Yahoo Finance Why Is Aspen Technology (AZPN) Down 5.2% Since Last Earnings Report?
It has been about a month since the last earnings report for Aspen Technology (AZPN). Shares have lost about 5.2% 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 drivers.
Aspen Technology Q3 Earnings & Revenues Miss Estimates
Aspen Technology reported third-quarter fiscal 2023 non-GAAP earnings of $1.06 per share, missing the Zacks Consensus Estimate of $1.66. The company reported non-GAAP earnings of 40 cents per share in the year-ago quarter.
The company reported revenues of $229.9 million, missing the Zacks Consensus Estimate by 19.1%. The company had reported revenues of $84.6 million in the year-ago quarter. The year-over-year top-line performance was driven by solid momentum across all business segments.
Quarter in Detail
License’s revenues (59.3% of revenues) were up 168.3% year over year to $136.3 million.
Maintenance’s revenues (33.6% of revenues) rose 183.2% year over year to $77.3 million.
Revenues from Services and other (7.1% of revenues) rose 150.8% from the year-ago quarter’s figure to $16.3 million.
As of Mar 31, 2023, the annual spend (which Aspen Technology defines as the annualized value of all term license and maintenance contracts at the end of the quarter other than Open Systems International [OSI] and Subsurface Science and Engineering [SSE]) amounted to $712 million, up 8.6% year over year and 2.1% quarter over quarter.
Margins
Gross profit increased to $136.1 million from the year-ago quarter’s figure of $40.8 million. As a percentage of total revenues, the figure reached 59.2% from 48.2% reported in the prior-year quarter.
Total operating expenses amounted to $214.5 million from the year-ago quarter’s figure of $43.5 million due to higher selling, marketing, and research and development costs.
Non-GAAP operating income totaled $56.8 million compared with $102.5 million reported in the prior-year quarter.
Balance Sheet & Cash Flow
As of Mar 31, 2023, cash and cash equivalents were $286.7 million compared with $446.1 million as of Dec 31, 2022.
The company generated $66.8 million in cash from operations compared with $20.1 million reported in the previous quarter. Non-GAAP free cash flow was $129.3 million in the fiscal third quarter.
Fiscal 2023 View
For fiscal 2023, Aspen now expects revenues in the range of $1.04-$1.06 billion compared with the previous guidance of $1.14-$1.20 billion. The company has lowered its guidance primarily due to ongoing integration and transformation factors related to the OSI and SSE businesses.
Non-GAAP net income is now anticipated to be $5.63-$5.83 per share compared with the earlier guided range of $6.83-$7.43 per share.
Management projects Annual Contract Value growth of 11-12% year over year compared with the earlier guided range of 10.5-13.5%. The company stated that the adjustment for the high end of guidance was mainly due a declining chemical customer software spending
Total bookings are projected in the range of $1.03-$1.06 billion compared with earlier guided range of $1.07-$1.17 billion.
Management projects non-GAAP operating income in the range of $398-$413 million compared with the earlier guided range of $503-$555 million. Non-GAAP total expenses are projected to be between $642 million and $647 million.
The free cash flow is projected to be at least $315 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -17.19% due to these changes.
VGM Scores
Currently, Aspen Technology has an average Growth Score of C, a grade with the same score on the momentum front. 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Aspen Technology has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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Aspen Technology, Inc. (AZPN) : Free Stock Analysis Report
