Aspen Technology, Inc. (NASDAQ:AZPN) Q4 2023 Results Conference Call August 1, 2023 4:30 PM ET Company Participants Brian Denyeau - ICR Antonio Pietri - President and CEO Chantelle Breithaupt - CFO Conference Call Participants Rob Oliver - Baird Andrew Obin - Bank of America Matthew Pfau - William Blair Jason Celino - KeyBanc Capital Markets Clarke Jeffries - Piper Sandler Josh Tilton - Wolfe Research Mark Schappel - Loop Capital Markets Operator Good day, and thank you for standing by, and welcome to Q4 20 ...

Financial Performance - The pro forma Annual Contract Value (ACV) grew approximately 11.2% from $768.6 million as of March 31, 2022, to $854.6 million as of March 31, 2023[114]. - Total Contract Value (TCV) increased to $3.5 billion as of March 31, 2023, compared to $3.2 billion as of March 31, 2022[115]. - Bookings for the three months ended March 31, 2023, were $231.3 million, down from $273.4 million for the same period in 2022; however, bookings for the nine months ended March 31, 2023, rose to $698.1 million from $638.4 million in the prior year[116]. - Free cash flow for the nine months ended March 31, 2023, was $180.8 million, significantly up from $16.3 million in the same period of 2022[119]. - Total revenue increased by $145.3 million to $229.9 million for the three months ended March 31, 2023, compared to the same period in the prior fiscal year, primarily driven by $157.8 million from Heritage AspenTech[128]. - Total revenue for the nine months ended March 31, 2023, increased by $480.1 million to $723.5 million, primarily due to $501.7 million from Heritage AspenTech[137]. - License and solutions revenue increased by $302.8 million for the nine months ended March 31, 2023, primarily driven by $313.7 million from Heritage AspenTech due to the Transaction[138]. - Maintenance revenue rose by $156.2 million during the same period, mainly due to $163.7 million from Heritage AspenTech[138]. - Overall gross profit increased by $331.0 million, with a gross profit margin rising to 59.2% from 47.0% year-over-year[142]. Expenses and Losses - The company reported a GAAP loss from operations of $78.5 million for the three months ended March 31, 2023, compared to a loss of $2.7 million for the same period in 2022[120]. - Net loss for the three months ended March 31, 2023, was $57.6 million, compared to a net loss of $3.3 million in the same period last year[137]. - Selling and marketing expenses surged by $101.1 million to $120.0 million, primarily due to $100.8 million from Heritage AspenTech[132]. - Research and development expenses rose by $38.6 million to $54.0 million, mainly due to $35.7 million from Heritage AspenTech[132]. - General and administrative expenses increased by $31.3 million to $40.5 million, primarily due to $33.6 million from Heritage AspenTech[133]. - Selling and marketing expenses increased by $294.4 million, primarily due to $301.0 million from Heritage AspenTech[143]. - Research and development expenses rose by $107.3 million, mainly attributed to $99.3 million from Heritage AspenTech[143]. Acquisition and Investments - The company entered into a definitive agreement to acquire Micromine for AU $900 million (approximately $623 million USD), with the transaction primarily financed through debt[108]. - The acquisition of Micromine is subject to regulatory approval, and the company has implemented foreign currency forward contracts to mitigate exchange rate risks associated with the purchase[108]. - The company entered into a $630.0 million Emerson Credit Agreement to finance acquisitions, replacing a previous $475.0 million Bridge Facility[152]. - As of March 31, 2023, the company's total commitment under a limited partnership investment fund is $5.0 million CAD ($4.0 million USD), with an investment value of $3.3 million CAD ($2.5 million USD) recorded in non-current assets[166]. Cash Flow and Financial Position - Operating cash flows for the nine months ended March 31, 2023, were $185.7 million, compared to $20.1 million for the same period in 2022[154]. - Free cash flow increased by $164.5 million during the nine-month period, primarily due to contributions from Heritage AspenTech[155]. - As of March 31, 2023, cash and cash equivalents were $286.7 million, down from $449.7 million as of June 30, 2022[150]. - The company recorded an income tax benefit of $68.1 million for the nine months ended March 31, 2023, compared to $7.4 million for the same period in 2022[149]. Currency and Market Risks - As of March 31, 2023, approximately 84% of the ACV was denominated in U.S. dollars, with 95% of the OSI business ACV also in USD[113]. - During the three months ended March 31, 2023, 8.7% of total revenue was denominated in a currency other than the U.S. dollar, while for the nine months, this figure was 9.6%[161]. - The company recorded a net foreign currency exchange gain of $1.0 million and a loss of $2.8 million for the three months ended March 31, 2023 and 2022, respectively[162]. - A hypothetical 10% change in foreign currency exchange rates could have impacted consolidated results by approximately $10.1 million for the three months ended March 31, 2023[162]. - The company has not entered into foreign currency forward contracts during the three months ended March 31, 2023, to mitigate foreign exchange risk[161]. - The company may enter into derivative financial instruments to manage exposure to market risks, including foreign currency exchange rates[159]. - The company recognizes that unfavorable future changes in market conditions could lead to a potential loss up to the full value of its $5.0 million CAD ($4.0 million USD) commitment in the partnership[166]. Internal Controls and Compliance - There was no change in internal control over financial reporting that materially affected the company during the nine months ended March 31, 2023[169]. - The company's disclosure controls and procedures were evaluated as effective as of March 31, 2023[168]. - A hypothetical 100 basis point increase or decrease in interest rates would not have a material impact on the fair value of the company's investment portfolio[164].

