annual value of our portfolio of term license and software maintenance and support (SMS) agreements
- Free cash flow of $347 to $362 million
- Total bookings of $1.07 to $1.17 billion
- Total revenue of $1.14 to $1.20 billion
- GAAP total expense of $1.186 to $1.196 billion
- Non-GAAP total expense of $637 to $647 million
- GAAP operating loss of $46 million to operating income of $6 million
- Non-GAAP operating income of $503 to $555 million
- GAAP net loss of $8 million to net income of $24 million
- Non-GAAP net income of $423 million to $455 million
- GAAP net loss per share of $0.12 to income per share of $0.36
- Non-GAAP net income per share of $6.40 to $6.89
These statements are forward-looking and actual results may differ materially. Refer to the Forward-Looking Statements safe harbor below for information on the factors that could cause AspenTech’s actual results to differ materially from these forward-looking statements.
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 a number of AspenTech’s performance indicators based on GAAP, including revenue, gross profit, operating income and net income, should be viewed in conjunction with certain non-GAAP and other business measures in assessing AspenTech’s performance, growth and financial condition. Accordingly, management utilizes a number of 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 8, 2022, at 4:30 p.m. (Eastern Time), to discuss the company's financial results for the fourth quarter of fiscal year 2022 as well as the company’s business outlook. The live dial-in number is (646) 307-1963 or (800) 715-9871, conference ID code 9571995. 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://ir.aspentech.com/events-and-presentations, 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 (800) 770-2030, conference ID code 9571995, through August 15, 2022.
