Aspen Technology, Inc. (AspenTech), a global leader in industrial software, announced financial results for its second-quarter fiscal 2023, ended December 31, 2022.
“AspenTech’s second quarter results reflected continued, strong end market demand and the benefit of the addition of the OSI and SSE businesses to heritage AspenTech. We made significant progress on our integration and transformation initiatives and we believe we are well positioned to deliver on our full year operational and financial objectives,” said Antonio Pietri, President and Chief Executive Officer of AspenTech.
“AspenTech is playing an essential role in helping our customers meet the demand for the products that support greater global prosperity while achieving their sustainability goals and ambitions,” Pietri added. “Delivering on both goals is the core of our Dual Challenge mission. Our customers have validated this value proposition and recognize our unique position to help them achieve it. We are confident these imperatives will enable AspenTech to deliver attractive growth and profitability over the long-term.”
Second 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 $833.7 million at the end of the second quarter of fiscal 2023, which increased 8.7% compared to the second 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 $697.5 million at the end of the second quarter of fiscal 2023, which increased 9.0% compared to the second quarter of fiscal 2022 and 2.2% sequentially.
Summary of Second Quarter Fiscal Year 2023 Financial Results
As a result of the transaction between AspenTech and Emerson Electric Co.(“Emerson”), 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 $242.8 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 $149.8 million in the second quarter of fiscal 2023, compared to $48.5 million in the second 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 $78.6 million in the second quarter of fiscal 2023, compared to $26.3 million in the second quarter of fiscal 2022.
- Services and other revenuewas $14.4 million in the second quarter of fiscal 2023, compared to $7.0 million in the second quarter of fiscal 2022.
For the quarter ended December 31, 2022, AspenTech reported loss from operations of $59.4 million, compared to loss from operations of $254,000 in the second quarter of fiscal 2022.
Net loss was $66.2 million for the quarter ended December 31, 2022, leading to net loss per share of $1.02 compared to net loss per share of $0.02 in the same period last fiscal year.
Non-GAAP income from operations was $86.6 million for the second quarter of fiscal 2023. Non-GAAP net income was $22.8 million, or $0.35 per share, for the second 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 gain 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 $446.1 million and total borrowings of $264.0 million at December 31, 2022. During the quarter the company entered into a Credit Agreement with Emerson for an aggregate loan commitment of $630 million. The proceeds from borrowings under the Agreement will principally be used to fund the pending acquisition of Micromine.
During the second quarter, AspenTech generated $49.5 million in cash flow from operations and generated $53.1 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, January 25, 2023, 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 expected to close as soon as the remaining regulatory approval is obtained.
- 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 $1.207 to $1.217 billion
- Non-GAAP total expense of $637 to $647 million
- GAAP operating loss of $67 million to $15 million
- Non-GAAP operating income of $503 to $555 million
- GAAP net loss of $7.5 million to net income of $32.5 million
- Non-GAAP net income of $451 to $491 million
- GAAP net loss per share of $0.11 to income per share of $0.49
- Non-GAAP net income per share of $6.83 to $7.43
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 January 25, 2023 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/.
