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Aspen Technology Announces Financial Results for the Fourth Quarter and Fiscal 2024

Aspen Technology, Inc. ("AspenTech" or the "Company") (NASDAQ: AZPN), a global leader in industrial software, today announced financial results for its fourth quarter and fiscal year ended June 30, 2024.

“AspenTech’s fourth quarter results reflected excellent execution across all areas of our business,” commented Antonio Pietri, President and Chief Executive Officer of AspenTech. “The strong performance of our DGM suite in the full year was a great demonstration of the significant growth opportunities in the utilities market and the benefit of our diversified end-market exposure.”

“In fiscal 2025, we are targeting another year of solid ACV growth, even as we manage through a dynamic macro environment. At the same time, we are focused on driving toward best-in-class profitability and plan to continue enhancing our productivity and efficiency. We believe this attractive combination of top-line growth and margin expansion can deliver significant value for our shareholders,” concluded Pietri.

Fiscal Year 2024 and Recent Business Highlights

  • Annual Contract Value1 ("ACV") was $968.4 million at the end of fiscal 2024, increasing 9.4% year over year and 3.5% quarter over quarter. This amount does not reflect the impact of the write-off related to the suspension of commercial activities in Russia described immediately below.
  • AspenTech has suspended all commercial activities in Russia following the recent announcement of expanded sanctions in the country. In connection with this decision, the Company has written-off approximately $35.5 million in ACV1 (the “Write-Off”), effective as of the end of fiscal 2024. Please see Recent Developments below for additional commentary. ACV1 was $932.9 million as of June 30, 2024, after reflecting the impact of the Write-Off. ACV1 increased 10.0% year over year in fiscal 2024 when adjusting to exclude Russia-based ACV1 in both fiscal 2023 and fiscal 2024.
  • Cash flow from operations was $339.9 million in fiscal 2024, increasing 13.6% year over year. Free cash flow2 was $335.3 million in fiscal 2024, increasing 14.7% year over year. A reconciliation of GAAP to non-GAAP results is included in the financial tables included in this press release.
  • AspenTech's Board of Directors has approved a share repurchase authorization of up to $100.0 million for fiscal 2025. AspenTech completed its previously announced $300.0 million share repurchase authorization (the "Fiscal 2024 Share Repurchase Authorization") in the fourth quarter of fiscal 2024. Please see Recent Developments below for additional commentary.

Summary of Fourth Quarter and Fiscal Year 2024 Financial Results

AspenTech’s total revenue was $342.9 million for the fourth quarter of fiscal 2024 and included the following:

  • License and solutions revenue, which represents the portion of a term license agreement allocated to the initial license and Digital Grid Management ("DGM") revenue where software, hardware and professional services are recognized as one performance obligation, was $231.0 million in the fourth quarter of fiscal 2024, compared to $222.8 million in the fourth quarter of fiscal 2023.
  • Maintenance revenue, which represents the portion of customer agreements related to ongoing support and the right to future product enhancements, was $89.2 million in the fourth quarter of fiscal 2024, compared to $82.6 million in the fourth quarter of fiscal 2023.
  • Services and other revenue, which represents the portion of customer agreements related to professional services and training services, was $22.7 million in the fourth quarter of fiscal 2024, compared to $15.2 million in the fourth quarter of fiscal 2023.

Income from operations was $39.2 million in the fourth quarter of fiscal 2024, compared to $6.0 million in the fourth quarter of fiscal 2023. Non-GAAP income from operations was $173.4 million in the fourth quarter of fiscal 2024, compared to $148.9 million in the fourth quarter of fiscal 2023. The year-over-year improvement in income from operations was mainly due to lower operating expenses and stock-based compensation.

Net income was $44.7 million, or $0.70 per diluted share, in the fourth quarter of fiscal 2024, compared to $27.3 million, or $0.42 per diluted share, in the fourth quarter of fiscal 2023. AspenTech has increased amortization of intangible assets following the close of its transaction with Emerson Electric Co. (”Emerson”) in May of 2022. AspenTech expects its amortization of intangible assets to remain at higher levels for the next several years as the related asset balance is amortized over the respective expected useful lives of the intangible assets.

Non-GAAP net income was $150.7 million, or $2.37 per diluted share, in the fourth quarter of fiscal 2024, compared to $138.2 million, or $2.13 per diluted share, in the fourth quarter of fiscal 2023. The year-over-year increase in non-GAAP net income was mainly due to revenue growth combined with strong operating leverage.

