Aspen Technology, Inc. : Aspen Technology Announces Financial Results for the Second Quarter Fiscal 2012
01/31/2012 | 04:05pm
Aspen Technology, Inc. (NASDAQ: AZPN), a leading provider of software
and services to the process industries, today announced financial
results for its second quarter of fiscal 2012, ended December 31, 2011.
Mark Fusco, Chief Executive Officer of AspenTech, said, "We are pleased
with the company's execution during the second quarter. While global
economic conditions remain volatile, AspenTech delivered accelerated
year-over-year growth in total license contract value for the second
quarter and first half of fiscal 2012 as compared to growth in the prior
fiscal year periods." Fusco added, "We again met or exceeded our
financial guidance across all key metrics for the second quarter, and we
believe the company is well positioned to do the same relative to our
full year objectives."
Second Quarter Fiscal 2012 and Recent Business Highlights
The license portion of total contract value was $1.36 billion for the
second quarter of fiscal 2012, which increased 12.9% compared to the
second quarter of fiscal 2011 and 4.1% sequentially.
Total contract value was $1.54 billion for the second quarter of
fiscal 2012, including the value of bundled maintenance, which
increased 17.9% compared to the second quarter of fiscal 2011 and 5.2%
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 $284 million at the end of the second
quarter, representing an increase of approximately 12% on a
year-over-year basis.
Summary of Second Quarter Fiscal Year 2012 Financial Results
AspenTech's total revenue of $66.6 million increased 34% from $49.8
million in the second quarter of the prior year.
Subscription and software revenue was $46.5 million in the
second quarter of fiscal 2012, an increase from $25.3 million in the
second quarter of fiscal 2011 and $31.9 million in the first quarter
of fiscal 2012.
Services & other revenue was $20.1 million in the second
quarter of fiscal 2012, compared to $24.5 million in the second
quarter of fiscal 2011 and $19.3 million in the first quarter of
fiscal 2012.
For the quarter ended December 31, 2011, AspenTech reported income from
operations of $7.0 million, compared to a loss from operations of $9.3
million for the quarter ended December 31, 2010.
Net income was $3.8 million for the quarter ended December 31, 2011,
leading to net income per share of $0.04, compared to a net loss per
share of $0.11 in the same period last fiscal year.
Non-GAAP income from operations, which adds back stock-based
compensation expense and restructuring charges, was $10.1 million for
the second quarter of fiscal 2012, compared to a non-GAAP loss from
operations of $6.9 million in the same period last fiscal year. Non-GAAP
net income was $6.0 million, or $0.06 per share, for the second quarter
of fiscal 2012, an improvement compared to a non-GAAP net loss of $8.0
million, or ($0.09) 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.
Mark Sullivan, Chief Financial Officer of AspenTech, said "Revenue and
profitability were well above our guidance for the second quarter due
primarily to the timing of recognizing revenue associated with a few
large contracts with longstanding customers." Sullivan added, "We
continue to believe that growth in total license contract value and
annual spend are more meaningful than reported revenue growth during the
company's multi-year revenue model transition, and free cash flow
generation is more meaningful than GAAP profitability. AspenTech
delivered a strong performance across each of these areas during the
second quarter, as well as for the first half of fiscal 2012."
AspenTech had a cash balance of $143.3 million at December 31, 2011, a
decrease of $2.1 million from the end of the prior quarter. The company
generated $23.0 million in cash flow from operations and $22.3 million
in free cash flow after taking into consideration $0.7 million in
capital expenditures and capitalized software. During the quarter, the
company also used $11.1 million in cash to repurchase shares of common
stock, and it reduced secured borrowings by $14.6 million.
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, January 31,
2012, at 4:30 p.m. (Eastern Time), to discuss the company's financial
results for the second quarter fiscal 2012 as well as the company's
business outlook. The live dial-in number is (877) 245-0126, conference
ID code 46505886. 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 46505886,
through February 7, 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.
