Aspen Technology, Inc. (AspenTech), a global leader in industrial software, announced financial results for its fourth quarter and fiscal year 2023, ended June 30, 2023.
“The fourth quarter was a strong finish to an important year and showed benefits from our transformation efforts and learnings in fiscal 2023. We delivered a full year of double-digit ACV growth, ending above the midpoint of our guidance range. Demand in most of our end markets and geographies was strong in the quarter and throughout the year. This performance, during an unpredictable macro environment, validates the mission criticality of AspenTech solutions to our customers’ operations and strategic priorities,” said Antonio Pietri, President and Chief Executive Officer of AspenTech.
Fiscal Year 2023 Recent Business Highlights
- Annual Contract Value ("ACV") was $884.9 million at the end of fiscal 2023, increasing 11.8% year over year and 3.5% quarter over quarter.
- Annual Spend for Heritage AspenTech was $730.9 million at the end of fiscal 2023, increasing 8.5% year over year and 2.7% quarter over quarter.
- Operating cash flow was $299.2 million for fiscal 2023.
- Free cash flowwas $292.3 million for fiscal 2023.
- AspenTech Board of Directors approved new $300.0 million share repurchase authorization for fiscal 2024; AspenTech set to complete previously announced $100.0 million accelerated share repurchase program in the first quarter of fiscal 2024.
Summary of Fourth Quarter and Fiscal Year 2023 Financial Results
AspenTech’s total revenue was $320.6 million for the fourth quarter of fiscal 2023 and included the following:
- License and solutions revenue, which represents the portion of a term license agreement allocated to the initial license and Open Systems International, Inc. (OSI) revenue where software and professional services are recognized as one performance obligation, was $222.8 million, compared to $179.3 million in the fourth 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 $82.6 million, compared to $50.2 million in the fourth quarter of fiscal 2022.
- Services and other revenue was $15.2 million, compared to $9.5 million in the fourth quarter of fiscal 2022.
Income from operations was $6.0 million in the fourth quarter of fiscal 2023, compared to income from operations of $39.2 million in the fourth quarter of fiscal 2022.
Net income was $27.3 million or $0.42 per diluted share in the fourth quarter of fiscal 2023, compared to net income of $57.2 million, or $1.13 per diluted share, in the fourth quarter of fiscal 2022. The Company has elevated amortization of intangible assets following the close of the transaction with Emerson. As a result, the Company expects its amortization of intangible assets to remain elevated for the next several years as the related asset balance is amortized over time.
Non-GAAP income from operations was $148.9 million in the fourth quarter of fiscal 2023. Non-GAAP net income was $138.2 million, or $2.13 per share, for the fourth 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 realized and unrealized gains and losses in connection with derivatives on foreign currency forward contracts. A reconciliation of GAAP to non-GAAP results is presented in the financial tables included in this press release.
As of June 30, 2023, AspenTech had cash and cash equivalents of $241.2 million, no borrowings, and $193.1 million available on its revolving credit facility.
During the fourth quarter, AspenTech generated $113.6 million in cash flow from operations and $111.5 million in free cash flow3. 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 and payments for capitalized computer software development costs. Free cash flow was below our guidance for fiscal 2023 due to lower-than-expected cash collections. AspenTech has already received a significant portion of these payments in July 2023.
Recent Developments
Micromine Transaction Update
AspenTech, in collaboration with Potentia, Micromine’s majority owner, has terminated its share sale agreement to acquire Micromine. AspenTech and Potentia were waiting to secure a final Russian regulatory approval as a condition to closing the transaction. As this process continued, the timing and requirements necessary to get this approval became increasingly unclear. This lack of clarity on the potential for, and timing of, a successful review led AspenTech and Potentia to this mutual course of action. AspenTech will not be paying any termination fee as part of this arrangement.
Share Repurchase Programs Update
AspenTech announced today that its Board of Directors has approved a new share repurchase authorization, through which the Company may repurchase up to $300 million of its outstanding shares of common stock in fiscal 2024. This authorization is in addition to the Company’s $100 million accelerated share repurchase program announced on May 5, 2023. The Company expects to complete the accelerated share repurchase program in its first quarter of fiscal 2024. Upon its completion, the Company will begin executing the $300 million share repurchase authorization.
Fiscal Year 2024 Business Outlook
Based on information as of today, August 1, 2023, AspenTech is issuing the following guidance for fiscal 2024.
- ACV1 growth of at least 11.5% year-over-year.
- GAAP operating cash flow of at least $378 million
- Free cash flow3 of at least $360 million
- Total bookings of at least $1.04 billion
- Total revenue of at least $1.12 billion
- GAAP total expense of approximately $1.22 billion
- Non-GAAP total expense of approximately $675 million
- GAAP operating loss at or better than $100 million
- Non-GAAP operating income of at least $445 million
- GAAP net loss at or better than $7 million
- Non-GAAP net income of at least $424 million
- GAAP net loss per share at or better than $0.11
- Non-GAAP net income per share of at least $6.51
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 Tuesday, August 1, 2023, at 4:30 p.m. ET to discuss its financial results, business outlook, and related corporate and financial matters. A live webcast of the call will be available on AspenTech's Investor Relations website, http://ir.aspentech.com/, via its "Webcasts" page. To access the call by phone, please use the following registration link. 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 also will be available for a limited time at http://ir.aspentech.com/.