AspenTech had cash and cash equivalents of $237.0 million as of June 30, 2024, compared to $241.2 million as of June 30, 2023. The decrease in cash and cash equivalents during this period was primarily due to the impact of share repurchase activity under the Fiscal 2024 Share Repurchase Authorization. Under its revolving credit facility, AspenTech had no borrowings and $195.1 million available as of June 30, 2024. Please see Recent Developments below for updates on the Fiscal 2024 Share Repurchase Authorization and credit facility.

AspenTech generated $154.9 million in cash flow from operations and $153.0 million in free cash flow2 in the fourth quarter of fiscal 2024, compared to $113.6 million in cash flow from operations and $111.5 million in free cash flow2 in the fourth quarter of fiscal 2023.

Recent Developments

Russia Business Exit

In June 2024, the United States government announced new expanded sanctions that will prohibit certain commercial activities with customers in Russia. These expanded restrictions impact the sale, service, maintenance, and support (such as bug fixes and updates) of enterprise management software and design and manufacturing software in the Russian market. As a result, the Company recently suspended all commercial activities in Russia. This includes the discontinuation of the following activities: all commercial discussions with customers, initiating and/or processing renewals, providing proposals to customers or selling products or services to customers.

As a result of the sanctions and the decision to exit Russia, the Company has written-off certain assets that are related to operations in Russia and recorded a reduction of $35.5 million in Russia-based ACV1. ACV1 was $932.9 million as of June 30, 2024, after including the impact of the Write-Off. The impact of the additional sanctions was treated as a modification to existing contracts with customers in Russia in accordance with ASC Topic 606, Revenue from Contracts with Customers. The aggregate impact of the contract modification resulted in the reversal of $5.5 million of revenue in the fourth quarter of fiscal 2024. The remaining net accounts receivable balance associated with customers in Russia as of June 30, 2024, is not material. The Company also now classifies cash balances that are both held in Russia and in excess of what is estimated to be required to wind down operations in Russia in fiscal 2025 as restricted cash due to current restrictions impacting the Company’s ability to transfer funds from bank accounts located in Russia to other countries. As of June 30, 2024, the Company's restricted cash held in Russia was $11.5 million, which is included within other non-current assets on the Company's consolidated balance sheets.

Restructuring Charge

The Company implemented a workforce reduction of approximately 5% in the first quarter of fiscal 2025 as it continues to seek additional opportunities to streamline expenses and increase efficiencies. As a result, the Company expects to record restructuring expenses consisting primarily of severance expenses, one-time benefits and other contract termination costs during fiscal 2025. The Company is still assessing the full impact of these restructuring activities and currently estimates that the total restructuring expenses for fiscal 2025 for the recent workforce reductions will be between $7.0 million and $9.0 million. The Company expects the majority of these expenses to occur in the first quarter of fiscal 2025.

Share Repurchase Updates

AspenTech repurchased 277,913 shares for $56.9 million under its Fiscal 2024 Share Repurchase Authorization in the fourth quarter of fiscal 2024. As of June 30, 2024, the Company had completed its Fiscal 2024 Share Repurchase Authorization, repurchasing 1,520,993 shares in total in fiscal 2024. AspenTech's Board of Directors has approved a new share repurchase authorization, pursuant to which an aggregate amount of up to $100.0 million of its outstanding shares of common stock may be repurchased by the Company in fiscal 2025.

Credit Agreement Renewal

On June 27, 2024 (the "Closing Date"), AspenTech entered into a Second Amended and Restated Credit Agreement (the “Credit Agreement”), with the lenders and issuing banks party thereto from time to time and JPMorgan Chase Bank, N.A., as administrative agent. The Credit Agreement provides for a new revolving credit facility (the “Credit Facility”) with initial commitments in an aggregate principal amount of $200.0 million, which includes a $40.0 million sub-facility for letters of credit, to replace the Company’s previous revolving credit facility. The proceeds of the Credit Facility may be used for working capital and general corporate purposes. The Credit Facility is scheduled to terminate on June 27, 2029.

On the Closing Date, in connection with the entry into the Credit Agreement as described above, the Company terminated the then-existing Amended and Restated Credit Agreement, dated as of December 23, 2019 (as amended, restated, amended and restated, supplemented or otherwise modified prior to the Closing Date) with the lenders party thereto, the initial issuing banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent.

