U.S. Markets open in 6 hrs

Aspen Technology (AZPN) Q4 Earnings & Revenues Top Estimates

Zacks Equity Research

Aspen Technology AZPN 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.

Coming to the price performance, shares of Aspen Technology have returned 52.2% in the year-to-date period, outperforming the industry’s rally of 28%.

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.

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

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. The Zacks Consensus Estimate for fiscal 2019 revenues is pegged at $557.45 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. The Zacks Consensus Estimate for earnings is pegged at $3.46 cents per share.

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%.

Zacks Rank & Stocks to Consider

Aspen currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector worth considering are Chegg CHGG, Benefitfocus BNFT, and Anixter International AXE. All the three stocks flaunt a Zacks Rank #1 (Strong buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Chegg, Benefitfocus and Anixter is currently pegged at 30%, 25% and 8%, respectively.

Biggest Tech Breakthrough in a Generation

Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.

A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 7 stocks to watch. The report is only available for a limited time.

See 7 breakthrough stocks now>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Benefitfocus, Inc. (BNFT) : Free Stock Analysis Report
Chegg, Inc. (CHGG) : Free Stock Analysis Report
Aspen Technology, Inc. (AZPN) : Free Stock Analysis Report
Anixter International Inc. (AXE) : Free Stock Analysis Report
To read this article on Zacks.com click here.