Aspen Technology, Inc., a leading provider of software and services to the process industries, announced financial results for its second quarter of fiscal year 2013, ended December 31, 2012.
“AspenTech delivered strong second quarter results that exceeded our guidance on all key metrics. We continue to see strong customer demand and product usage patterns, which contributed to our solid year-over-year annual spend growth of nearly 13% during the second quarter”
“AspenTech delivered strong second quarter results that exceeded our guidance on all key metrics. We continue to see strong customer demand and product usage patterns, which contributed to our solid year-over-year annual spend growth of nearly 13% during the second quarter,” said Mark Fusco, President and Chief Executive Officer. “The company’s operational execution remains at a high level, which is evidenced by free cash flow generation of $34.5 million during the quarter. With over $50 million of free cash flow generated during the first half of our fiscal year, we feel very good about the company’s position as we are heading into our seasonally strongest cash flow quarter.”
Fusco added, “Looking ahead, we are encouraged by the strength of our pipeline and business momentum. We believe the company is tracking well against each of our key full year objectives, including growth, cash flow, revenue and profitability.”
Second Quarter Fiscal 2013 and Recent Business Highlights
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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 $320 million at the end of the second quarter of fiscal 2013, an increase of 12.7% compared to the second quarter of fiscal 2012, and 2.6% sequentially.
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The license portion of total contract value was $1.54 billion at the end of the second quarter of fiscal 2013, an increase of 13.5% compared to the second quarter of fiscal 2012, and 2.9% sequentially.
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Total contract value, including the value of bundled maintenance, was $1.78 billion at the end of the second quarter of fiscal 2013, an increase of 15.5% compared to the second quarter of fiscal 2012, and 3.3% sequentially.
Summary of Second Quarter Fiscal Year 2013 Financial Results
AspenTech’s total revenue of $77.3 million increased 16% from $66.6 million in the second quarter of the prior year.
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Subscription and software revenue was $59.5 million in the second quarter of fiscal 2013, an increase from $46.5 million in the second quarter of fiscal 2012.
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Services & other revenue was $17.9 million in the second quarter of fiscal 2013, compared to $20.1 million in the second quarter of fiscal 2012.
For the quarter ended December 31, 2012, AspenTech reported income from operations of $14.9 million, compared to income from operations of $7.0 million for the same period last fiscal year.
Net income was $9.9 million for the quarter ended December 31, 2012, leading to net income per share of $0.10, compared to $0.04 in the same period last fiscal year.
Non-GAAP income from operations, which adds back stock-based compensation expense, restructuring charges and amortization of intangibles associated with acquisitions, was $18.6 million for the second quarter of fiscal 2013, compared to $10.1 million in the same period last fiscal year.
Non-GAAP net income was $12.3 million, or $0.13 per share, for the second quarter of fiscal 2013, compared to non-GAAP net income of $6.0 million, or $0.06 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.
AspenTech had cash and cash equivalents of $175.2 million at December 31, 2012, an increase of $11.9 million from the end of the prior quarter after using $19.7 million in cash to repurchase shares of common stock and reducing secured borrowings by $5.6 million. AspenTech has now fully repaid its secured borrowings. During the second quarter, the company generated $35.7 million in cash flow from operations and $34.5 million in free cash flow after taking into consideration $1.2 million in capital expenditures and capitalized software.
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.
