Aspen Technology, Inc. (NASDAQ: AZPN), a leading provider of software and services to the process industries, today announced financial results for its third quarter of fiscal year 2016, ended March 31, 2016.

Antonio Pietri, President and Chief Executive Officer of AspenTech, said, “AspenTech delivered third quarter results that exceeded expectations on both the top and bottom line, highlighted by a 50% non-GAAP operating margin.  Although certain market and geographic segments continue to be challenging, overall we believe we remain well positioned to deliver a year of positive growth in the current environment.”                                

Pietri added, “Today we are also announcing that AspenTech’s Board of Directors has approved a $400 million dollar expansion to our share repurchase program, which we intend to use in its entirety during fiscal 2017.  This announcement demonstrates the strength and predictability of our cash flow and balance sheet, and underscores our commitment to deploy our substantial financial resources to produce value for our shareholders.”

Third Quarter Fiscal 2016 and Recent Business Highlights

Annual spend, which the company defines as the annualized value of all term license and maintenance revenue contracts at the end of the quarter, was approximately $431 million at the end of the third quarter of fiscal 2016, which increased 4.6% compared to the third quarter of fiscal 2015 and was flat sequentially.

GAAP operating margin was 42.5%, compared to 37.5% in the third quarter of fiscal 2015.  Non-GAAP operating margin was 49.7%, compared to 43.7% in the third quarter of fiscal 2015.

We repurchased approximately 1.4 million shares of our common stock for $50.0 million in the third quarter of fiscal 2016.

Summary of Third Quarter Fiscal Year 2016 Financial Results

AspenTech’s total revenue of $119.2 million increased 7.1% from $111.3 million in the third quarter of the prior fiscal year. 

• Subscription and software revenue was $111.7 million in the third quarter of fiscal 2016, an increase from $102.5 million in the third quarter of fiscal 2015. 
• Services and other revenue was $7.5 million in the third quarter of fiscal 2016, compared to $8.8 million in the third quarter of fiscal 2015. 

For the quarter ended March 31, 2016, AspenTech reported income from operations of $50.7 million, compared to income from operations of $41.7 million for the quarter ended March 31, 2015. 

Net income was $33.2 million for the quarter ended March 31, 2016, leading to net income per share of $0.40, compared to net income per share of $0.32 in the same period last fiscal year. 

Non-GAAP income from operations, which adds back stock-based compensation expense, amortization of intangibles associated with acquisitions, acquisition-related costs and non-capitalized acquired technology, was $59.3 million for the third quarter of fiscal 2016, compared to non-GAAP income from operations of $48.7 million in the same period last fiscal year.  Non-GAAP net income was $40.9 million, or $0.49 per share, for the third quarter of fiscal 2016, compared to non-GAAP net income of $32.6 million, or $0.37 per share, in the same period last fiscal year.  A reconciliation of GAAP to non-GAAP results is included in the financial tables included in this press release.

AspenTech had a cash and marketable securities balance of $105.9 million at March 31, 2016, a decrease of $94.6 million from the end of the prior quarter.

During the third quarter, the company generated $69.7 million in cash flow from operations and $77.2 million in free cash flow.

Board of Directors Approves $400 Million Expansion of Share Repurchase Program

AspenTech's Board of Directors has approved a $400 million expansion to our existing share repurchase program. This expansion is in addition to the $196 million that remained on the plan as of March 31, 2016. Based on current market conditions and business outlook, it is the Company’s current intent to repurchase $400 million worth of stock during fiscal 2017.  The timing and amount of any shares repurchased will be determined by AspenTech based on its evaluation of market conditions and other factors. Repurchases may also be made under a Rule 10b5-1 plan, which would permit shares to be repurchased when AspenTech might otherwise be precluded from doing so under applicable insider trading laws and regulations. The repurchase program may be suspended or discontinued at any time.

Use of Non-GAAP Financial Measures

This press release contains “non-GAAP financial measures” under the rules of the U.S. Securities and Exchange Commission. Non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles. This non-GAAP information supplements, and is not intended to represent a measure of performance in accordance with, disclosures required by generally accepted accounting principles, or GAAP.  Non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP.  A reconciliation of GAAP to non-GAAP results is included in the financial tables included in this press release.

Management considers both GAAP and non-GAAP financial results in managing AspenTech’s business.  As the result of adoption of new licensing models, management believes that a number of AspenTech’s performance indicators based on GAAP, including revenue, gross profit, operating income and net income, should be viewed in conjunction with certain non-GAAP and other business measures in assessing AspenTech’s performance, growth and financial condition. Accordingly, management utilizes a number of non-GAAP and other business metrics, including the non-GAAP metrics set forth in this press release, to track AspenTech’s business performance. None of these non-GAAP metrics should be considered as an alternative to any measure of financial performance calculated in accordance with GAAP.

Conference Call and Webcast

AspenTech will host a conference call and webcast today, April 28, 2016, at 4:30 p.m. (Eastern Time), to discuss the company's financial results for the third quarter fiscal year 2016 as well as the company’s business outlook. 

The live dial-in number is (866) 604-6127or (706) 634-5625, conference ID code 90329492. Interested parties may also listen to a live webcast of the call by logging on to the Investor Relations section of AspenTech’s website,http://www.aspentech.com/corporate/investor.cfm, and clicking on the “webcast” link.  A replay of the call will be archived on AspenTech’s website and will also be available via telephone at (855) 859-2056 or (404) 537-3406, conference ID code 90329492, through May 27, 2016.

About AspenTech

AspenTech is a leading supplier of software that optimizes process manufacturing – for energy, chemicals, engineering and construction, and other industries that manufacture and produce products from a chemical process. With integrated aspenONE solutions, process manufacturers can implement best practices for optimizing their engineering, manufacturing and supply chain operations. As a result, AspenTech customers are better able to increase capacity, improve margins, reduce costs and become more energy efficient. To see how the world’s leading process manufacturers rely on AspenTech to achieve their operational excellence goals, visit www.aspentech.com.

Forward-Looking Statements

The second and third paragraphs (as well as the first paragraph under “Board of Directors Approves $400 Million Expansion of Share Repurchase Program”)  of this press release contain forward-looking statements for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Actual results may vary significantly from AspenTech’s expectations based on a number of risks and uncertainties, including, without limitation:  AspenTech’s failure to increase usage and product adoption of aspenONE offerings, and failure to continue to provide innovative, market-leading solutions; demand for, or usage of, aspenONE software declines for any reason; unfavorable economic and market conditions or a lessening demand in the market for process optimization software; and other risk factors described from time to time in AspenTech’s periodic reports filed with the Securities and Exchange Commission.  AspenTech cannot guarantee any future results, levels of activity, performance, or achievements.  AspenTech expressly disclaims any obligation to update forward-looking statements after the date of this press release.

© 2016 Aspen Technology, Inc.  AspenTech, aspenONE and the Aspen leaf logo are registered trademarks of Aspen Technology, Inc. All rights reserved. All other trademarks are property of their respective owners.