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Aspen's (AZPN) Q2 Earnings & Revenues Miss Estimates, Fall Y/Y
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Aspen Technology (AZPN - Free Report) reported second-quarter fiscal 2022 non-GAAP earnings of $1.20 per share, lagging the Zacks Consensus Estimate by 16.1%. The company reported non-GAAP earnings of $2.04 per share in the year-ago quarter.
Revenues of $171.4 million missed the Zacks Consensus Estimate by 8.9%. The company reported revenues of $233.7 million in the year-ago quarter.
The company also announced that it was on track to complete the Emerson acquisition in fourth-quarter fiscal 2022.
In October 2021, Aspen Technology and Emerson inked an agreement. Per the terms, Aspen will be integrated with Emerson’s OSI Inc and the Geological Simulation Software business to form a new company.
In the quarter under review, total bookings (reported under topic 606) were $182 million, down 34% year over year. The downtick was due to strong bookings (including the company’s largest-ever renewal) witnessed in the previous quarter.
In the past year, shares of Aspen Technology have returned 7.5% compared with the industry’s rally of 17.3%.
Aspen Technology, Inc. Price, Consensus and EPS Surprise
License revenues (67.8% of revenues) were down 35.6% year over year to $116.1 million.
Maintenance revenues (28.2%) rose 3.3% year over year to $48.4 million.
Services and other revenues (4%) inched up 1.9% from the year-ago quarter’s figure to $6.9 million.
As of Dec 31, 2021, 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 $640 million, up 6% year over year and 1.7% quarter over quarter.
Margins
Gross profit declined 28.7% year over year to $156.5 million. As a percentage of total revenues, the figure contracted 260 basis points (bps) on a year-over-year basis to 91.3%.
Total operating expenses increased 25.6% from the year-ago quarter’s figure to $88 million due to higher spending related to buyout and integration planning expenses related to the pending Emerson acquisition.
Non-GAAP operating income totaled $92.2 million compared with $162.2 million reported in the prior-year quarter. Non-GAAP operating margin was 53.8% compared with 69.4% operating margin reported in the year-ago quarter.
Balance Sheet & Cash Flow
As of Dec 31, 2021, cash and cash equivalents were $211.4 million compared with $248 million as of Sep 30, 2021. The company’s total borrowings, net of debt issuance costs, stood at $285.2 million as of Dec 31, 2021.
The company generated $41.3 million cash from operations compared with $32.7 million in the previous quarter. Non-GAAP free cash flow was $51.9 million in the fiscal second quarter.
The company repurchased 439,000 shares in the fiscal second quarter for $65 million.
In June 2021, Aspen Technology announced that its board of directors approved a new $300-million share buyback authorization to be executed in fiscal 2022. The new buyback authorization includes an accelerated share repurchase (“ASR”) agreement to repurchase up to $150 million of the company’s common shares in the first quarter of fiscal 2022. The remaining $150 million worth of shares will be repurchased over the next three quarters of fiscal 2022.
Raised Fiscal 2022 View
Driven by strong performance in the first half of the year and improving demand trends witnessed in various business areas, Aspen Technology lifted the outlook for fiscal 2022.
For fiscal 2022, Aspen Technology expects revenues in the range of $737-$754 million compared with the earlier guidance of $702-$737 million. The Zacks Consensus Estimate for revenues is pegged at $723.5 million.
The company now expects annual spend growth rate between 7% and 8%, while total bookings are projected in the range of $814-$840 million. Earlier, the company projected annual spend growth rate between 5% and 7% and total bookings were projected in the range of $766-$819 million.
Non-GAAP net income is anticipated in the range of $5.23-$5.39 per share compared with $4.75-$5.13 per share guided earlier. The consensus mark for earnings is pegged at $5.02.
Management now projects non-GAAP operating income in the range of $397-$409 million. Free cash flow is anticipated between $280 million and $290 million. Earlier, management guided non-GAAP operating income in the range of $361-$391 million. Free cash flow was anticipated between $275 million and $285 million.
Zacks Rank & Stocks to Consider
Currently, Aspen Technology carries a Zacks Rank #3 (Hold).
The Zacks Consensus Estimate for Salesforce’s fiscal 2022 earnings is pegged at $4.68 per share. The long-term earnings growth rate of the company is pegged at 16.8%.
Salesforce’s earnings beat the Zacks Consensus Estimate in all the preceding four quarters, the average surprise being 44.2%. Shares of CRM have decreased 6.8% in the past year.
The Zacks Consensus Estimate for Hewlett Packard’s fiscal 2022 earnings is pegged at $2.03 per share, unchanged in the past 60 days. The long-term earnings growth rate of the company is pegged at 5.8%.
Hewlett Packard’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 14.4%. Shares of HPE have rallied 26.1% in the past year.
The Zacks Consensus Estimate for Cadence 2021 earnings is pegged at $3.25 per share. The long-term earnings growth rate of the company is pegged at 18.2%.
Cadence’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 11%. Shares of CDNS have soared 6.4% in the past year.
