Aspen Technology Announces Financial Results for the Fourth Quarter and Fiscal 2021

BEDFORD, Mass.–(BUSINESS WIRE)–Aspen Technology, Inc. (NASDAQ: AZPN), a global leader in asset optimization software, today announced financial results for its fourth-quarter and fiscal year 2021 ended June 30, 2021.

“AspenTech finished fiscal 2021 having generated record profitability and free cash flow, with 4.8% annual spend growth in the midst of unprecedented challenges for many of our customers. Our ability to achieve these results reflects the mission-critical role our solutions play in supporting the sustainability and efficiency requirements of our customers across the process and other capital-intensive industries,” said Antonio Pietri, President and Chief Executive Officer of Aspen Technology.

Pietri continued, “As we enter fiscal 2022, we are optimistic about the long-term opportunity for AspenTech. The need for our customers to operate their assets safely, sustainably, reliably and profitably has never been greater. Our continued focus on innovation, including the recently released aspenONE v12.1 that embeds AI capabilities across our solutions, enables even more value creation by customers. We are confident in our ability to return to double-digit annual spend growth over time as economic conditions and industry budgets normalize.”

Fourth Quarter and Fiscal Year 2021 Recent Business Highlights

  • Annual spend, which the company defines as the annualized value of all term license and maintenance contracts at the end of the quarter, was $621 million at the end of the fourth quarter of fiscal 2021, which increased 4.8% compared to the fourth quarter of fiscal 2020 and 1.9% sequentially.
  • AspenTech repurchased approximately 361,000 shares of its common stock for $50 million in fiscal year 2021.

Summary of Fourth Quarter Fiscal Year 2021 Financial Results

AspenTech’s total revenue of $198.0 million included:

  • License revenue, which represents the portion of a term license agreement allocated to the initial license, was $145.3 million in the fourth quarter of fiscal 2021, compared to $149.9 million in the fourth quarter of fiscal 2020.
  • Maintenance revenue, which represents the portion of the term license agreement related to ongoing support and the right to future product enhancements, was $45.6 million in the fourth quarter of fiscal 2021, compared to $45.7 million in the fourth quarter of fiscal 2020.
  • Services and other revenue was $7.0 million in the fourth quarter of fiscal 2021, compared to $6.4 million in the fourth quarter of fiscal 2020.

For the quarter ended June 30, 2021, AspenTech reported income from operations of $105.9 million, compared to income from operations of $116.3 million in the fourth quarter of fiscal 2020.

Net income was $95.4 million for the quarter ended June 30, 2021, leading to net income per share of $1.39, compared to net income per share of $1.39 in the same period last fiscal year.

Non-GAAP income from operations was $118.4 million for the fourth quarter of fiscal 2021, compared to non-GAAP income from operations of $125.5 million in the same period last fiscal year. Non-GAAP net income was $105.3 million, or $1.53 per share, for the fourth quarter of fiscal 2021, compared to non-GAAP net income of $101.8 million, or $1.49 per share, in the same period last fiscal year. These non-GAAP results add back the impact of stock-based compensation expense, amortization of intangibles and acquisition-related fees. 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 $379.9 million and total borrowings, net of debt issuance costs, of $293.2 million at June 30, 2021.

During the fourth quarter, the company generated $103.2 million in cash flow from operations and $103.7 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 acquisition-related payments.

Summary of Fiscal Year 2021 Financial Results

AspenTech’s total revenue of $709.4 million increased 18.5% from $598.7 million for fiscal year 2020.

  • License revenue was $497.5 million, an increase from $388.2 million for fiscal year 2020.
  • Maintenance revenue was $185.2 million, an increase from $178.1 million for fiscal year 2020.
  • Services and other revenue was $26.7 million, a decrease from $32.4 million for fiscal year 2020.

For the fiscal year ended June 30, 2021, AspenTech reported income from operations of $358.4 million, compared to income from operations of $257.4 million for fiscal year 2020.

Net income was $319.8 million for the fiscal year ended June 30, 2021, leading to net income per share of $4.67, compared to net income per share of $3.34 for fiscal year 2020.

Non-GAAP income from operations was $404.3 million for fiscal year 2021, compared to non-GAAP income from operations of $295.6 million for fiscal year 2020. Non-GAAP net income was $356.0 million, or $5.20 per share, for fiscal year 2021, compared to non-GAAP net income of $259.8 million, or $3.78 per share, for fiscal year 2020.

