Aspen Technology, Inc. (NASDAQ: AZPN), the asset optimization software company, today announced financial results for its third quarter of fiscal year 2017, ended March 31, 2017.

Antonio Pietri, President and Chief Executive Officer of AspenTech, said “AspenTech reported third quarter fiscal 2017 financial results that exceeded expectations from a revenue and profitability perspective.  

The demand from our owner-operator customers offset the impact of continued macroeconomic challenges facing engineering and construction and upstream customers.”

Pietri continued, “Last week we hosted our biennial OPTIMIZE 2017 user conference, which was focused on Asset Optimization.  Customers showed strong interest in the direction of our engineering and manufacturing and supply chain products and the significant value those solutions can capture from increased asset efficiency.  A highlight of the conference was the positive customer reaction to our new Asset Performance Maintenance (APM) suite, which expands AspenTech’s capabilities into the maintenance of the physical asset by leveraging reliability analysis, machine-based learning, and prescriptive analytics.  We are excited by the opportunity for APM and believe it can be an important contributor to growth in the coming years.” 

Pietri concluded, “At the same time, we continued to utilize our strong cash flow to generate value for shareholders via our share buyback program, which in the third quarter surpassed $1 billion in cumulative repurchases since the program began in fiscal year 2011.”

Third Quarter Fiscal 2017 Business Highlights

• Annual spend, which the company defines as the annualized value of all term license and maintenance contracts at the end of the quarter, was approximately $452 million at the end of the third quarter of fiscal 2017, which increased 4.9% compared to the third quarter of fiscal 2016 and 0.3% sequentially.

 GAAP operating margin was 43.8%, compared to 42.5% in the third quarter of fiscal 2016.  Non-GAAP operating margin was 48.1%, compared to 49.7% in the third quarter of fiscal 2016.

•  AspenTech repurchased 1.7 million shares of its common stock for $100.0 million in the third quarter of fiscal 2017.

Summary of Third Quarter Fiscal Year 2017 Financial Results

AspenTech’s total revenue of $119.3 million included: 

Subscription and software revenue was $111.7 million in the third quarter of fiscal 2017, consistent with $111.7 million in the third quarter of fiscal 2016. 

• Services and other revenue was $7.6 million in the third quarter of fiscal 2017, an increase from $7.5 million in the third quarter of fiscal 2016. 

For the quarter ended March 31, 2017, AspenTech reported income from operations of $52.3 million, compared to income from operations of $50.7 million for the quarter ended March 31, 2016. 

Net income was $35.8 million for the quarter ended March 31, 2017, leading to net income per share of $0.47, compared to net income per share of $0.40 in the same period last fiscal year. 

Non-GAAP income from operations, which adds back the impact of stock-based compensation expense, amortization of intangibles associated with acquisitions, acquisition-related expenses and non-capitalized acquired technology was $57.4 million for the third quarter of fiscal 2017, compared to non-GAAP income from operations of $59.3 million in the same period last fiscal year.  Non-GAAP net income was $39.4 million, or $0.52 per share, for the third quarter of fiscal 2017, compared to non-GAAP net income of $40.9 million, or $0.49 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 cash and marketable securities of $101.7 million and borrowings of $140.0 million at March 31, 2017. 

During the third quarter, the company generated $55.6 million in cash flow from operations and $56.2 million in free cash flow.

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, May 2, 2017, at 4:30 p.m. (Eastern Time), to discuss the company's financial results for the third quarter fiscal year 2017 as well as the company’s business outlook. 

The live dial-in number is (866) 604-6127 or (443) 961-0460, conference ID code 7805720. 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 7805720, through June 2, 2017.

About AspenTech

AspenTech is a leading software supplier for optimizing asset performance. Our products thrive in complex, industrial environments where it is critical to optimize the asset design, operation and maintenance lifecycle. AspenTech uniquely combines decades of process modeling expertise with big data machine-learning. Our purpose-built software platform automates knowledge work and builds sustainable competitive advantage by delivering high returns over the entire asset lifecycle. As a result, companies in capital-intensive industries can maximize uptime and push the limits of performance, running their assets faster, safer, longer and greener. Visit AspenTech.com to find out more.

Forward-Looking Statements

The third paragraph of this press release contains 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, including declines due to adverse changes in the process industries; 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.

© 2017 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.