Fiscal Year 2025 Business Outlook

Based on information as of today, August 6, 2024, AspenTech is issuing the following guidance for fiscal 2025. Please note that the Company’s fiscal 2025 ACV1 guidance is based on an ACV1 balance of $932.9 million as of June 30, 2024, which reflects the impact of the Write-Off.

  • ACV1 growth of ~9.0% year-over-year
  • GAAP operating cash flow of ~$357 million
  • Free cash flow2 of ~$340 million
  • Total bookings of ~$1.17 billion
  • Total revenue of ~$1.19 billion
  • GAAP total expense of ~$1.21 billion
  • Non-GAAP total expense of ~$675 million
  • GAAP operating loss of ~$24 million
  • Non-GAAP operating income of ~$514 million
  • GAAP net income of ~$52 million
  • Non-GAAP net income of ~$478 million
  • GAAP net income per share of ~$0.81
  • Non-GAAP net income per share of ~$7.47

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 6, 2024, 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 registration link. To avoid delays, participants are encouraged 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/.

AspenTech has provided an earnings presentation for its fourth quarter of fiscal 2024. AspenTech asks that shareholders refer to this presentation in conjunction with the conference call, which can be found at ir.aspentech.com.

Footnotes

  1. AspenTech defines ACV as the estimate of the annual value of portfolio of term license and software maintenance and support ("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 the Company's business.
  2. Free cash flow is a non-GAAP metric that 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. Effective January 1, 2023, AspenTech no longer excludes acquisition and integration planning related payments from its computation of free cash flow. Free cash flow for all prior periods presented has been revised to the current period computation.

About AspenTech

Aspen Technology, Inc. (NASDAQ: AZPN) is a global software leader helping industries at the forefront of the world’s dual challenge meet the increasing demand for resources from a rapidly growing population in a profitable and sustainable manner. AspenTech solutions address complex environments where it is critical to optimize the asset design, operation and maintenance lifecycle. Through AspenTech's unique combination of deep domain expertise and innovation, customers in asset-intensive industries can run their assets safer, greener, longer and faster to improve their operational excellence. To learn more, visit AspenTech.com.

Forward-Looking Statements

Statements in this press release that are not strictly historical may be “forward-looking” statements for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties, and AspenTech undertakes no obligation to update any such statements to reflect later developments. These forward-looking statements include, but are not limited to, AspenTech's guidance for fiscal 2025, expectations regarding cash collections, and completion of the new share repurchase authorization announced for fiscal 2025. In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “strategy,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing,” “opportunity” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. These risks and uncertainties include, without limitation: the failure to realize the anticipated benefits of the transaction with Emerson; risks resulting from the Company's status as a controlled company; the suspension of commercial activities in Russia and the scope, duration and ultimate impact of the Israeli-Hamas conflict; as well as economic and currency conditions, market demand (including adverse changes in the process or other capital-intensive industries, such as materially reduced spending budgets due to oil and gas price declines and volatility), pricing, protection of intellectual property, cybersecurity, natural disasters, tariffs, sanctions, competitive and technological factors, and inflation; and others, as set forth in AspenTech’s most recent Annual Report on Form 10-K and subsequent reports filed with the U.S. Securities and Exchange Commission (the “SEC”). The outlook contained herein represents AspenTech’s expectation for its consolidated results, other than as noted herein.

© 2024 Aspen Technology, Inc. AspenTech, aspenONE, asset optimization and the Aspen leaf logo are trademarks of Aspen Technology, Inc. All rights reserved. All other trademarks not owned by AspenTech are property of their respective owners.

Use of Non-GAAP Financial Measures

This press release contains “non-GAAP financial measures” under the rules of the SEC. 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 a number of AspenTech’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 AspenTech’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 AspenTech’s business performance.

ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES

CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended

June 30,

 

Year Ended

June 30,

 

2024

 

2023

 

2024

 

2023

 

 

 

 

 

 

 

 

 

(Dollars and Shares in Thousands, Except per Share Data)

Revenue:

 

 

 

 

 

 

 

License and solutions

$

230,996

 

 

$

222,825

 

 

$

701,574

 

 

$

669,185

 

Maintenance

 

89,171

 

 

 

82,634

 

 

 

345,451

 

 

 

316,911

 

Services and other

 

22,738

 

 

 

15,184

 

 

 

80,457

 

 

 

58,082

 

Total revenue

 

342,905

 

 

 

320,643

 

 

 

1,127,482

 

 

 

1,044,178

 

Cost of revenue:

 

 

 

 

 

 

 

License and solutions

 

65,838

 

 

 

70,238

 

 

 

270,291

 

 

 

279,564

 

Maintenance

 

11,003

 

 

 

8,846

 

 

 

40,195

 

 

 

36,650

 

Services and other

 

19,800

 

 

 

16,478

 

 

 

72,090

 

 

 

57,375

 

Total cost of revenue

 

96,641

 

 

 

95,562

 

 

 

382,576

 

 

 

373,589

 

Gross profit

 

246,264

 

 

 

225,081

 

 

 

744,906

 

 

 

670,589

 

Operating expenses:

 

 

 

 

 

 

 

Selling and marketing

 

124,846

 

 

 

126,396

 

 

 

490,767

 

 

 

482,656

 

Research and development

 

49,959

 

 

 

55,606

 

 

 

206,114

 

 

 

209,347

 

General and administrative

 

32,250

 

 

 

37,094

 

 

 

137,565

 

 

 

161,651

 

Total operating expenses

 

207,055

 

 

 

219,096

 

 

 

834,446

 

 

 

853,654

 

Income (loss) from operations

 

39,209

 

 

 

5,985

 

 

 

(89,540

)

 

 

(183,065

)

Other (expense) income, net

 

(461

)

 

 

3,850

 

 

 

(8,478

)

 

 

(29,418

)

Interest income, net

 

14,127

 

 

 

12,807

 

 

 

54,183

 

 

 

31,917

 

Income (loss) before provision (benefit) for income taxes

 

52,875

 

 

 

22,642

 

 

 

(43,835

)

 

 

(180,566

)

Provision (benefit) for income taxes

 

8,177

 

 

 

(4,674

)

 

 

(34,064

)

 

 

(72,806

)

Net income (loss)

$

44,698

 

 

$

27,316

 

 

$

(9,771

)

 

$

(107,760

)

Net income (loss) per common share:

 

 

 

 

 

 

 

Basic

$

0.71

 

 

$

0.42

 

 

$

(0.15

)

 

$

(1.67

)

Diluted

$

0.70

 

 

$

0.42

 

 

$

(0.15

)

 

$

(1.67

)

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

63,308

 

 

 

64,614

 

 

 

63,711

 

 

 

64,621

 

Diluted

 

63,619

 

 

 

64,943

 

 

 

63,711

 

 

 

64,621

 

ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES

CONSOLIDATED AND COMBINED BALANCE SHEETS

(Unaudited)

 

 

 

 

 

June 30,

 

2024

 

2023

 

 

(Dollars in Thousands, Except Share Data)

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

236,970

 

 

$

241,209

 

Accounts receivable, net

 

115,533

 

 

 

122,789

 

Current contract assets, net

 

409,177

 

 

 

367,539

 

Prepaid expenses and other current assets

 

27,441

 

 

 

27,728

 

Receivables from related parties

 

78,483

 

 

 

62,375

 

Prepaid income taxes

 

8,462

 

 

 

11,424

 

Total current assets

 

876,066

 

 

 

833,064

 

Property, equipment and leasehold improvements, net

 

17,389

 

 

 

18,670

 

Goodwill

 

8,328,201

 

 

 

8,330,811

 

Intangible assets, net

 

4,184,750

 

 

 

4,659,657

 

Non-current contract assets, net

 

515,106

 

 

 

536,104

 

Contract costs

 

24,903

 

 

 

15,992

 

Operating lease right-of-use assets

 

96,034

 

 

 

67,642

 

Deferred income tax assets

 

6,989

 

 

 

10,638

 

Other non-current assets

 

22,269

 

 

 

13,474

 

Total assets

$

14,071,707

 

 

$

14,486,052

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

8,099

 

 

$

20,299

 

Accrued expenses and other current liabilities

 

100,167

 

 

 

99,526

 

Due to related parties

 

47,449

 

 

 

22,019

 

Current operating lease liabilities

 

13,125

 

 

 

12,928

 

Income taxes payable

 

44,249

 

 

 

46,205

 

