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Aspen (AZPN) Beats Earnings and Revenue Estimates in Q2

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Aspen Technology (AZPN - Free Report) reported second-quarter fiscal 2021 non-GAAP earnings of $2.04 per share that surpassed the Zacks Consensus Estimate by 64.5%. The company reported non-GAAP earnings of 68 cents in the year-ago quarter.

Revenues of $233.7 million beat the Zacks Consensus Estimate by 26.9%. The company reported revenues of $126.01 million in the year-ago quarter.

Increases in total bookings, as economies reopened, aided year-over-year growth. In the quarter under review, the company signed one of its biggest renewal contracts worth $75 million with one of the largest global oil companies. 

Total bookings were $274.4 million, up 144% year over year, driven by higher renewal activity.

Aspen Technology, Inc. Price, Consensus and EPS Surprise

 

Aspen Technology, Inc. Price, Consensus and EPS Surprise

Aspen Technology, Inc. price-consensus-eps-surprise-chart | Aspen Technology, Inc. Quote

 

Quarter in Detail

License revenues (77.1% of revenues) skyrocketed 148.7% year over year to $180.2 million.

Maintenance revenues (20%) increased 5.1% year over year to $46.8 million.

Services and other revenues (2.9%) declined 25.5% from the year-ago quarter’s figure to $6.7 million.

As of Dec 31, 2020, the annual spend (which Aspen Technology defines as the annualized value of all term license and maintenance contracts at the end of the quarter) amounted to $604 million, up 7% year over year and 1.3% quarter over quarter.

Margins

Gross profit increased 98.6% year over year to $219.4 million. As a percentage of total revenues, the figure expanded 620 basis points (bps) on a year-over-year basis to 93.9%.

Total operating expenses climbed 3.6% from the year-ago quarter’s figure to $70 million due to increase in general & administrative expenses.

Non-GAAP operating income of $162.2 million compared with $52.1 million reported in the prior-year quarter. Non-GAAP operating margin was 69.4% compared with 41.4% operating margin reported in the year-ago quarter.

Balance Sheet & Cash Flow

As of Dec 31, 2020, cash and cash equivalents were $217.5 million compared with $317.5 million as of Sep 30, 2020.

The company’s total borrowings, net of debt issuance costs, stood at $300.8 million. The company also repaid $119.2 million on the outstanding balance on its revolving credit facility in the quarter under review.

The company generated $37.8 million cash from operations during the quarter under review compared with $36.5 million in the previous quarter. Free cash flow was $38 million for the second quarter of fiscal 2021.

The company did not repurchase any shares in first half of fiscal 2021. However, the company intends to buy back $200 million worth of stock in the second half of fiscal 2021.

Encouraging Fiscal 2021 View

For fiscal 2021, Aspen Technology expects revenues in the range of $731-$760 million. The Zacks Consensus Estimate for revenues is pegged at $729.04 million.

Further, annual spend growth rate for fiscal 2021 is expected to be between 6% and 8%, while total bookings are expected in the range of $805-$850 million.

Non-GAAP net income is anticipated in the range of $5.29-$5.58 per share. The consensus mark for earnings is pegged at $5.04.

Management projects non-GAAP operating income in the range of $418-$442 million. Free cash flow is anticipated between $265 million and $275 million.

Zacks Rank & Stocks to Consider

Currently, Aspen Technology carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are Qorvo (QRVO - Free Report) , Synaptics Incorporated (SYNA - Free Report) and Microchip (MCHP - Free Report) . All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Qorvo is set to report its quarterly results on Feb 3, while Synaptics and Microchip are scheduled to report their quarterly results on Feb 4.

Long-term earnings growth rate of Qorvo, Synaptics and Microchip is pegged at 15.8%, 10% and 14.9%, respectively.

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