The second paragraph of this press release contains 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, our 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
Six Months Ended
December 31,
December 31,
2011
2010
2011
2010
Revenue:
Subscription and software
$
46,502
$
25,333
$
78,412
$
44,300
Services and other
20,053
24,475
39,368
48,608
Total revenue
66,555
49,808
117,780
92,908
Cost of revenue:
Subscription and software
2,622
1,972
5,346
4,094
Services and other
10,303
11,583
21,400
22,709
Total cost of revenue
12,925
13,555
26,746
26,803
Gross profit
53,630
36,253
91,034
66,105
Operating expenses:
Selling and marketing
22,318
19,954
45,764
40,305
Research and development
12,767
12,096
26,536
24,671
General and administrative
11,490
13,425
27,377
29,982
Restructuring charges
14
78
(59
)
155
Total operating expenses
46,589
45,553
99,618
95,113
Income (loss) from operations
7,041
(9,300
)
(8,584
)
(29,008
)
Interest income
2,034
3,534
4,265
7,236
Interest expense
(1,015
)
(1,653
)
(2,107
)
(2,897
)
Other (expense) income, net
(425
)
(735
)
(2,457
)
1,929
Income (loss) before income taxes
7,635
(8,154
)
(8,883
)
(22,740
)
Provision for (benefit from) income taxes
3,799
2,115
(983
)
2,997
Net income (loss)
$
3,836
$
(10,269
)
$
(7,900
)
$
(25,737
)
Net Income (loss) per common share:
Basic
$
0.04
$
(0.11
)
$
(0.08
)
$
(0.28
)
Diluted
$
0.04
$
(0.11
)
$
(0.08
)
$
(0.28
)
Weighted average shares outstanding:
Basic
93,902
93,252
93,983
92,968
Diluted
96,267
93,252
93,983
92,968
ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands, except share data)
December 31,
June 30,
2011
2011
ASSETS
Current assets:
Cash and cash equivalents
$
143,255
$
149,985
Accounts receivable, net
35,880
27,866
Current portion of installments receivable, net
37,348
38,703
Current portion of collateralized receivables, net
8,631
15,748
Unbilled services
423
2,319
Prepaid expenses and other current assets
8,656
10,819
Prepaid income taxes
1,124
1,151
Deferred income taxes- current
7,349
7,272
Total current assets
242,666
253,863
Non-current installments receivable, net
33,327
47,773
Non-current collateralized receivables, net
4,403
9,291
Property, equipment and leasehold improvements, net
5,885
6,730
Computer software development costs, net
2,255
2,813
Goodwill
17,903
18,624
Deferred income taxes- non-current
71,264
69,242
Other non-current assets
4,850
3,639
Total assets
$
382,553
$
411,975
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of secured borrowings
$
12,568
$
15,756
Accounts payable
3,326
2,099
Accrued expenses and other current liabilities
46,298
64,467
Income taxes payable
1,777
672
Deferred revenue
99,633
90,681
Total current liabilities
163,602
173,675
Long-term secured borrowings
5,062
9,157
Long-term deferred revenue
44,597
38,262
Other non-current liabilities
31,166
33,078
Commitments and contingencies
Series D redeemable convertible preferred stock, $0.10 par value--
Authorized-- 3,636 shares at December 31, 2011 and June 30, 2011
Issued and outstanding-- none at December 31, 2011 and June 30, 2011
-
-
Stockholders' equity:
Common stock, $0.10 par value-- Authorized--210,000,000 shares Issued--
95,704,821 shares at December 31, 2011 and 94,939,400 shares at June
30, 2011 Outstanding-- 93,774,496 shares at December 31, 2011 and
94,238,370 shares at June 30, 2011
9,570
9,494
Additional paid-in capital
540,036
530,996
Accumulated deficit
(389,171
)
(381,271
)
Accumulated other comprehensive income
8,462
9,115
Treasury stock, at cost--1,930,325 shares of common stock at December
31, 2011 and 701,030 at June 30, 2011
(30,771
)
(10,531
)
Total stockholders' equity
138,126
157,803
Total liabilities and stockholders' equity
$
382,553
$
411,975
ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited and in thousands)
Three Months Ended
Six Months Ended
December 31,
December 31,
2011
2010
2011
2010
Cash flows from operating activities:
Net income (loss)
$
3,836
$
(10,269
)
$
(7,900
)
$
(25,737
)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization
1,281
1,239
2,693
2,600
Net foreign currency (gain) loss
(57
)
531
1,218
(1,648
)
Stock-based compensation
3,071
2,345
6,779
5,042
Deferred income taxes