Current contract liabilities

 

124,312

 

 

 

151,450

 

Total current liabilities

 

337,401

 

 

 

352,427

 

Non-current contract liabilities

 

27,512

 

 

 

30,103

 

Deferred income tax liabilities

 

790,687

 

 

 

957,911

 

Non-current operating lease liabilities

 

84,875

 

 

 

55,442

 

Other non-current liabilities

 

18,377

 

 

 

19,240

 

Stockholders’ equity:

 

 

 

Common stock, $0.0001 par value—Authorized—600,000,000 shares

Issued— 65,367,159 and 64,952,868 shares

Outstanding— 63,251,495 and 64,465,242 shares

 

7

 

 

 

6

 

Additional paid-in capital

 

13,277,851

 

 

 

13,194,028

 

Accumulated deficit

 

(51,162

)

 

 

(41,391

)

Accumulated other comprehensive (loss) income

 

(7,261

)

 

 

2,436

 

Treasury stock, at cost- 2,115,664 and 487,626 shares of common stock

 

(406,580

)

 

 

(84,150

)

Total stockholders’ equity

 

12,812,855

 

 

 

13,070,929

 

Total liabilities and stockholders’ equity

$

14,071,707

 

 

$

14,486,052

 

ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES

CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS

(Unaudited)

 

Three Months Ended

June 30,

 

Year Ended

June 30,

 

2024

 

2023

 

2024

 

2023

 

 

 

 

 

 

 

 

 

(Dollars and Shares in Thousands, Except per Share Data)

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income (loss)

$

44,698

 

 

$

27,316

 

 

$

(9,771

)

 

$

(107,760

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

123,215

 

 

 

123,153

 

 

 

493,009

 

 

 

491,419

 

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

 

4,761

 

 

 

3,406

 

 

 

16,073

 

 

 

13,869

 

Net foreign currency losses

 

904

 

 

 

368

 

 

 

9,142

 

 

 

4,079

 

Net realized loss on settlement of foreign currency forward contracts

 

 

 

 

36,997

 

 

 

 

 

 

26,176

 

Stock-based compensation

 

11,494

 

 

 

20,830

 

 

 

57,311

 

 

 

84,850

 

Deferred income taxes

 

(28,872

)

 

 

(36,880

)

 

 

(167,342

)

 

 

(192,926

)

Provision for uncollectible receivables

 

(3,031

)

 

 

3,883

 

 

 

6,238

 

 

 

7,827

 

Other non-cash operating activities

 

32

 

 

 

(1,336

)

 

 

837

 

 

 

(228

)

Changes in assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

27,841

 

 

 

(14,478

)

 

 

4,918

 

 

 

(25,538

)

Contract assets

 

(19,442

)

 

 

(10,986

)

 

 

(22,344

)

 

 

(21,658

)

Contract costs

 

(3,982

)

 

 

(4,808

)

 

 

(9,186

)

 

 

(10,165

)

Lease liabilities

 

(4,214

)

 

 

(3,352

)

 

 

(15,495

)

 

 

(13,655

)

Prepaid expenses, prepaid income taxes, and other assets

 

(22,865

)

 

 

(20,016

)

 

 

(40,309

)

 

 

7,625

 

Liability from foreign currency forward contract

 

 

 

 

(40,454

)

 

 

 

 

 

 

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

 

40,504

 

 

 

30,353

 

 

 

46,476

 

 

 

18,315

 

Contract liabilities

 

(16,107

)

 

 

(437

)

 

 

(29,671

)

 

 

16,979

 

Net cash provided by operating activities

 

154,936

 

 

 

113,559

 

 

 

339,886

 

 

 

299,209

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Purchase of property, equipment and leasehold improvements

 

(1,853

)

 

 

(2,062

)

 

 

(4,432

)

 

 

(6,577

)

Net payments for settlement of foreign currency forward contracts

 

 

 

 

(36,997

)

 

 

 

 

 

(26,176

)

Payments for business acquisitions, net of cash acquired

 

 

 

 

 

 

 

(8,273

)

 

 

(72,498

)

Payments for equity method investments

 

(46

)

 

 

(24

)

 

 

(318

)

 

 

(700

)

Payments for capitalized computer software development costs

 

(52

)

 

 

(19

)

 

 

(183

)

 

 

(366

)

Payments for asset acquisitions

 

