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Aspen Technology (AZPN) Q1 Earnings & Revenues Beat Estimates

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Aspen Technology (AZPN - Free Report) reported first-quarter fiscal 2023 non-GAAP earnings of $2.20 per share, beating the Zacks Consensus Estimate of $1.23. The company reported non-GAAP earnings of 31 cents per share in the year-ago quarter.

Revenues of $250.8 million surpassed the Zacks Consensus Estimate by 10.3%. The company reported revenues of $77 million in the year-ago quarter. The top-line performance was driven by the acquisition of Emerson’s business units. The integration of Emerson's OSI and GSS businesses with Aspen will aid the the company to move toward its token licensing model.

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

The company also announced that it is migrating its dealer grid management (DGM) product line from a perpetual license to a term contract structure, which is expected to begin in the latter half of the year. This will allow the company to cross-sell DGM products in the heritage AspenTech market.

The company also plans to acquire Micromine to capitalize on the metals and mining market by the second quarter.

Following the announcement, shares of the company are up 2.9% in the pre-market trading on Oct 27, 2022. In the past year, shares of the company have returned 60.3% against the industry’s decline of 61.4%.

Zacks Investment Research
Image Source: Zacks Investment Research

Quarter in Detail

License revenues (63.9% of revenues) were up 263% year over year to $160.2 million.

Maintenance revenues (31.3%) rose 220% year over year to $78.4 million.

Services and other revenues (4.8%) rose 47% from the year-ago quarter’s figure to $12.2 million.

As of Sep 30, 2022, 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 $682.3 million, up 8.3% year over year and 1.2% quarter over quarter.

Margins

Gross profit increased to $159.7 million from the year-ago quarter’s figure of $33.5 million. As a percentage of total revenues, the figure increased to 63.7% from 43.5% reported in the prior-year quarter.

Total operating expenses increased to $210.8 million from the year-ago quarter’s figure of $47.4 million due to higher selling, marketing and research and development costs.

Non-GAAP operating income totaled $92.5 million compared with $15.3 million reported in the prior-year quarter.

Balance Sheet & Cash Flow

As of Sep 30, 2022, cash and cash equivalents were $382.5 million compared with $449.7 million as of Jun 30, 2022. The company’s total borrowings stood at $270 million as of Sep 30, 2022.

The company generated $5.1 million in cash from operations compared with $0.3 million of cash used from operations in the previous quarter. Non-GAAP free cash flow was $10.7 million in the fiscal first quarter.

Fiscal 2023 View

For fiscal 2023, Aspen expects revenues in the range of $1.14-$1.20 billion. The Zacks Consensus Estimate for revenues is pegged at $1.17 billion.

Management projects Annual Contract Value (ACV) growth of 10.5%-13.5% year over year.

Total bookings are projected in the range of $1.07-$1.17 billion.

Non-GAAP net income is anticipated to be $6.76-$6.91 per share. The consensus mark for earnings is pegged at $6.77.

Management projects non-GAAP operating income in the range of $503-$555 million. Non-GAAP total expenses are projected to be between $637 million and $647 million.

The free cash flow is projected in the range of $347-$362 million.

Zacks Rank & Other Stocks to Consider

Currently, Aspen sports a Zacks Rank #1 (Strong Buy).

Some other top-ranked stocks from the broader technology space are InterDigital (IDCC - Free Report) , Pure Storage (PSTG - Free Report) and Blackbaud (BLKB - Free Report) . Pure Storage, InterDigital and Blackbaud currently flaunt a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks.

The Zacks Consensus Estimate for InterDigital’s 2022 earnings is pegged at $2.45 per share, up 2.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 25%.

InterDigital’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 81.9%. Shares of IDCC have decreased 25.1% in the past year.

The Zacks Consensus Estimate for PSTG 2022 earnings is pegged at $1.18 per share, rising 24.2% in the past 60 days. The long-term earnings growth rate is anticipated to be 35.5%.

Pure Storage’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 171.8%. Shares of PSTG have increased 10.8% in the past year.

The Zacks Consensus Estimate for Blackbaud’s fiscal 2023 earnings is pegged at $2.55 per share, unchanged in the past 60 days. The long-term earnings growth rate is anticipated to be 3%.

Blackbaud’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, the average being 8.6%. Shares of BLKB have decreased 24.6% in the past year

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