Aspen Technology, Inc. (AspenTech), a global leader in industrial software, announced financial results for its first-quarter fiscal 2023, ended September 30, 2022.
“AspenTech delivered a strong start to fiscal 2023 as demand trends remained positive across geographies and end markets. In addition, we made substantial progress bringing together the OSI and SSE businesses with heritage AspenTech to capitalize on our unique position as one of the world’s leading industrial software companies,” said Antonio Pietri, President and Chief Executive Officer of AspenTech.
Pietri added, “Now more than ever, customers rely on AspenTech for software that enables their assets to operate more efficiently and sustainably. While we are focused on the evolving economic environment around the world, we remain confident in our ability to deliver on our financial objectives for fiscal 2023 and beyond.”
First Quarter and Fiscal Year 2023 Recent Business Highlights
- Annual contract value, which we define as the estimate of the annual value of our portfolio of term license and software maintenance and support, or SMS, contracts, the annual value of SMS agreements purchased with perpetual licenses and the annual value of standalone SMS agreements purchased with certain legacy term license agreements, which have become an immaterial part of our business, was $810 million at the end of the first quarter of fiscal 2023, which increased 7.7% compared to the first quarter of fiscal 2022.
- 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 $682.3 million at the end of the first quarter of fiscal 2023, which increased 8.3% compared to the first quarter of fiscal 2022 and 1.2% sequentially.
Summary of First Quarter Fiscal Year 2023 Financial Results
As a result of the transaction between AspenTech and Emerson Electric Co., EmerSubCX, the subsidiary Emerson created as part of the transaction, became the surviving entity when the transaction closed on May 16th, 2022. The comparable periods shown in the financial statements below for fiscal year 2022 reflect only the historical results of the OSI and SSE businesses that were contributed to new AspenTech.
AspenTech’s total revenue of $250.8 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 $160.2 million in the first quarter of fiscal 2023, compared to $44.2 million in the first quarter of fiscal 2022.
- Maintenance revenue, which represents the portion of customer agreements related to ongoing support and the right to future product enhancements, was $78.4 million in the first quarter of fiscal 2023, compared to $24.5 million in the first quarter of fiscal 2022.
- Services and other revenuewas $12.2 million in the first quarter of fiscal 2023, compared to $8.3 million in the first quarter of fiscal 2022.
For the quarter ended September 30, 2022, AspenTech reported loss from operations of $51.2 million, compared to loss from operations of $13.9 million in the first quarter of fiscal 2022.
Net loss was $11.2 million for the quarter ended September 30, 2022, leading to net loss per share of $0.17 compared to net loss per share of $0.31 in the same period last fiscal year.
Non-GAAP income from operations was $92.6 million for the first quarter of fiscal 2023. Non-GAAP net income was $142.0 million, or $2.20 per share, for the first quarter of fiscal 2023. These non-GAAP results add back the impact of stock-based compensation expense, amortization of intangibles, fees related to acquisitions and integration planning and unrealized loss on derivatives associated with acquisitions. 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 $382.5 million and total borrowings of $270.0 million at September 30, 2022.
During the first quarter, AspenTech generated $5.1 million in cash flow from operations and generated $10.7 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, October 26, 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 approvals.
- 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 $1.197 to $1.207 billion
- Non-GAAP total expense of $637 to $647 million
- GAAP operating loss of $57 to $5 million
- Non-GAAP operating income of $503 to $555 million
- GAAP net loss of $32.5 to $22.5 million
- Non-GAAP net income of $446 to $456 million
- GAAP net loss per share of $0.49 to $0.34
- Non-GAAP net income per share of $6.76 to $6.91
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.
Conference Call and Webcast
AspenTech will host a conference call and webcast presentation on October 26, 2022 at 4:30 p.m. (Eastern Time) to discuss the company's financial results, business outlook, and related corporate and financial matters. A live webcast of the call will be available on the Investor Relations section of AspenTech’s website, http://ir.aspentech.com/, and clicking on the “webcast” link. To access the call by phone, please go to this link (registration link) and you will be provided with dial in details. To avoid delays, we encourage participants to dial into the conference call fifteen minutes ahead of the scheduled start time. A replay of the webcast will also be available for a limited time at http://ir.aspentech.com/.