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Aspen's (AZPN) Q2 Earnings & Revenues Miss Estimates, Fall Y/Y
Aspen Technology (AZPN - Free Report) reported second-quarter fiscal 2022 non-GAAP earnings of $1.20 per share, lagging the Zacks Consensus Estimate by 16.1%. The company reported non-GAAP earnings of $2.04 per share in the year-ago quarter.
Revenues of $171.4 million missed the Zacks Consensus Estimate by 8.9%. The company reported revenues of $233.7 million in the year-ago quarter.
The company also announced that it was on track to complete the Emerson acquisition in fourth-quarter fiscal 2022.
In October 2021, Aspen Technology and Emerson inked an agreement. Per the terms, Aspen will be integrated with Emerson’s OSI Inc and the Geological Simulation Software business to form a new company.
In the quarter under review, total bookings (reported under topic 606) were $182 million, down 34% year over year. The downtick was due to strong bookings (including the company’s largest-ever renewal) witnessed in the previous quarter.
In the past year, shares of Aspen Technology have returned 7.5% compared with the industry’s rally of 17.3%.
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 (67.8% of revenues) were down 35.6% year over year to $116.1 million.
Maintenance revenues (28.2%) rose 3.3% year over year to $48.4 million.
Services and other revenues (4%) inched up 1.9% from the year-ago quarter’s figure to $6.9 million.
As of Dec 31, 2021, 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 $640 million, up 6% year over year and 1.7% quarter over quarter.
Margins
Gross profit declined 28.7% year over year to $156.5 million. As a percentage of total revenues, the figure contracted 260 basis points (bps) on a year-over-year basis to 91.3%.
Total operating expenses increased 25.6% from the year-ago quarter’s figure to $88 million due to higher spending related to buyout and integration planning expenses related to the pending Emerson acquisition.
Non-GAAP operating income totaled $92.2 million compared with $162.2 million reported in the prior-year quarter. Non-GAAP operating margin was 53.8% compared with 69.4% operating margin reported in the year-ago quarter.
Balance Sheet & Cash Flow
As of Dec 31, 2021, cash and cash equivalents were $211.4 million compared with $248 million as of Sep 30, 2021. The company’s total borrowings, net of debt issuance costs, stood at $285.2 million as of Dec 31, 2021.
The company generated $41.3 million cash from operations compared with $32.7 million in the previous quarter. Non-GAAP free cash flow was $51.9 million in the fiscal second quarter.
The company repurchased 439,000 shares in the fiscal second quarter for $65 million.
In June 2021, Aspen Technology announced that its board of directors approved a new $300-million share buyback authorization to be executed in fiscal 2022. The new buyback authorization includes an accelerated share repurchase (“ASR”) agreement to repurchase up to $150 million of the company’s common shares in the first quarter of fiscal 2022. The remaining $150 million worth of shares will be repurchased over the next three quarters of fiscal 2022.
Raised Fiscal 2022 View
Driven by strong performance in the first half of the year and improving demand trends witnessed in various business areas, Aspen Technology lifted the outlook for fiscal 2022.
For fiscal 2022, Aspen Technology expects revenues in the range of $737-$754 million compared with the earlier guidance of $702-$737 million. The Zacks Consensus Estimate for revenues is pegged at $723.5 million.
The company now expects annual spend growth rate between 7% and 8%, while total bookings are projected in the range of $814-$840 million. Earlier, the company projected annual spend growth rate between 5% and 7% and total bookings were projected in the range of $766-$819 million.
Non-GAAP net income is anticipated in the range of $5.23-$5.39 per share compared with $4.75-$5.13 per share guided earlier. The consensus mark for earnings is pegged at $5.02.
Management now projects non-GAAP operating income in the range of $397-$409 million. Free cash flow is anticipated between $280 million and $290 million. Earlier, management guided non-GAAP operating income in the range of $361-$391 million. Free cash flow was anticipated between $275 million and $285 million.
Zacks Rank & Stocks to Consider
Currently, Aspen Technology carries a Zacks Rank #3 (Hold).
Some other top-ranked stocks from the broader technology sector include Salesforce (CRM - Free Report) , Hewlett Packard (HPE - Free Report) and Cadence Design Systems (CDNS - Free Report) . While Salesforce and Hewlett Packard sport a Zacks Rank #1 (Strong Buy), Cadence carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Salesforce’s fiscal 2022 earnings is pegged at $4.68 per share. The long-term earnings growth rate of the company is pegged at 16.8%.
Salesforce’s earnings beat the Zacks Consensus Estimate in all the preceding four quarters, the average surprise being 44.2%. Shares of CRM have decreased 6.8% in the past year.
The Zacks Consensus Estimate for Hewlett Packard’s fiscal 2022 earnings is pegged at $2.03 per share, unchanged in the past 60 days. The long-term earnings growth rate of the company is pegged at 5.8%.
Hewlett Packard’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 14.4%. Shares of HPE have rallied 26.1% in the past year.
The Zacks Consensus Estimate for Cadence 2021 earnings is pegged at $3.25 per share. The long-term earnings growth rate of the company is pegged at 18.2%.
Cadence’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 11%. Shares of CDNS have soared 6.4% in the past year.