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Aspen (AZPN) Updates on Q1 Results for Selected Financials

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Aspen Technology (AZPN - Free Report) announced preliminary results for selected first-quarter fiscal 2021 financials.

For the quarter ended Sep 30, 2020, Aspen gained from momentum in digitalization and investments in its solutions from capital intensive industries.

The company is banking on solid uptake of its latest solutions, including aspenONE v12 and the Aspen AIoT Hub. Integration of advanced AI capabilities across its product portfolio positions its offerings well to witness incremental adoption.

The delay in filing its Form 10-K with the Securities and Exchange Commission, has postponed the filing of its first-quarter fiscal 2021 quarterly report on Form 10-Q. The company anticipates filing Form 10-Q “within several weeks after filing the 2020 Form 10-K.”

Q1 Business Highlights

Annual spend, which Aspen Technology defines as the annualized value of all term license and maintenance contracts at the end of the quarter, is projected to be $596-$597 million. The mid-point of the range — $596.5 million, indicates an increase of 8.8% on a year-over-year basis and 0.6% sequentially.

The company notes that as of Sep 30, cash and cash equivalents were $317.5 million and total borrowings, net of debt issuance costs, came in at $423.7 million.

Notably, as of Jun 30, 2020, cash and cash equivalents were $287.8 million compared with $192.2 million as of Mar 31, 2020.

Factors to Note

Demand uptick across China and easing of lockdowns globally are likely to have contributed to fiscal first-quarter revenues.

Markedly, during the quarter under review, Aspen Technology’s Mtell asset performance management (“APM”) solutions were selected by engineering and consultancy firm, Wood. This solution will help Wood’s customers to improve efficiency of manufacturing and facility assets.

Also, Heide Refinery selected Aspen Generic Dynamic Optimization Technology (GDOT) software solutions to accelerate digital transformation.

Further, strength in aspenONE MSC Suite and APM suite pipeline are anticipated to have aided fiscal first-quarter performance.

The Zacks Consensus Estimate for revenues stands at $151.35 million, suggesting growth of 12.9% from the year-ago reported figure.
 

For first-quarter fiscal 2021, the Zacks Consensus Estimate for earnings has been revised upward by 1 cent to 93 cents per share over the past 30 days, indicating an improvement of 17.7% from the prior-year quarter.

During fiscal first quarter, Aspen Technology unveiled a new AIoT Hub, a product of the integration of its recent investments in Industry 4.0 functionalities. The new offering facilitates flexible data exchange and integration across the enterprise from sensors to the edge and cloud. This aids enterprises to reduce risks and accelerate time to market for introducing AI to simplify the complexity in operations.

Also, coronavirus crisis triggered demand for refining and select chemicals might have favored the company’s APM solutions in gaining traction. This, in turn, may get reflected in the fiscal first quarter’s revenues.

Nevertheless, increasing expenses on product enhancements amid stiff competition in the APM space from International Business Machines Corporation’s (IBM - Free Report) Maximo, Oracle’s (ORCL - Free Report) Enterprise Asset Management solution and SAP SE’s (SAP - Free Report) Enterprise Asset Management (EAM) suite are likely to have weighed on the fiscal first-quarter performance.

Also, coronavirus crisis-induced supply chain disruptions are likely to have affected contract renewals and dampened revenue growth in the fiscal first quarter. Further, major oil industry downturn and steep drop in oil prices might have negatively impacted the performance in the quarter under review.

Fiscal 2021 View Unchanged

Aspen Technology maintained guidance for fiscal 2021. For fiscal 2021, the company continues to expect revenues to be $704-$754 million (mid-point of $729 million). The Zacks Consensus Estimate for revenues is pegged at $729.2 million.

Non-GAAP net income is anticipated in the range of $4.78-$5.32 per share. The consensus mark for earnings stands at $5.05, in line with the mid-point of management’s guided range.

Management projects non-GAAP operating income in the range of $374-$420 million. Free cash flow is anticipated between $260 million and $270 million.

Annual spend growth is anticipated to be 6-9% on a year-over-year basis. Total bookings are projected to be $770-$850 million.

Zacks Rank

Currently, Aspen Technology carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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