For the fiscal year ended June 30, 2021, the company generated $276.1 million in cash flow from operations and $277.5 million in free cash flow.

Business Outlook

Based on information as of today, August 11, 2021, Aspen Technology is issuing the following guidance for fiscal year 2022:

  • Annual spend growth of 5-7% year-over-year
  • Free cash flow of $275 to $285 million
  • Total bookings of $766 to $819 million
  • Total revenue of $702 to $737 million
  • GAAP total expense of $386 to $391 million
  • Non-GAAP total expense of $341 to $346 million
  • GAAP operating income of $316 to $346 million
  • Non-GAAP operating income of $361 to $391 million
  • GAAP net income of $288 to $314 million
  • Non-GAAP net income of $323 to $349 million
  • GAAP net income per share of $4.27 to $4.65
  • Non-GAAP net income per share of $4.79 to $5.17

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 our 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 Aspen Technology’s business. As the result of adoption of new licensing models, management believes that a number of Aspen Technology’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 Aspen Technology’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 Aspen Technology’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

Aspen Technology will host a conference call and webcast today, August 11, 2021, at 4:30 p.m. (Eastern Time), to discuss the company’s financial results for the fourth-quarter and fiscal year 2021 as well as the company’s business outlook. The live dial-in number is (866) 471-3828 or (678) 509-7573, conference ID code 7282409. Interested parties may also listen to a live webcast of the call by logging on to the Investor Relations section of Aspen Technology’s website, http://ir.aspentech.com/events-and-presentations, and clicking on the “webcast” link. A replay of the call will be archived on Aspen Technology’s website and will also be available via telephone at (855) 859-2056 or (404) 537-3406, conference ID code 7282409, through August 18, 2021.

About Aspen Technology

Aspen Technology (AspenTech) is a global leader in asset optimization software. Its solutions address complex, industrial environments where it is critical to optimize the asset design, operation and maintenance lifecycle. AspenTech uniquely combines decades of process modelling expertise with artificial intelligence. Its purpose-built software platform automates knowledge work and builds sustainable competitive advantage by delivering high returns over the entire asset lifecycle. As a result, companies in capital-intensive industries can maximize uptime and push the limits of performance, running their assets safer, greener, longer and faster. Visit AspenTech.com to find out more.

Forward-Looking Statements

The third paragraph of this press release as well as the Business Outlook section contain 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: delays or reductions in demand for AspenTech solutions due to the COVID-19 pandemic; AspenTech’s failure to increase usage and product adoption of aspenONE offerings or grow the aspenONE APM business, and failure to continue to provide innovative, market-leading solutions; declines in the demand for, or usage of, aspenONE software for any reason, including declines due to adverse changes in the process or other capital-intensive industries and materially reduced industry spending budgets due to the drop in demand for oil due to the COVID-19 pandemic; unfavorable economic and market conditions or a lessening demand in the market for asset process optimization software, including materially reduced industry spending budgets due to the significant drop in oil prices arising from drop in demand due to the COVID-19 pandemic; risks of foreign operations or transacting business with customers outside the United States; risks of competition 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 obligation to update forward-looking statements after the date of this press release.

© 2021 Aspen Technology, Inc. AspenTech, aspenONE, asset optimization and the Aspen leaf logo are trademarks of Aspen Technology, Inc. All rights reserved. All other trademarks are property of their respective owners.

ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited in Thousands, Except per Share Data)
 

Three Months Ended June 30,

Twelve Months Ended June 30,

2021

2020

2021

2020

Revenue:
License

$ 145,346

$ 149,869

$ 497,479

$ 388,180

Maintenance

45,603

45,721

185,164

178,139

Services and other

7,012

6,350

26,733

32,398

Total revenue

197,961

201,940

709,376

598,717

Cost of revenue:
License

2,417

1,691

9,276

7,241

Maintenance

4,221

4,909

18,287

19,248

Services and other

7,677

8,558

32,588

35,118

Total cost of revenue

14,315

15,158

60,151

61,607

Gross profit

183,646

186,782

649,225

537,110

Operating expenses:
Selling and marketing

32,867

28,440

114,959

114,486

Research and development

23,653

23,536

94,229

92,230

General and administrative

21,247

18,510

81,636

73,035

Total operating expenses

77,767

70,486

290,824

279,751

Income from operations

105,879

116,296

358,401

257,359

Interest income

10,408

8,081

36,791

32,658

Interest (expense)

