Aspen Technology AZPN reported fourth-quarter fiscal 2020 non-GAAP earnings of $1.54 per share that surpassed the Zacks Consensus Estimate by 30.5% but declined 3.1% on a year-over-year basis.
Revenues of $199.3 million beat the Zacks Consensus Estimate by 12.8% and improved 1.8% from the year-ago quarter’s figure. Uptick in contract renewals, as economies reopened, drove year-over-year growth.
As of Jun 30, 2020, the total contract value or TCV amounted to $2.76 billion, compared with $2.57 billion as of Jun 30, 2019.
Total bookings were $236.2 million, down 2% year over year.
The fiscal fourth-quarter performance highlights the indispensability of the company’s product portfolio and its business resilience amid the COVID-19 induced macroeconomic weakness.
Shares Up on Encouraging Fiscal 2021 View
Shares were up more than 28% in the pre-market on Aug 13, following better-than-expected fourth-quarter results and impressive guidance for fiscal 2021 on strong pipeline of the company’s asset performance management (“APM”) solutions. Notably, in the year-to-date period, the stock has declined 19.2% against the industry’s rally of 26.2%.
For fiscal 2021, Aspen Technology expects revenues in the range of $704-$754 million. The Zacks Consensus Estimate for revenues is pegged at $598.94 million.
Non-GAAP net income is anticipated in the range of $4.78-$4.83 per share. The consensus mark for earnings stands at $3.20.
Management projects non-GAAP operating income in the range of $374-$420 million. Free cash flow is anticipated between $260 million and $270 million.
Quarter in Detail
License revenues (73.9% of revenues) declined 0.9% year over year to $147.2 million.
Maintenance revenues (22.9%) increased 15.8% year over year to $45.7 million.
Services and other revenues (3.2%) declined 17.9% from the year-ago quarter’s figure to $6.4 million.
Annual spend increased 9.6% year over year to $593 million.
Gross profit increased 2.2% year over year to $184.2 million. As a percentage of total revenues, the figure expanded 30 basis points (bps) on a year-over-year basis to 92.4%.
Total operating expenses climbed 2.1% from the year-ago quarter’s figure to $70.5 million due to increase in research & development and general & administrative expenses.
Non-GAAP operating income of $122.9 million improved 2.5% year over year. Non-GAAP operating margin was 61.7%, which expanded 40 bps on a year-over-year basis.
Balance Sheet & Cash Flow
As of Jun 30, 2020, cash and cash equivalents were $287.8 million compared with $192.2 million as of Mar 31, 2020.
The company generated $99.7 million cash from operations during the quarter under review compared with $81.4 million in the previous quarter. Free cash flow was $99.5 million compared with $81.2 million in the prior quarter.
Aspen Technology, Inc. Price, Consensus and EPS Surprise
Aspen Technology, Inc. price-consensus-eps-surprise-chart | Aspen Technology, Inc. Quote
The company did not repurchase any shares in fourth-quarter fiscal 2020. However, the company will resume stock repurchase program. Recently, the company’s board of directors authorized share repurchase of up to $200 million for fiscal year 2021.
2020 at a Glance
Aspen Technology reported revenues of $590.2 million. The company had projected revenues in the range of $550-$582 million.
Non-GAAP earnings came in at $3.72 per share, above the higher end of guided range of $3.16-$3.48.
Zacks Rank & Stocks to Consider
Currently, Aspen Technology carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Agilent A, Analog Devices ADI and salesforce.com CRM. All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Agilent, Analog Devices and salesforce are set to report their quarterly results on Aug 18, 19 and 25, respectively.
Long-term earnings growth rate of Agilent, Analog Devices and salesforce is pegged at 10%, 13.33% and 18%, respectively.
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