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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.

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