Aspen Technology, Inc. (NASDAQ:AZPN) Q3 2023 Results Conference Call April 26, 2023 4:30 PM ET Company Participants Brian Denyeau - ICR Antonio Pietri - President, CEO Chantelle Breithaupt - CFO Conference Call Participants Rob Oliver - R. W. Baird Matthew Pfau - William Blair Jason Celino - KeyBanc Andrew Obin - Bank of America Clarke Jeffries - Piper Sandler Mark Schappel - Loop Capital Operator Thank you for standing by, and welcome to the Third Quarter 2023 Aspen Technology Earnings Conference Call. [O ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________________ Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Trading Symbol Name of Each Exchange on Which Registered Common stock, $0.0001 par value per share AZPN NASDAQ Global Select Market ____________________________________________ FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period en ...

Financial Performance - ACV reached $833.7 million at the end of Q2 FY23[4] - ACV grew by 8.7% year-over-year and 3.0% quarter-over-quarter[4] - Total Revenue for Q2 FY23 was $242.838 million, a 197% increase year-over-year but a 3% decrease quarter-over-quarter[10] - GAAP Net Loss for Q2 FY23 was $66.197 million[10] - Non-GAAP Net Income for Q2 FY23 was $22.801 million, a 36% increase year-over-year but an 84% decrease quarter-over-quarter[10] - Free Cash Flow for Q2 FY23 was $53.102 million[10] Guidance for FY23 - ACV Growth is projected between 10.5% and 13.5%[12] - Total Bookings are expected to be between $1.07 billion and $1.17 billion[12] - Total Revenue is guided between $1.14 billion and $1.20 billion[12] - Non-GAAP Net Income per share is expected to be between $6.83 and $7.43[12]

Aspen Technology, Inc. (NASDAQ:AZPN) Q2 2023 Earnings Conference Call January 25, 2023 4:30 PM ET Company Participants Brian Denyeau - Managing Director, ICR Antonio Pietri - President & CEO Chantelle Breithaupt - CFO Conference Call Participants Robert Oliver - Baird Andrew Obin - Bank of America Matthew Pfau - William Blair Jason Celino - KeyBanc Capital Mark Schappel - Loop Capital Clarke Jeffries - Piper Sandler Operator Good day, and thank you for standing by. Welcome to the Q2 2023 Aspen Technology Ea ...