(1,606)

(2,494)

(7,245)

(11,862)

Other (expense), net

(1,393)

1,419

(3,200)

1,202

Income before income taxes

113,288

123,302

384,747

279,357

Provision for income taxes

17,843

28,772

64,944

49,686

Net income

$ 95,445

$ 94,530

$ 319,803

$ 229,671

Net income per common share:
Basic

$ 1.40

$ 1.40

$ 4.71

$ 3.38

Diluted

$ 1.39

$ 1.39

$ 4.67

$ 3.34

Weighted average shares outstanding:
Basic

68,028

67,634

67,863

68,000

Diluted

68,612

68,176

68,492

68,727

ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(Unaudited in Thousands, Except Share and Per Share Data)
 
June 30,
2021
June 30,
2020
ASSETS
Current assets:
Cash and cash equivalents

$ 379,853

$ 287,796

Accounts receivable, net

52,502

56,301

Current contract assets

308,607

291,497

Prepaid expenses and other current assets

12,716

10,884

Prepaid income taxes

14,639

3,962

Total current assets

768,317

650,440

Property, equipment and leasehold improvements, net

5,610

5,963

Computer software development costs, net

1,461

928

Goodwill

159,852

137,055

Intangible assets, net

44,327

42,851

Non-current contract assets

407,180

318,976

Contract costs

29,056

28,614

Operating lease right-of-use assets

32,539

34,905

Deferred tax assets

2,121

1,735

Other non-current assets

3,537

1,839

Total assets

$ 1,454,000

$ 1,223,306

 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable

$ 4,367

$ 3,988

Accrued expenses and other current liabilities

50,575

43,556

Current operating lease liabilities

6,751

6,824

Income taxes payable

3,444

1,799

Current borrowings

20,000

135,163

Current deferred revenue

56,393

43,168

Total current liabilities

141,530

234,498

Non-current deferred revenue

11,732

13,913

Deferred income taxes

193,360

179,978

Non-current operating lease liabilities

29,699

33,088

Non-current borrowings, net

273,162

292,369

Other non-current liabilities

3,760

3,107

Commitments and contingencies (Note 17)
Series D redeemable convertible preferred stock, $0.10 par value—
Authorized— 367,000 shares as of June 30, 2021 and June 30, 2020
Issued and outstanding— none as of June 30, 2021 and June 30, 2020

Stockholders’ equity:
Common stock, $0.10 par value— Authorized—210,000,000 shares
Issued— 104,543,414 shares at June 30, 2021 and 103,988,707 shares at June 30, 2020
Outstanding— 67,912,160 shares at June 30, 2021 and 67,718,692 shares at June 30, 2020

10,455

10,399

Additional paid-in capital

819,642

769,411

Retained earnings

1,778,133

1,458,330

Accumulated other comprehensive income (loss)

9,026

(5,288)

Treasury stock, at cost—36,631,254 shares of common stock at June 30, 2021 and 36,270,015 shares at June 30, 2020

(1,816,499)

(1,766,499)

Total stockholders’ equity

800,757

466,353

Total liabilities and stockholders’ equity

$ 1,454,000

$ 1,223,306

ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited in Thousands)
 

Three Months Ended June 30,

Twelve Months Ended June 30,

2021

2020

2021

2020

Cash flows from operating activities:
Net income

$ 95,445

$ 94,530

$ 319,803

$ 229,671

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization

2,712

2,522

10,257

9,550

Reduction in the carrying amount of right-of-use assets

1,890

2,576

8,927

9,094

Net foreign currency losses (gains)

1,383

(1,128)

3,410

(945)

Stock-based compensation

9,055

7,415

33,644

31,548

Deferred income taxes

5,226

29,617

12,255

28,101

Provision for bad debts

2,916

1,864

9,716

5,255

Other non-cash operating activities

203

202

921

625

Changes in assets and liabilities:
Accounts receivable

(6,247)

3,553

(2,132)

(12,875)

Contract assets, net

(10,199)

(30,413)

(113,737)