3,044
28
(2,310
)
74
Provision for bad debts
(553
)
(620
)
(403
)
97
Other non-cash activities
-
415
13
415
Changes in assets and liabilities:
Accounts receivable
(13,662
)
(2,232
)
(8,068
)
3,009
Unbilled services
1,294
917
1,905
630
Prepaid expenses, prepaid income taxes, and other assets
(419
)
1,354
768
6,145
Installments and collateralized receivables
18,399
18,238
26,728
30,139
Accounts payable, accrued expenses, income taxes payable and other
liabilities
(1,694
)
1,842
(8,592
)
(14,596
)
Deferred revenue
8,467
1,037
15,449
15,043
Net cash provided by operating activities
23,007
14,825
28,280
21,213
Cash flows from investing activities:
Purchase of property, equipment and leasehold improvements
(536
)
(1,288
)
(922
)
(1,876
)
Capitalized computer software development costs
(192
)
(204
)
(392
)
(380
)
Net cash used in investing activities
(728
)
(1,492
)
(1,314
)
(2,256
)
Cash flows from financing activities:
Exercise of stock options and warrants
1,874
3,283
4,106
3,420
Proceeds from secured borrowings
3,574
576
4,982
2,500
Repayments of secured borrowings
(18,188
)
(6,900
)
(20,420
)
(16,241
)
Repurchases of common stock
(11,068
)
(1,242
)
(20,240
)
(1,242
)
Payment of tax withholding obligations related to restricted stock
(582
)
(202
)
(1,769
)
(998
)
Net cash used in financing activities
(24,390
)
(4,485
)
(33,341
)
(12,561
)
Effects of exchange rate changes on cash and cash equivalents
10
(367
)
(355
)
301
(Decrease) increase in cash and cash equivalents
(2,101
)
8,481
(6,730
)
6,697
Cash and cash equivalents, beginning of period
145,356
123,161
149,985
124,945
Cash and cash equivalents, end of period
$
143,255
$
131,642
$
143,255
$
131,642
Supplemental disclosure of cash flow information:
Interest paid
$
1,015
$
1,490
$
2,107
$
3,071
Income tax (refunded) paid, net
(293
)
1,535
338
(4,961
)
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
December 31,
Six Months Ended
December 31,
2011
2010
2011
2010
Total expenses
GAAP total expenses (a)
$
59,514
$
59,108
$
126,364
$
121,916
Less:
Stock-based compensation (b)
(3,071
)
(2,345
)
(6,779
)
(5,042
)
Restructuring charges
(14
)
(78
)
59
(155
)
Non-GAAP total expenses
$
56,429
$
56,685
$
119,644
$
116,719
Income (loss) from operations
GAAP income (loss) from operations
$
7,041
$
(9,300
)
$
(8,584
)
$
(29,008
)
Plus:
Stock-based compensation (b)
3,071
2,345
6,779
5,042
Restructuring charges
14
78
(59
)
155
Non-GAAP income (loss) from operations
$
10,126
$
(6,877
)
$
(1,864
)
$
(23,811
)
Net income (loss)
GAAP net income (loss)
$
3,836
$
(10,269
)
$
(7,900
)
$
(25,737
)
Plus:
Stock-based compensation (b)
3,071
2,345
6,779
5,042
Restructuring charges
14
78
(59
)
155
Less:
Income tax effect on Non-GAAP items
(941
)
(118
)
(1,970
)
(208
)
Non-GAAP net income (loss)
$
5,980
$
(7,964
)
$
(3,150
)
$
(20,748
)
Diluted income (loss) per share
GAAP diluted income (loss) per share
$
0.04
$
(0.11
)
$
(0.08
)
$
(0.28
)
Plus:
Stock-based compensation (b)
0.03
0.02
0.07
0.06
Restructuring charges
0.00
0.00
(0.00
)
0.00
Less:
Income tax effect on Non-GAAP items (c)
(0.01
)
(0.00
)
(0.02
)
(0.00
)
Non-GAAP diluted income (loss) per share
$
0.06
$
(0.09
)
$
(0.03
)
$
(0.22
)
Shares used in computing diluted income (loss) per share
96,267
93,252
93,983
92,968
(a) GAAP total expenses
Three Months Ended
December 31,
Six Months Ended
December 31,
2011
2010
2011
2010
Total costs of revenue
$
12,925
$
13,555
$
26,746
$
26,803
Total operating expenses
46,589
45,553
99,618
95,113
GAAP total expenses
$
59,514
$
59,108
$
126,364
$
121,916
(b) Stock-based compensation expense was as follows:
Three Months Ended
December 31,
Six Months Ended
December 31,
2011
2010
2011
2010
Cost of service and other
$
314
$
233
$
617
$
486
Selling and marketing
1,229
907
2,399
1,803
Research and development
353
287
701
576
General and administrative
1,175
918
3,062
2,177
Total stock-based compensation
$
3,071
$
2,345
$
6,779
$
5,042
(c) The income tax effect on Non-GAAP items is calculated utilizing
our estimated effective tax rate. During the three and six months
ended December 31, 2010, we had a U.S. valuation allowance in place
which resulted in a minimal income tax adjustment.
