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Aspen's (AZPN) Q3 Earnings Beat Estimates, Revenues Up Y/Y

Aspen Technology AZPN reported third-quarter fiscal 2022 non-GAAP earnings of $1.38 per share, beating the Zacks Consensus Estimate by 1.5%. The company reported non-GAAP earnings of $1.05 per share in the year-ago quarter.

Revenues of $187.8 million missed the Zacks Consensus Estimate by 2.9%. The company reported revenues of $162.7 million in the year-ago quarter.

The company also announced that it was on track to complete the Emerson acquisition and the shareholder meeting was to be on May 16, 2022 for the same.

In October 2021, Aspen Technology and Emerson inked an agreement. Per the terms, Aspen will be integrated with Emerson’s OSI Inc and the Geological Simulation Software business to form a new company.

In the quarter under review, total bookings (reported under topic 606) were $207 million, up 18% year over year.

In the past year, shares of Aspen Technology have returned 12.6% compared with the industry’s decline of 0.3%.

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

Quarter in Detail

License revenues (69.3% of revenues) were up 18.1% year over year to $130 million.

Maintenance revenues (26.6%) rose 9% year over year to $50 million.

Services and other revenues (4.1%) rose 14.4% from the year-ago quarter’s figure to $7.7 million.

As of Mar 31, 2022, the annual spend (which Aspen Technology defines as the annualized value of all term license and maintenance contracts at the end of the quarter) amounted to $655 million, up 7.4% year over year and 2.4% quarter over quarter.

Margins

Gross profit increased 18.7% year over year to $174.1 million. As a percentage of total revenues, the figure expanded 260 basis points (bps) on a year-over-year basis to 92.7%.

Total operating expenses increased 20% from the year-ago quarter’s figure to $93.4 million due to higher spending related to buyout and integration planning expenses regarding the pending Emerson acquisition.

Non-GAAP operating income totaled $102.5 million compared with $80.9 million reported in the prior-year quarter. Non-GAAP operating margin was 54.6% compared with the 49.7% operating margin reported in the year-ago quarter.

Balance Sheet & Cash Flow

As of Mar 31, 2022, cash and cash equivalents were $285.2 million compared with $211.4 million as of Dec 31, 2021. The company’s total borrowings, net of debt issuance costs, stood at $279.4 million as of Mar 31, 2022.

The company generated $81.1 million in cash from operations compared with $41.3 million in the previous quarter. Non-GAAP free cash flow was $89.2 million in the fiscal third quarter.

Fiscal 2022 View

For fiscal 2022, Aspen Technology expects revenues in the range of $737-$754 million. The Zacks Consensus Estimate for revenues is pegged at $745.7 million.

The company expects an annual spend growth rate of 7-8%, while total bookings are projected in the range of $814-$840 million.

Non-GAAP net income is anticipated in the range of $5.33-$5.50 per share compared with the earlier guidance of $5.23-$5.39 per share. The consensus mark for earnings is pegged at $5.31.

Management now projects non-GAAP operating income in the range of $404-$416 million versus the earlier projected range of $397-$409 million. Non-GAAP total expenses are projected to be between $333 million and $338 million.

Free cash flow is anticipated to be at least $285 million against the earlier guidance of $280-$290 million.

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks from the broader technology sector are Flex FLEX, Jabil JBL and Broadcom AVGO. Flex and Jabil sport a Zacks Rank #1 (Strong Buy), while Broadcom carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

The Zacks Consensus Estimate for Flex’s fiscal 2022 earnings is pegged at $1.88 per share, unchanged in the past 60 days. The long-term earnings growth rate is pegged at 14.9%.

Flex earnings beat the Zacks Consensus Estimate all last four quarters, with the average being 25.6%. Shares of FLEX have declined 9.8% in the past year.

The Zacks Consensus Estimate for Jabil fiscal 2022 earnings is pegged at $7.25 per share, up 10.2% in the past 60 days. The long-term earnings growth rate is 12%.

Jabil earnings beat the Zacks Consensus Estimate all last four quarters, with the average being 13.5%. Shares of JBL have gained 5.5% in the past year.

The Zacks Consensus Estimate for Broadcom’s fiscal 2022 earnings is pegged at $35.67 per share, up 7.6% in the past 60 days. AVGO’s long-term earnings growth rate is pegged at 14.5%.

Broadcom’s earnings beat the Zacks Consensus Estimate in all the preceding four quarters, with the average being 1.9%. Shares of AVGO have increased 20% in the past year


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