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Aspen Technology (AZPN) Down 14.2% Since Last Earnings Report: Can It Rebound?
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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 14.2% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Aspen Technology Q2 Earnings & Revenues Lag Estimates
Aspen Technology reported second-quarter fiscal 2020 non-GAAP earnings of 79 cents per share that missed the Zacks Consensus Estimate by 16.5% and declined 28.3% on a year-over-year basis.
Revenues of $124.7 million lagged the consensus of $135 million and declined 11.2% from the year-ago quarter. The decline can be attributed to lower year-over-year bookings.
Notably, total bookings for the reported quarter came in at $112.3 million, down 27% year over year, due to decrease in the amount of term license contract renewals compared with the year-ago period.
Nonetheless, ongoing momentum in Asset Performance Management (APM) and Manufacturing & Supply Chain (MSC) suite and strength in Engineering suite benefited the company in the second quarter.
Quarter in Detail
License revenues (56.3% of revenues) declined 24.8% year over year to $70.2 million as several transactions that the company expected to close in the second quarter were pushed to the second half of fiscal 2020.
Maintenance revenues (36.3%) increased 10.5% year over year to approximately $45.3 million. Services and other revenues (7.4%) surged 53.3% from the year-ago quarter to $9.2 million.
Annual spend improved 3% sequentially and 10% year over year to $564 million.
Management is optimistic about expanding engineering & construction (E&C) and global economy industries (GEIs) customer base. With the company signing significant deals globally, the APM suite and Aspen Mtell offerings continue to gain traction. The company also witnessed pipeline expansion, which was a positive.
For instance, a European Oil & Chemicals company and a long-term user of AspenTech’s engineering and MSC suites selected the company’s supply chain management solution for deployment across its chemical assets and integration with AspenTech’s existing planning solution in its refining business.
Moreover, the introduction of IMO 2020 requirements to reduce sulfur dioxide levels in bunker fuel for transportation ships is a demand catalyst for certain refiners.
Margins
Gross margin contracted 190 basis points (bps) on a year-over-year basis to approximately 87.6%.
Total operating expenses climbed 9.1% from the year-ago quarter to $67.5 million.
Non-GAAP operating income of $50.9 million declined 28.5% from the year-ago quarter. Non-GAAP operating margin contracted 990 bps year over year to 40.8%.
Balance Sheet & Cash Flow
As of Dec 31, 2019 cash and cash equivalents were $80.5 million compared with $57.9 million reported in the previous quarter.
The company generated $46.9 million cash from operations during the quarter compared with $15.3 million in the previous quarter. Free cash flow came in at $48.1 million compared with $14.3 million in the previous quarter.
Fiscal 2020 Guidance
Aspen Technology trimmed fiscal 2020 earnings guidance. Non-GAAP earnings are now projected in the range of $3.43-$3.84 per share compared with the prior guided range of $3.47-$3.89.
The company continues to expect revenues between $575 million and $615 million. Non-GAAP operating income is projected in the range of $272-$307 million.
APM suite is projected to contribute 3% to the anticipated annual spend increase of 10-12%, while Engineering and MSC suites are projected to contribute 7% and 9%, respectively. Free cash flow is now anticipated in the range of $260 million to $270 million compared with the prior guided range of $250 million to $260 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month. The consensus estimate has shifted 10.27% due to these changes.
VGM Scores
Currently, 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
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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Aspen Technology (AZPN) Down 14.2% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Aspen Technology (AZPN - Free Report) . Shares have lost about 14.2% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Aspen Technology Q2 Earnings & Revenues Lag Estimates
Aspen Technology reported second-quarter fiscal 2020 non-GAAP earnings of 79 cents per share that missed the Zacks Consensus Estimate by 16.5% and declined 28.3% on a year-over-year basis.
Revenues of $124.7 million lagged the consensus of $135 million and declined 11.2% from the year-ago quarter. The decline can be attributed to lower year-over-year bookings.
Notably, total bookings for the reported quarter came in at $112.3 million, down 27% year over year, due to decrease in the amount of term license contract renewals compared with the year-ago period.
Nonetheless, ongoing momentum in Asset Performance Management (APM) and Manufacturing & Supply Chain (MSC) suite and strength in Engineering suite benefited the company in the second quarter.
Quarter in Detail
License revenues (56.3% of revenues) declined 24.8% year over year to $70.2 million as several transactions that the company expected to close in the second quarter were pushed to the second half of fiscal 2020.
Maintenance revenues (36.3%) increased 10.5% year over year to approximately $45.3 million. Services and other revenues (7.4%) surged 53.3% from the year-ago quarter to $9.2 million.
Annual spend improved 3% sequentially and 10% year over year to $564 million.
Management is optimistic about expanding engineering & construction (E&C) and global economy industries (GEIs) customer base. With the company signing significant deals globally, the APM suite and Aspen Mtell offerings continue to gain traction. The company also witnessed pipeline expansion, which was a positive.
For instance, a European Oil & Chemicals company and a long-term user of AspenTech’s engineering and MSC suites selected the company’s supply chain management solution for deployment across its chemical assets and integration with AspenTech’s existing planning solution in its refining business.
Moreover, the introduction of IMO 2020 requirements to reduce sulfur dioxide levels in bunker fuel for transportation ships is a demand catalyst for certain refiners.
Margins
Gross margin contracted 190 basis points (bps) on a year-over-year basis to approximately 87.6%.
Total operating expenses climbed 9.1% from the year-ago quarter to $67.5 million.
Non-GAAP operating income of $50.9 million declined 28.5% from the year-ago quarter. Non-GAAP operating margin contracted 990 bps year over year to 40.8%.
Balance Sheet & Cash Flow
As of Dec 31, 2019 cash and cash equivalents were $80.5 million compared with $57.9 million reported in the previous quarter.
The company generated $46.9 million cash from operations during the quarter compared with $15.3 million in the previous quarter. Free cash flow came in at $48.1 million compared with $14.3 million in the previous quarter.
Fiscal 2020 Guidance
Aspen Technology trimmed fiscal 2020 earnings guidance. Non-GAAP earnings are now projected in the range of $3.43-$3.84 per share compared with the prior guided range of $3.47-$3.89.
The company continues to expect revenues between $575 million and $615 million. Non-GAAP operating income is projected in the range of $272-$307 million.
APM suite is projected to contribute 3% to the anticipated annual spend increase of 10-12%, while Engineering and MSC suites are projected to contribute 7% and 9%, respectively. Free cash flow is now anticipated in the range of $260 million to $270 million compared with the prior guided range of $250 million to $260 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month. The consensus estimate has shifted 10.27% due to these changes.
VGM Scores
Currently, 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
Aspen Technology has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.