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Why Is Aspen Technology (AZPN) Down 3.5% Since Last Earnings Report?
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It has been about a month since the last earnings report for Aspen Technology (AZPN - Free Report) . Shares have lost about 3.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Aspen Technology due for a breakout? 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 delivered fourth-quarter fiscal 2019 non-GAAP earnings of $1.59 per share, outpacing the Zacks Consensus Estimate by 47.2% and surging 42% on a year-over-year basis.
Revenues of $195.8 million surpassed the Zacks Consensus Estimate of $162 million and improved 23.1% from the adjusted year-ago quarter. The increase can be attributed to improvement in year-over-year bookings.
Notably, total booking for the reported quarter came in at $241 million, up 43% year over year, primarily driven by higher term license contracts for renewals.
Moreover, ongoing momentum in Asset Performance Management (APM) and Manufacturing & Supply Chain (MSC) suite, and strength in Engineering suite of solutions drove year-over-year revenues.
Quarter Highlights
License revenues (75.9%) surged 33.1% year over year to $148.5 million, primarily on higher bookings due to the timing of contract renewals. Further, maintenance revenues (20.2%) inched up 0.8% year over year to approximately $39.5 million.
Meanwhile, Services and other revenues (3.9%) declined 6.2% from the year-ago quarter to approximately $7.8 million.
Annual spend grew approximately 2.8% sequentially and 10.6% year over year during the reported quarter to $541 million.
Management is encouraged by increase in E&C and GEI customers. The APM suite and Aspen Mtell offerings continue to gain traction, with the company signing significant deals globally. The company also witnessed pipeline expansion, which remains a positive.
Operating Details
Gross margin expanded 30 bps year over year to 92.1%.
Total operating expenses increased 4.2% from the year-ago quarter to $69.1 million.
Non-GAAP operating income of $119.9 million surged 39.3% from the year-ago quarter. Non-GAAP operating margin expanded 720 bps year over year to 61.3%.
Balance Sheet & Cash Flow
Aspen ended the fourth quarter with $71.9 million in cash and cash equivalents compared with $65.6 million reported in the previous quarter.
The company generated $85.2 million cash from operations during the quarter compared with $90million in the previous quarter. Free cash flow came in at $84.9 million.
The company repurchased approximately 0.6 million shares for $75 million.
Fiscal 2019 at a Glance
In fiscal 2019, total revenues increased 15.3% over adjusted fiscal 2018 figure.
Earnings of $4.09 per share declined 4.9% over fiscal 2018 as adjusted.
Impressive Fiscal 2020 Guidance
AspenTech forecasts revenues between $575 million and $615 million.
Non-GAAP operating income and non-GAAP earnings are projected in the range $272-$307 million and $3.44-$3.85 per share, respectively.
License revenues are projected between $377 million and $410 million. Maintenance revenues are envisioned in the range of $170-$175 million. Meanwhile, Service & other revenues are expected to be in the band of $28-$30 million.
Free cash flow is anticipated in the range of $250 million to $260 million.
APM suite is projected to contribute 3% growth to the anticipated annual spend increase of 10-12%, wherein Engineering and MSC suites are projected to contribute 7-9%.
Note: The EPS data mentioned in the text of this section differs from the rest of report due to the difference in calculation or consideration of one-time items.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted -8.02% due to these changes.
VGM Scores
Currently, Aspen Technology has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. 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 indicates a downward shift. Notably, Aspen Technology has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Aspen Technology (AZPN) Down 3.5% Since Last Earnings Report?
It has been about a month since the last earnings report for Aspen Technology (AZPN - Free Report) . Shares have lost about 3.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Aspen Technology due for a breakout? 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 Technology Q4 Earnings & Revenues Beats Estimates
Aspen delivered fourth-quarter fiscal 2019 non-GAAP earnings of $1.59 per share, outpacing the Zacks Consensus Estimate by 47.2% and surging 42% on a year-over-year basis.
Revenues of $195.8 million surpassed the Zacks Consensus Estimate of $162 million and improved 23.1% from the adjusted year-ago quarter. The increase can be attributed to improvement in year-over-year bookings.
Notably, total booking for the reported quarter came in at $241 million, up 43% year over year, primarily driven by higher term license contracts for renewals.
Moreover, ongoing momentum in Asset Performance Management (APM) and Manufacturing & Supply Chain (MSC) suite, and strength in Engineering suite of solutions drove year-over-year revenues.
Quarter Highlights
License revenues (75.9%) surged 33.1% year over year to $148.5 million, primarily on higher bookings due to the timing of contract renewals. Further, maintenance revenues (20.2%) inched up 0.8% year over year to approximately $39.5 million.
Meanwhile, Services and other revenues (3.9%) declined 6.2% from the year-ago quarter to approximately $7.8 million.
Annual spend grew approximately 2.8% sequentially and 10.6% year over year during the reported quarter to $541 million.
Management is encouraged by increase in E&C and GEI customers. The APM suite and Aspen Mtell offerings continue to gain traction, with the company signing significant deals globally. The company also witnessed pipeline expansion, which remains a positive.
Operating Details
Gross margin expanded 30 bps year over year to 92.1%.
Total operating expenses increased 4.2% from the year-ago quarter to $69.1 million.
Non-GAAP operating income of $119.9 million surged 39.3% from the year-ago quarter. Non-GAAP operating margin expanded 720 bps year over year to 61.3%.
Balance Sheet & Cash Flow
Aspen ended the fourth quarter with $71.9 million in cash and cash equivalents compared with $65.6 million reported in the previous quarter.
The company generated $85.2 million cash from operations during the quarter compared with $90million in the previous quarter. Free cash flow came in at $84.9 million.
The company repurchased approximately 0.6 million shares for $75 million.
Fiscal 2019 at a Glance
In fiscal 2019, total revenues increased 15.3% over adjusted fiscal 2018 figure.
Earnings of $4.09 per share declined 4.9% over fiscal 2018 as adjusted.
Impressive Fiscal 2020 Guidance
AspenTech forecasts revenues between $575 million and $615 million.
Non-GAAP operating income and non-GAAP earnings are projected in the range $272-$307 million and $3.44-$3.85 per share, respectively.
License revenues are projected between $377 million and $410 million. Maintenance revenues are envisioned in the range of $170-$175 million. Meanwhile, Service & other revenues are expected to be in the band of $28-$30 million.
Free cash flow is anticipated in the range of $250 million to $260 million.
APM suite is projected to contribute 3% growth to the anticipated annual spend increase of 10-12%, wherein Engineering and MSC suites are projected to contribute 7-9%.
Note: The EPS data mentioned in the text of this section differs from the rest of report due to the difference in calculation or consideration of one-time items.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted -8.02% due to these changes.
VGM Scores
Currently, Aspen Technology has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. 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 indicates a downward shift. Notably, Aspen Technology has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.