 

 

 

 

 

 

(12,500

)

 

 

 

Purchase of other assets

 

 

 

 

 

 

 

 

 

 

(1,000

)

Net cash used in investing activities

 

(1,951

)

 

 

(39,102

)

 

 

(25,706

)

 

 

(107,317

)

Cash flows from financing activities:

 

 

 

 

 

 

 

Issuance of shares of common stock

 

10,593

 

 

 

5,194

 

 

 

25,807

 

 

 

36,736

 

Repurchases of common stock

 

(56,934

)

 

 

(100,000

)

 

 

(300,000

)

 

 

(100,000

)

Payment of tax withholding obligations related to restricted stock

 

(3,370

)

 

 

(6,430

)

 

 

(20,380

)

 

 

(20,836

)

Deferred business acquisition payments

 

 

 

 

 

 

 

 

 

 

(1,363

)

Repayments of amounts borrowed under term loan

 

 

 

 

 

 

 

 

 

 

(276,000

)

Net transfers (to) from Parent Company

 

(30,550

)

 

 

(14,184

)

 

 

2,008

 

 

 

(19,933

)

Payments of debt issuance costs

 

(1,708

)

 

 

 

 

 

(1,708

)

 

 

(2,375

)

Net cash used in financing activities

 

(81,969

)

 

 

(115,420

)

 

 

(294,273

)

 

 

(383,771

)

Effect of exchange rate changes on cash and cash equivalents and

 

(140

)

 

 

(4,564

)

 

 

(12,648

)

 

 

(16,637

)

Increase (decrease) in cash and cash equivalents

 

70,876

 

 

 

(45,527

)

 

 

7,259

 

 

 

(208,516

)

Cash, cash equivalents and restricted cash, beginning of period

 

177,592

 

 

 

286,736

 

 

 

241,209

 

 

 

449,725

 

Cash, cash equivalents and restricted cash, end of period

$

248,468

 

 

$

241,209

 

 

$

248,468

 

 

$

241,209

 

 

 

 

 

 

 

 

 

Reconciliation of cash, cash equivalents and restricted cash:

 

 

 

 

 

 

 

Cash and cash equivalents

$

236,970

 

 

$

241,209

 

 

$

236,970

 

 

$

241,209

 

Restricted cash in other non-current assets

 

11,498

 

 

 

 

 

 

11,498

 

 

 

 

Total cash, cash equivalents and restricted cash

$

248,468

 

 

$

241,209

 

 

$

248,468

 

 

$

241,209

 

ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES

Reconciliation of GAAP to Non-GAAP Results of Operations and Cash Flows

(Unaudited)

 

Three Months Ended

June 30,

 

Year Ended

June 30,

 

2024

 

2023

 

2024

 

2023

 

 

 

 

 

 

 

 

 

(Dollars and Shares in Thousands, Except per Share Data)

Total expenses

 

 

 

 

 

 

 

GAAP total expenses (a)

$

303,696

 

 

$

314,658

 

 

$

1,217,022

 

 

$

1,227,243

 

Less:

 

 

 

 

 

 

 

Stock-based compensation (b)

 

(11,494

)

 

 

(20,830

)

 

 

(57,311

)

 

 

(84,850

)

Amortization of intangibles (c)

 

(121,589

)

 

 

(121,526

)

 

 

(486,490

)

 

 

(485,486

)

Acquisition and integration planning related fees

 

(1,131

)

 

 

(526

)

 

 

(1,947

)

 

 

(7,556

)

 

 

 

 

 

 

 

 

Non-GAAP total expenses

$

169,482

 

 

$

171,776

 

 

$

671,274

 

 

$

649,351

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

 

 

 

 

 

 

GAAP income (loss) from operations

$

39,209

 

 

$

5,985

 

 

$

(89,540

)

 

$

(183,065

)

Plus:

 

 

 

 

 

 

 

Stock-based compensation (b)

 

11,494

 

 

 

20,830

 

 

 

57,311

 

 

 

84,850

 

Amortization of intangibles (c)

 

121,589

 

 

 

121,526

 

 

 

486,490

 

 

 

485,486

 

Acquisition and integration planning related fees

 

1,131

 

 

 

526

 

 

 

1,947

 

 

 

7,556

 

 

 

 

 

 

 

 

 

Non-GAAP income from operations

$

173,423

 

 

