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Aspen Technology (AZPN) Up 10.8% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Aspen Technology (AZPN - Free Report) . Shares have added about 10.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Aspen Technology due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Aspen Q1 Earnings Miss Estimates
Aspen reported first-quarter fiscal 2024 non-GAAP earnings per share (EPS) of $1.16, which missed the Zacks Consensus Estimate of $1.41. AZPN reported non-GAAP EPS of $2.20 in the year-ago quarter.
Revenues of $249.3 million lagged the Zacks Consensus Estimate by 3.5%. The company reported revenues of $250.8 million in the prior-year quarter. The year-over-year decline was due to weakness in the License and solutions business segment.
Quarter in Detail
License’s revenues (59.5% of revenues) were down 7.2% year over year to $148.6 million.
Maintenance’s revenues (34.1%) rose 8.4% year over year to $84.9 million.
Revenues from Services and other (6.4%) increased 28.3% from the year-ago quarter’s figure to $15.6 million.
The Zacks Consensus Estimate for fiscal first-quarter revenues for the License, Maintenance and Services segments was pegged at $161 million, $84 million and $13.87 million, respectively.
As of Sep 30, 2023, the annual spend (which Aspen Technology defines as the annualized value of all term license and maintenance contracts at the quarter end other than Open Systems International and Subsurface Science and Engineering) totaled $897.6 million, up 10.9% year over year and 1.4% quarter over quarter.
Margins
Gross profit decreased to $151.2 million from the year-ago quarter’s $159.6 million. As a percentage of total revenues, the figure reached 60.1% from 63.7% reported in the prior-year quarter.
Total operating expenses amounted to $211.4 million from the year-ago quarter’s $210.8 million due to higher selling, marketing, and research and development costs.
Non-GAAP operating income totaled $77.8 million compared with $92.6 million reported in the year-ago quarter.
Balance Sheet & Cash Flow
As of Sep 30, 2023, cash and cash equivalents were $120.5 million compared with $241.2 million as of Jun 30, 2023.
The company generated $17 million in cash from operations compared with $5.1 million reported in the previous quarter. Non-GAAP free cash flow was $16 million in the fiscal first quarter.
Fiscal 2024 View
For fiscal 2024, Aspen expects revenues to be at least $1.12 billion. Non-GAAP net income is anticipated to be at least $6.57 per share.
Management projects Annual Contract Value growth to be at least 11.5% year over year and total bookings to be at least $1.04 billion.
Non-GAAP operating income is estimated to be at least $445 million, while non-GAAP total expenses are expected to be nearly $675 million.
Free cash flow is projected to be at least $360 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted 15.63% due to these changes.
VGM Scores
At this time, Aspen Technology has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Aspen Technology has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Aspen Technology belongs to the Zacks Internet - Software industry. Another stock from the same industry, Fortinet (FTNT - Free Report) , has gained 6.1% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
Fortinet reported revenues of $1.33 billion in the last reported quarter, representing a year-over-year change of +16.1%. EPS of $0.41 for the same period compares with $0.33 a year ago.
For the current quarter, Fortinet is expected to post earnings of $0.43 per share, indicating a change of -2.3% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
Fortinet has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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Aspen Technology (AZPN) Up 10.8% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Aspen Technology (AZPN - Free Report) . Shares have added about 10.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Aspen Technology due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Aspen Q1 Earnings Miss Estimates
Aspen reported first-quarter fiscal 2024 non-GAAP earnings per share (EPS) of $1.16, which missed the Zacks Consensus Estimate of $1.41. AZPN reported non-GAAP EPS of $2.20 in the year-ago quarter.
Revenues of $249.3 million lagged the Zacks Consensus Estimate by 3.5%. The company reported revenues of $250.8 million in the prior-year quarter. The year-over-year decline was due to weakness in the License and solutions business segment.
Quarter in Detail
License’s revenues (59.5% of revenues) were down 7.2% year over year to $148.6 million.
Maintenance’s revenues (34.1%) rose 8.4% year over year to $84.9 million.
Revenues from Services and other (6.4%) increased 28.3% from the year-ago quarter’s figure to $15.6 million.
The Zacks Consensus Estimate for fiscal first-quarter revenues for the License, Maintenance and Services segments was pegged at $161 million, $84 million and $13.87 million, respectively.
As of Sep 30, 2023, the annual spend (which Aspen Technology defines as the annualized value of all term license and maintenance contracts at the quarter end other than Open Systems International and Subsurface Science and Engineering) totaled $897.6 million, up 10.9% year over year and 1.4% quarter over quarter.
Margins
Gross profit decreased to $151.2 million from the year-ago quarter’s $159.6 million. As a percentage of total revenues, the figure reached 60.1% from 63.7% reported in the prior-year quarter.
Total operating expenses amounted to $211.4 million from the year-ago quarter’s $210.8 million due to higher selling, marketing, and research and development costs.
Non-GAAP operating income totaled $77.8 million compared with $92.6 million reported in the year-ago quarter.
Balance Sheet & Cash Flow
As of Sep 30, 2023, cash and cash equivalents were $120.5 million compared with $241.2 million as of Jun 30, 2023.
The company generated $17 million in cash from operations compared with $5.1 million reported in the previous quarter. Non-GAAP free cash flow was $16 million in the fiscal first quarter.
Fiscal 2024 View
For fiscal 2024, Aspen expects revenues to be at least $1.12 billion. Non-GAAP net income is anticipated to be at least $6.57 per share.
Management projects Annual Contract Value growth to be at least 11.5% year over year and total bookings to be at least $1.04 billion.
Non-GAAP operating income is estimated to be at least $445 million, while non-GAAP total expenses are expected to be nearly $675 million.
Free cash flow is projected to be at least $360 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted 15.63% due to these changes.
VGM Scores
At this time, Aspen Technology has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Aspen Technology has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Aspen Technology belongs to the Zacks Internet - Software industry. Another stock from the same industry, Fortinet (FTNT - Free Report) , has gained 6.1% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
Fortinet reported revenues of $1.33 billion in the last reported quarter, representing a year-over-year change of +16.1%. EPS of $0.41 for the same period compares with $0.33 a year ago.
For the current quarter, Fortinet is expected to post earnings of $0.43 per share, indicating a change of -2.3% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
Fortinet has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.