(28,084)

Contract costs

(636)

(2,048)

(438)

(3,570)

Lease liabilities

(2,649)

(2,668)

(10,182)

(9,508)

Prepaid expenses, prepaid income taxes, and other assets

(5,883)

(3,087)

(12,842)

(5,288)

Accounts payable, accrued expenses, income taxes payable and other liabilities

6,788

(2,608)

(59)

(23,360)

Deferred revenue

3,181

(657)

16,591

13,044

Net cash provided by operating activities

103,185

99,670

276,134

243,258

Cash flows from investing activities:
Purchases of property, equipment and leasehold improvements

(504)

(167)

(1,237)

(1,278)

Payments for business acquisitions, net of cash acquired

(16,272)

(74,460)

Payments for equity method investments

(217)

(5)

(1,143)

(324)

Payments for capitalized computer software development costs

(234)

(1,129)

(141)

Net cash used in investing activities

(955)

(172)

(19,781)

(76,203)

Cash flows from financing activities:
Issuance of shares of common stock

13,588

3,640

26,096

9,004

Repurchases of common stock

(45,647)

(1,811)

(45,647)

(152,432)

Payments of tax withholding obligations related to restricted stock

(2,453)

(1,921)

(9,172)

(10,167)

Deferred business acquisition payments

(1,229)

(1,229)

(4,600)

Proceeds from borrowings

574,163

Repayments of amounts borrowed

(4,000)

(4,000)

(135,182)

(363,000)

Payments of debt issuance costs

(3,533)

Net cash provided by (used in) financing activities

(39,741)

(4,092)

(165,134)

49,435

Effect of exchange rate changes on cash and cash equivalents

265

218

838

(620)

Increase in cash and cash equivalents

62,754

95,624

92,057

215,870

Cash and cash equivalents, beginning of period

317,099

192,172

287,796

71,926

Cash and cash equivalents, end of period

$ 379,853

$ 287,796

$ 379,853

$ 287,796

Supplemental disclosure of cash flow information:
Income taxes paid, net

$ 12,061

$ 13,174

$ 61,410

$ 39,533

Interest paid

731

4,198

6,403

12,444

Supplemental disclosure of non-cash activities:
Change in purchases of property, equipment and leasehold improvements included in accounts payable and accrued expenses

$ 35

$ (10)

$ 112

$ (99)

Change in repurchases of common stock included in accounts payable and accrued expenses

4,353

(1,811)

4,353

(2,432)

Lease liabilities arising from obtaining right-of-use assets

2,012

2,387

3,500

14,013

ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Results of Operations and Cash Flows

(Unaudited in Thousands, Except per Share Data)
 

Three Months Ended

June 30,

Twelve Months Ended

June 30,

2021

2020

2021

2020

Total expenses
GAAP total expenses (a)

$ 92,082

$ 85,644

$ 350,975

$ 341,358

Less:
Stock-based compensation (b)

(9,055)

(7,415)

(33,644)

(31,548)

Amortization of intangibles

(2,040)

(1,831)

(7,697)

(6,572)

Acquisition related fees

(1,385)

(4,518)

(78)

 
Non-GAAP total expenses

$ 79,602

$ 76,398

$ 305,116

$ 303,160

 
Income from operations
GAAP income from operations

$ 105,879

$ 116,296

$ 358,401

$ 257,359

Plus:
Stock-based compensation (b)

9,055

7,415

33,644

31,548

Amortization of intangibles

2,040

1,831

7,697

6,572

Acquisition related fees

1,385

4,518

78

 
Non-GAAP income from operations

$ 118,359

$ 125,542

$ 404,260

$ 295,557

 
Net income
GAAP net income

$ 95,445

$ 94,530

$ 319,803

$ 229,671

Plus:
Stock-based compensation (b)

9,055

7,415

33,644

31,548

Amortization of intangibles

2,040

1,831

7,697

6,572

Acquisition related fees

1,385

4,518

78

Less:
Income tax effect on Non-GAAP items (c)

(2,621)

(1,942)

(9,630)

(8,022)

 
Non-GAAP net income

$ 105,304

$ 101,834

$ 356,032

$ 259,847

 
Diluted income per share
GAAP diluted income per share

$ 1.39

$ 1.39

$ 4.67

$ 3.34

Plus:
Stock-based compensation (b)