$

148,867

 

 

$

456,208

 

 

$

394,827

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 

 

 

 

 

 

GAAP net income (loss)

$

44,698

 

 

$

27,316

 

 

$

(9,771

)

 

$

(107,760

)

Plus:

 

 

 

 

 

 

 

Stock-based compensation (b)

 

11,494

 

 

 

20,830

 

 

 

57,311

 

 

 

84,850

 

Amortization of intangibles (c)

 

121,589

 

 

 

121,526

 

 

 

486,490

 

 

 

485,486

 

Acquisition and integration planning related fees

 

1,131

 

 

 

526

 

 

 

1,947

 

 

 

7,556

 

Realized loss on foreign currency forward contract

 

 

 

 

36,997

 

 

 

 

 

 

26,176

 

Less:

 

 

 

 

 

 

 

Income tax effect on Non-GAAP items (d)

 

(28,243

)

 

 

(28,565

)

 

 

(113,923

)

 

 

(124,231

)

Unrealized gain on foreign currency forward contract

 

 

 

 

(40,454

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP net income

$

150,669

 

 

$

138,176

 

 

$

422,054

 

 

$

372,077

 

 

 

 

 

 

 

 

 

Diluted income (loss) per share

 

 

 

 

 

 

 

GAAP diluted income (loss) per share

$

0.70

 

 

$

0.42

 

 

$

(0.15

)

 

$

(1.67

)

Plus:

 

 

 

 

 

 

 

Stock-based compensation (b)

 

0.18

 

 

 

0.32

 

 

 

0.89

 

 

 

1.30

 

Amortization of intangibles (c)

 

1.91

 

 

 

1.87

 

 

 

7.59

 

 

 

7.46

 

Acquisition and integration planning related fees

 

0.02

 

 

 

0.01

 

 

 

0.03

 

 

 

0.12

 

Realized loss on foreign currency forward contract

 

 

 

 

0.57

 

 

 

 

 

 

0.40

 

Impact of diluted shares

 

 

 

 

 

 

 

0.01

 

 

 

0.02

 

Less:

 

 

 

 

 

 

 

Income tax effect on Non-GAAP items (d)

 

(0.44

)

 

 

(0.44

)

 

 

(1.78

)

 

 

(1.91

)

Unrealized gain on foreign currency forward contract

 

 

 

 

(0.62

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP diluted income per share

$

2.37

 

 

$

2.13

 

 

$

6.59

 

 

$

5.72

 

 

 

 

 

 

 

 

 

Shares used in computing diluted income per share

 

63,619

 

 

 

64,943

 

 

 

64,060

 

 

 

65,094

 

 

 

 

 

 

 

 

 

 

Three Months Ended

June 30,

 

Year Ended

June 30,

 

2024

 

2023

 

2024

 

2023

 

 

 

 

 

 

 

 

 

(Dollars in Thousands)

Free Cash Flow (2)

 

 

 

 

 

 

 

Net cash provided by operating activities (GAAP)

$

154,936

 

 

$

113,559

 

 

$

339,886

 

 

$

299,209

 

Purchases of property, equipment and leasehold improvements

 

(1,853

)

 

 

(2,062

)

 

 

(4,432

)

 

 

(6,577

)

Payments for capitalized computer software development costs

 

(52

)

 

 

(19

)

 

 

(183

)

 

 

(366

)

Free cash flow (2) (non-GAAP)

$

153,031

 

 

$

111,478

 

 

$

335,271

 

 

$

292,266

 

 

 

 

 

 

 

 

 

(a) GAAP total expenses

 

 

 

 

 

 

 

 

Three Months Ended

June 30,

 

Year Ended

June 30,

 

2024

 

2023

 

2024

 

2023

 

 

 

 

 

 

 

 

 

(Dollars in Thousands)

Total costs of revenue

$

96,641

 

 

$

95,562

 

 

$

382,576

 

 

$

373,589

 

Total operating expenses

 

207,055

 

 

 

219,096

 

 

 

834,446

 

 

 

853,654

 

GAAP total expenses

$

303,696

 

 

$

314,658

 

 

$

1,217,022

 

 

$

1,227,243

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Three Months Ended

June 30,

 

Year Ended

June 30,

 

2024

 

2023

 

2024

 

2023

 

 

 

 

 

 

 

 

 

(Dollars in Thousands)

