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Aspen (AZPN) Q4 Earnings Beat, Stock Up on Upbeat '21 View

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Aspen Technology AZPN reported fourth-quarter fiscal 2020 non-GAAP earnings of $1.54 per share that surpassed the Zacks Consensus Estimate by 30.5% but declined 3.1% on a year-over-year basis.

Revenues of $199.3 million beat the Zacks Consensus Estimate by 12.8% and improved 1.8% from the year-ago quarter’s figure. Uptick in contract renewals, as economies reopened, drove year-over-year growth.

As of Jun 30, 2020, the total contract value or TCV amounted to $2.76 billion, compared with $2.57 billion as of Jun 30, 2019.

Total bookings were $236.2 million, down 2% year over year.

The fiscal fourth-quarter performance highlights the indispensability of the company’s product portfolio and its business resilience amid the COVID-19 induced macroeconomic weakness.

Shares Up on Encouraging Fiscal 2021 View

Shares were up more than 28% in the pre-market on Aug 13, following better-than-expected fourth-quarter results and impressive guidance for fiscal 2021 on strong pipeline of the company’s asset performance management (“APM”) solutions. Notably, in the year-to-date period, the stock has declined 19.2% against the industry’s rally of 26.2%.


 

For fiscal 2021, Aspen Technology expects revenues in the range of $704-$754 million. The Zacks Consensus Estimate for revenues is pegged at $598.94 million.

Non-GAAP net income is anticipated in the range of $4.78-$4.83 per share. The consensus mark for earnings stands at $3.20.

Management projects non-GAAP operating income in the range of $374-$420 million. Free cash flow is anticipated between $260 million and $270 million.

Quarter in Detail

License revenues (73.9% of revenues) declined 0.9% year over year to $147.2 million.

Maintenance revenues (22.9%) increased 15.8% year over year to $45.7 million.

Services and other revenues (3.2%) declined 17.9% from the year-ago quarter’s figure to $6.4 million.

Annual spend increased 9.6% year over year to $593 million.

Margins

Gross profit increased 2.2% year over year to $184.2 million. As a percentage of total revenues, the figure expanded 30 basis points (bps) on a year-over-year basis to 92.4%.

Total operating expenses climbed 2.1% from the year-ago quarter’s figure to $70.5 million due to increase in research & development and general & administrative expenses.

Non-GAAP operating income of $122.9 million improved 2.5% year over year. Non-GAAP operating margin was 61.7%, which expanded 40 bps on a year-over-year basis.

Balance Sheet & Cash Flow

As of Jun 30, 2020, cash and cash equivalents were $287.8 million compared with $192.2 million as of Mar 31, 2020.

The company generated $99.7 million cash from operations during the quarter under review compared with $81.4 million in the previous quarter. Free cash flow was $99.5 million compared with $81.2 million in the prior quarter.
 

Aspen Technology, Inc. Price, Consensus and EPS Surprise

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 did not repurchase any shares in fourth-quarter fiscal 2020. However, the company will resume stock repurchase program. Recently, the company’s board of directors authorized share repurchase of up to $200 million for fiscal year 2021.

2020 at a Glance

Aspen Technology reported revenues of $590.2 million. The company had projected revenues in the range of $550-$582 million.

Non-GAAP earnings came in at $3.72 per share, above the higher end of guided range of $3.16-$3.48.

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the broader technology sector are Agilent A, Analog Devices ADI and salesforce.com CRM. All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Agilent, Analog Devices and salesforce are set to report their quarterly results on Aug 18, 19 and 25, respectively.

Long-term earnings growth rate of Agilent, Analog Devices and salesforce is pegged at 10%, 13.33% and 18%, respectively.

These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.

Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

See the 5 high-tech stocks now>>


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Analog Devices, Inc. (ADI) : Free Stock Analysis Report
 
salesforce.com, inc. (CRM) : Free Stock Analysis Report
 
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