Aspen Technology (AZPN) Down 1.4% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Aspen Technology (AZPN). Shares have lost about 1.4% 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 Q4 Earnings & Revenues Miss Estimates
Aspen Technology reported fourth-quarter fiscal 2023 non-GAAP earnings of $2.13 per share, missing the Zacks Consensus Estimate of $2.19. AZPN reported non-GAAP earnings of $2.55 per share in the year-ago quarter.
Revenues of $320.6 million lagged the Zacks Consensus Estimate by 1.3%. The company reported revenues of $238.9 million in the prior-year quarter. The year-over-year growth was driven by solid momentum across all business segments.
Quarter in Detail
License’s revenues (69.5% of revenues) were up 24.3% year over year to $222.8 million.
Maintenance’s revenues (25.8%) rose 64.6% year over year to $82.6 million.
Revenues from Services and other (4.7%) surged 60.5% from the year-ago quarter’s figure to $15.2 million.
As of Jun 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 [OSI] and Subsurface Science and Engineering [SSE]) totaled $730.9 million, up 8.5% year over year and 2.7% quarter over quarter.
Margins
Gross profit increased to $225.1 million from the year-ago quarter’s $167.9 million. As a percentage of total revenues, the figure reached 70.2% from 70.3% reported in the prior-year quarter.
Total operating expenses amounted to $219.1 million from the year-ago quarter’s $128.8 million due to higher selling, marketing, general and administrative along with research and development costs.
Non-GAAP operating income totaled $148.9 million compared with $129 million reported in the year-earlier quarter.
Balance Sheet & Cash Flow
As of Jun 30, 2023, cash and cash equivalents were $241.2 million compared with $286.7 million as of Mar 31, 2023.
The company generated $113.6 million in cash from operations compared with $66.8 million reported in the previous quarter. Non-GAAP free cash flow was $111.5 million in the fiscal fourth 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 $6.51 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 suggested to be nearly $675 million.
Free cash flow is projected to be at least $360 million
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 38.76% due to these changes.
VGM Scores
Currently, Aspen Technology has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. 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 #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Aspen Technology is part of the Zacks Internet - Software industry. Over the past month, F5 Networks (FFIV), a stock from the same industry, has gained 2.4%. The company reported its results for the quarter ended June 2023 more than a month ago.
F5 reported revenues of $702.64 million in the last reported quarter, representing a year-over-year change of +4.2%. EPS of $3.21 for the same period compares with $2.57 a year ago.
F5 is expected to post earnings of $3.22 per share for the current quarter, representing a year-over-year change of +22.9%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.3%.
F5 has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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Aspen Technology, Inc. (AZPN) : Free Stock Analysis Report
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