Cost of license and solutions

$

312

 

 

$

813

 

 

$

2,116

 

 

$

3,565

 

Cost of maintenance

 

642

 

 

 

431

 

 

 

2,526

 

 

 

1,893

 

Cost of services and other

 

856

 

 

 

538

 

 

 

2,445

 

 

 

1,995

 

Selling and marketing

 

2,256

 

 

 

5,316

 

 

 

10,368

 

 

 

16,202

 

Research and development

 

2,574

 

 

 

7,959

 

 

 

14,189

 

 

 

21,790

 

General and administrative

 

4,854

 

 

 

5,773

 

 

 

25,667

 

 

 

39,405

 

Total stock-based compensation

$

11,494

 

 

$

20,830

 

 

$

57,311

 

 

$

84,850

 

 

 

 

 

 

 

 

 

(c) Amortization of intangible assets was as follows:

 

 

 

 

 

 

 

 

Three Months Ended

June 30,

 

Year Ended

June 30,

 

2024

 

2023

 

2024

 

2023

 

 

 

 

 

 

 

 

 

(Dollars in Thousands)

Cost of license and solutions

$

48,202

 

 

$

48,035

 

 

$

192,586

 

 

$

191,412

 

Selling and marketing

 

73,387

 

 

 

73,491

 

 

 

293,904

 

 

 

294,074

 

Total amortization of intangible assets

$

121,589

 

 

$

121,526

 

 

$

486,490

 

 

$

485,486

 

 

 

 

 

 

 

 

 

(d) The income tax effect on non-GAAP items is calculated utilizing the Company's combined US federal and state statutory tax rate as follows:

 

 

 

 

 

 

 

 

 

Three Months Ended

June 30,

 

Year Ended

June 30,

 

Nine Months

Ended June 30,

 

2024

 

2023

 

2024

 

2023

U.S. statutory rate

 

21.79

%

 

 

21.79

%

 

 

21.79

%

 

 

21.79

%

ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES

Reconciliation of Forward-Looking Guidance

(Unaudited)

 

 

 

 

 

Twelve Months Ended June 30, 2025 (3)

 

(Dollars in Thousands, Except Share Data)

Guidance - Total expenses

 

 

 

GAAP expectation - total expenses

$

1,213,000

 

 

 

Less:

 

 

 

Stock-based compensation

 

(56,000

)

 

 

Amortization of intangibles

 

(474,000

)

 

 

Restructuring (4)

 

(8,000

)

 

 

 

 

 

 

Non-GAAP expectation - total expenses

$

675,000

 

 

 

 

 

 

 

Guidance - Income from operations

 

 

 

GAAP expectation - loss from operations

$

(24,000

)

 

 

Plus:

 

 

 

Stock-based compensation

 

56,000

 

 

 

Amortization of intangibles

 

474,000

 

 

 

Restructuring (4)

 

8,000

 

 

 

 

 

 

 

Non-GAAP expectation - income from operations

$

514,000

 

 

 

 

 

 

 

Guidance - Net income and diluted income per share

 

 

 

GAAP expectation - net income and diluted income per share

$

52,000

 

 

$

0.81

Plus:

 

 

 

Stock-based compensation

 

56,000

 

 

 

Amortization of intangibles

 

474,000

 

 

 

Restructuring (4)

 

8,000

 

 

 

Less:

 

 

 

Income tax effect on Non-GAAP items (5)

 

(112,000

)

 

 

 

 

 

 

Non-GAAP expectation - net income and diluted income per share

$

478,000

 

 

$

7.47

 

 

 

 

Shares used in computing guidance for diluted income per share

 

64,000

 

 

 

 

 

 

 

Guidance - Free Cash Flow (2)

 

 

 

GAAP expectation - Net cash provided by operating activities

$

357,000

 

 

 

Less:

 

 

 

Purchases of property, equipment and leasehold improvements

 

(17,000

)

 

 

 

 

 

 

Free cash flow expectation (non-GAAP)

$

340,000

 

 

 

 

 

 

(3) Rounded amounts used, except per share data.

(4) The Company uses the midpoint of its estimated fiscal 2025 total restructuring expense range to reconcile its fiscal 2025 guidance.

(5) The income tax effect on non-GAAP items for the twelve months ended June 30, 2025 is calculated utilizing the Company’s statutory tax rate of 21.79 percent.

 

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