Aspen's (AZPN) Q4 Earnings Beat Estimates, Revenues Up Y/Y

Aspen Technology AZPN reported fourth-quarter fiscal 2022 non-GAAP earnings of $2.43 per share, beating the Zacks Consensus Estimate by 13%. The company reported non-GAAP earnings of 38 cents per share in the year-ago quarter.

Revenues of $238.9 million missed the Zacks Consensus Estimate by 19.7%. The company reported revenues of $77.4 million in the year-ago quarter.

On Jul 27, 2022, Aspen announced that it had inked an agreement to acquire Micromine from Potentia Capital and other sellers for AU$900 million or approximately $623 million in an all-cash deal.

On May 17, 2022, Aspen concluded the merger with Emerson Electric Co. for $6 billion in cash in exchange for 55% ownership in the company, which will be distributed to Aspen stockholders. The merger involves the integration of Emerson's OSI Inc. and GSS businesses with Aspen.

In the past year, shares of Aspen have returned 42.7% against the industry’s decline of 58%.

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 (74.2% of revenues) were up 288% year over year to $177.3 million.

Maintenance revenues (21%) rose 110% year over year to $50.2 million.

Services and other revenues (4.8%) rose 49% from the year-ago quarter’s figure to $11.5 million.

As of Jun 30, 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 $674 million, up 8.5% year over year and 2.8% quarter over quarter.

Margins

Gross profit increased to $167.9 million from the year-ago quarter’s figure of $35.4 million. As a percentage of total revenues, the figure increased 24.5% on a year-over-year basis to 70.3%.

Total operating expenses increased to $128.8 million from the year-ago quarter’s figure of $44.2 million due to higher selling and marketing, and research and development costs.

Non-GAAP operating income totaled $128.9 million compared with $20.5 million reported in the prior-year quarter. Non-GAAP operating margin was 54% compared with the 10.4% operating margin reported in the year-ago quarter.

Balance Sheet & Cash Flow

As of Jun 30, 2022, cash and cash equivalents were $449.7 million compared with $285.2 million as of Mar 31, 2022. The company’s total borrowings and net of debt issuance costs stood at $273.6 million as of Jun 30, 2022.

The company used $0.3 million in cash from operations compared with $81.1 million in the previous quarter. Non-GAAP free cash flow was $4.9 million in the fiscal fourth quarter.

Fiscal 2023 View

For fiscal 2023, Aspen expects revenues in the range of $1.14-$1.20 billion. The Zacks Consensus Estimate for revenues is pegged at $1.04 billion.

Management project Annual Contract Value (ACV) growth of 10.5%-13.5% year over year.

Total bookings are projected in the range of $1.07-$1.17 billion.

Non-GAAP net income is anticipated to be $6.40-$6.89 per share. The consensus mark for earnings is pegged at $6.25.

Management projects non-GAAP operating income in the range of $503-$555 million. Non-GAAP total expenses are projected to be between $637 million and $647 million.

Free cash flow is projected in the range of $347-$362 million.

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks from the broader technology space are Cadence Design Systems CDNS, Badger Meter BMI and Arista Networks ANET. Cadence Design Systems, Badger Meter and Arista Networks (ANET) each sport a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for CDNS 2022 earnings is pegged at $4.11 per share, rising 5.7% in the past 60 days. The long-term earnings growth rate is anticipated to be 17.7%.

Cadence’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 9.8%. Shares of CDNS have jumped 22.7% in the past year.

The Zacks Consensus Estimate for BMI’s 2022 earnings is pegged at $2.30 per share, up 7% in the past 60 days.

Badger Meter’s earnings beat the Zacks Consensus Estimate in three of the preceding four quarters, with the average being 12.6%. Shares of BMI have lost 4.5% of their value in the past year.

The Zacks Consensus Estimate for Arista Network’s 2022 earnings is pegged at $3.99 per share, increasing 8.4% in the past 60 days. The long-term earnings growth rate is anticipated to be 18.6%.

Arista Network’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 10.1%. Shares of ANET have increased 32.8% in the past year.

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