0.13

0.11

0.49

0.46

Amortization of intangibles

0.03

0.03

0.11

0.10

Acquisition related fees

0.02

0.07

Less:
Income tax effect on Non-GAAP items (c)

(0.04)

(0.03)

(0.14)

(0.12)

 
Non-GAAP diluted income per share

$ 1.53

$ 1.49

$ 5.20

$ 3.78

 
Shares used in computing Non-GAAP diluted income per share

68,612

68,176

68,492

68,727

 
 

Three Months Ended

June 30,

Twelve Months Ended

June 30,

2021

2020

2021

2020

Free Cash Flow
Net cash provided by operating activities (GAAP)

$ 103,185

$ 99,670

$ 276,134

$ 243,258

Purchases of property, equipment and leasehold improvements

(504)

(167)

(1,237)

(1,278)

Payments for capitalized computer software development costs

(234)

(1,129)

(141)

Acquisition related payments

1,300

3,733

1,264

Free cash flow (non-GAAP)

$ 103,747

$ 99,503

$ 277,501

$ 243,103

 
(a) GAAP total expenses

Three Months Ended

June 30,

Twelve Months Ended

June 30,

2021

2020

2021

2020

Total costs of revenue

$ 14,315

$ 15,158

$ 60,151

$ 61,607

Total operating expenses

77,767

70,486

290,824

279,751

GAAP total expenses

$ 92,082

$ 85,644

$ 350,975

$ 341,358

 
(b) Stock-based compensation expense was as follows:

Three Months Ended

June 30,

Twelve Months Ended

June 30,

2021

2020

2021

2020

Cost of maintenance

$ 208

$ 337

$ 896

$ 1,441

Cost of services and other

415

484

1,613

1,961

Selling and marketing

1,912

1,428

6,567

5,656

Research and development

2,472

2,113

8,987

8,306

General and administrative

4,048

3,053

15,581

14,184

Total stock-based compensation

$ 9,055

$ 7,415

$ 33,644

$ 31,548

 
(c) The income tax effect on non-GAAP items for the three and twelve months ended June 30, 2021 and 2020, respectively, is calculated utilizing the Company’s statutory tax rate of 21 percent.
ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
Reconciliation of Forward-Looking Guidance Range
(Unaudited in Thousands, Except per Share Data)
Twelve Months Ended June 30, 2022 (a)
Range
Low High
Guidance – Total expenses
GAAP – total expenses

$ 386,000

$ 391,000

Less:
Stock-based compensation

(36,000)

(36,000)

Amortization of intangibles

(9,000)

(9,000)

 
Non-GAAP – total expenses

$ 341,000

$ 346,000

 
Guidance – Income from operations
GAAP – income from operations

$ 316,000

$ 346,000

Plus:
Stock-based compensation

36,000

36,000

Amortization of intangibles

9,000

9,000

 
Non-GAAP – income from operations

361,000

391,000

 
Guidance – Net income and diluted income per share
GAAP – net income and diluted income per share

$ 288,000

$ 4.27

$ 314,000

$ 4.65

Plus:
Stock-based compensation

36,000

36,000

Amortization of intangibles

9,000

9,000

Less:
Income tax effect on Non-GAAP items (b)

(10,000)

(10,000)

 
Non-GAAP – net income and diluted income per share

$ 323,000

$ 4.79

$ 349,000

$ 5.17

 
Shares used in computing guidance for Non-GAAP diluted income per share

67,500

67,500

 
Guidance – Free Cash Flow
GAAP – Net cash provided by operating activities

$ 278,800

$ 288,800

Less:
Purchases of property, equipment and leasehold improvements

(3,000)

(3,000)

Payments for capitalized computer software development costs

(800)

(800)

 
Free cash flow (non-GAAP)

$ 275,000

$ 285,000

 
(a) Rounded amounts used, except per share data.
(b) The income tax effect on non-GAAP items for the twelve months ended June 30, 2022 is calculated utilizing the Company’s statutory tax rate of 21 percent.

 

Contacts

Media Contact
Len Dieterle

Aspen Technology

+1 781-221-4291

len.dieterle@aspentech.com

Investor Contact
Brian Denyeau

ICR for Aspen Technology

+1 646-277-1251

brian.denyeau@icrinc.com