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Aspen Technology (AZPN) Q2 Earnings & Revenues Miss Estimates

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Aspen Technology (AZPN - Free Report) reported second-quarter fiscal 2023 non-GAAP earnings of 35 cents per share, missing the Zacks Consensus Estimate of $1.27. The company reported non-GAAP earnings of 46 cents per share in the year-ago quarter.

The company reported revenues of $242.8 million compared with $81.8 million reported in the year-ago quarter. The top-line performance was driven by the acquisition of Emerson’s business units as well as strong end-market demand. However, revenues missed the Zacks Consensus Estimate by 10.7%.

Following the announcement, shares of the company were down 5.3% in the after-market trading on Jan 25. In the past year, shares of the company have surged 33.2% against the sub-industry’s decline of 44.8%.

Zacks Investment Research
Image Source: Zacks Investment Research

Quarter in Detail

License’s revenues (61.7% of revenues) were up 209% year over year to $149.8 million.

Maintenance’s revenues (32.3% of revenues) rose 199% year over year to $78.6 million.

Revenues from Services and other (6% of revenues) rose 105% from the year-ago quarter’s figure to $14.4 million.

As of Dec 31, 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 other than OSI and SSE) amounted to $697.5 million, up 9% year over year and 2.2% quarter over quarter.

Margins

Gross profit increased to $149.7 million from the year-ago quarter’s figure of $40.2 million. As a percentage of total revenues, the figure reached 61.7% from 49.2% reported in the prior-year quarter.

Total operating expenses amounted to $209.1 million from the year-ago quarter’s figure of $40.5 million due to higher selling, marketing, and research and development costs.

Non-GAAP operating income totaled $86.6 million compared with $22.4 million reported in the prior-year quarter.

Balance Sheet & Cash Flow

As of Dec 31, 2022, cash and cash equivalents were $446.1 million compared with $382.5 million as of Sep 30, 2022. The company’s total borrowings were $264 million as of Dec 31, 2022.

The company generated $49.5 million in cash from operations compared with $5.1 million reported in the previous quarter. Non-GAAP free cash flow was $53.1 million in the fiscal second quarter.

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

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.

Non-GAAP net income is now anticipated to be $6.83-$7.43 per share compared with earlier guided range of $6.76-$6.91 per share. The Zacks Consensus Estimate for earnings is pegged at $6.85 per share.

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

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

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 & Stocks to Consider

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

Some better-ranked stocks in the broader technology space are Arista Networks (ANET - Free Report) , Jabil (JBL - Free Report) and Pure Storage (PSTG - Free Report) . While Jabil sports a Zacks Rank #1 (Strong Buy), Arista and Pure Storage carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Arista Networks’ 2022 earnings is pegged at $4.38 per share, up 1 cent in the past 60 days. The long-term earnings growth rate is anticipated to be 17.5%.

Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 12.7%. Shares of ANET are up 3.2% in the past year.

The Zacks Consensus Estimate for Jabil’s 2023 earnings is pegged at $8.37 per share, rising 2.3% in the past 60 days. The long-term earnings growth rate is anticipated to be 12%.

Jabil’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 8.8%. Shares of JBL have increased 35.9% in the past year.

The Zacks Consensus Estimate for Pure Storage’s fiscal 2023 earnings is pegged at $1.28 per share, up 8.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 21.3%.

Pure Storage’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 156%. Shares of PSTG are up 10.6% in the past year.

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