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements.) This section presents the unaudited consolidated and combined financial statements, including operations, balance sheets, cash flows, and notes on key accounting policies and transactions [Consolidated and Combined Statements of Operations](index=4&type=section&id=Consolidated%20and%20Combined%20Statements%20of%20Operations) For the three months ended September 30, 2022, total revenue reached $250.8 million with a net loss of $11.2 million, significantly impacted by the inclusion of Heritage AspenTech's results Statement of Operations Highlights (Q1 FY23 vs Q1 FY22) | Metric | Three Months Ended Sep 30, 2022 (in thousands) | Three Months Ended Sep 30, 2021 (in thousands) | | :--- | :--- | :--- | | **Total Revenue** | $250,819 | $77,015 | | Gross Profit | $159,689 | $33,495 | | (Loss) from Operations | ($51,182) | ($13,884) | | **Net (Loss)** | **($11,244)** | **($11,202)** | | Net (Loss) per Share (Basic & Diluted) | ($0.17) | ($0.31) | [Consolidated and Combined Balance Sheets](index=6&type=section&id=Consolidated%20and%20Combined%20Balance%20Sheets) As of September 30, 2022, total assets were $14.97 billion, with key components including cash, goodwill, and intangible assets, alongside total liabilities of $1.80 billion and equity of $13.17 billion Balance Sheet Summary (in thousands) | Account | Sep 30, 2022 | June 30, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $382,458 | $449,725 | | Goodwill | $8,326,336 | $8,266,809 | | Intangible assets, net | $5,021,909 | $5,112,781 | | Total Assets | $14,971,403 | $14,969,922 | | Total Liabilities | $1,800,613 | $1,800,565 | | Total Stockholders' Equity | $13,170,790 | $13,169,357 | [Consolidated and Combined Statements of Cash Flows](index=8&type=section&id=Consolidated%20and%20Combined%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities for Q1 FY23 was $5.1 million, with significant cash used in investing activities for acquisitions, resulting in a quarter-end cash balance of $382.5 million Cash Flow Summary (Three Months Ended Sep 30, in thousands) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $5,077 | ($9,186) | | Net cash used in investing activities | ($76,367) | ($3,957) | | Net cash provided by financing activities | $7,756 | $15,195 | | **(Decrease) increase in cash** | **($67,267)** | **$2,054** | | Cash and cash equivalents, end of period | $382,458 | $25,713 | [Notes to Unaudited Consolidated and Combined Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Consolidated%20and%20Combined%20Financial%20Statements) These notes detail the accounting for the Emerson transaction, Inmation acquisition, Micromine hedging, debt facilities, and the impact of the Russia-Ukraine conflict, alongside a change to single segment reporting - The transaction with Emerson, closed May 16, 2022, was accounted for as a business combination, with Emerson's Industrial Software Business treated as the acquirer, impacting prior period financial statements[23](index=23&type=chunk)[25](index=25&type=chunk) - On August 29, 2022, **Inmation Software GmbH was acquired for $87.4 million in cash**, generating **$63.6 million in goodwill** and **$31.5 million in intangible assets**[44](index=44&type=chunk) - Foreign currency forward contracts for the **AU $900 million Micromine acquisition** resulted in a **$50.3 million recognized loss** as of September 30, 2022[68](index=68&type=chunk) - The company transitioned to a **single operating and reportable segment** as of September 30, 2022, with prior period information restated[81](index=81&type=chunk) - Operations in Russia generated approximately **$10.0 million in net sales** and held approximately **$24.5 million in total assets** as of September 30, 2022[28](index=28&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses Q1 FY23 financial performance, highlighting the transformative Emerson transaction, significant revenue growth, increased costs, and liquidity, including new debt facilities for the Micromine acquisition [Key Business Metrics](index=21&type=section&id=Key%20Business%20Metrics) Key business metrics include Pro Forma ACV, which grew 7.7% to $809.6 million, TCV at $3.3 billion, and bookings of $224.0 million for the quarter Key Business Metrics Performance | Metric | As of/For the period ended Sep 30, 2022 | As of/For the period ended Sep 30, 2021 | | :--- | :--- | :--- | | Pro Forma ACV | $809.6 million (+7.7% YoY) | $751.9 million | | TCV | $3.3 billion | $3.1 billion | | Bookings | $224.0 million | $156.2 million | [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Q1 FY23 total revenue increased 225.7% to $250.8 million due to Heritage AspenTech, leading to higher costs, a $51.2 million operating loss, and a $104.8 million pre-tax loss from foreign currency losses - Total revenue increased by **$173.8 million**, primarily due to **$176.4 million in revenue from Heritage AspenTech** following the Emerson transaction[115](index=115&type=chunk) - Operating expenses significantly increased, with **Selling and Marketing up $93.3 million**, including **$64.2 million in additional intangible asset amortization** from the transaction[120](index=120&type=chunk) - Other expense increased by **$57.3 million**, mainly due to **$50.3 million in unrealized losses on foreign currency forward contracts** for the Micromine acquisition[123](index=123&type=chunk) - The income tax benefit increased to **$93.5 million (89.3% effective rate)** from $4.3 million (27.8% effective rate) due to a higher FDII deduction and tax accounting changes[125](index=125&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2022, the company held **$382.5 million in cash**, secured a **$475.0 million bridge facility** for the Micromine acquisition, and reported **$10.7 million in free cash flow** for the quarter - Principal liquidity sources as of September 30, 2022, included **$382.5 million in cash and cash equivalents**[126](index=126&type=chunk) - A **$475.0 million senior unsecured bridge facility** was secured for the Micromine acquisition, with no outstanding amounts as of September 30, 2022[127](index=127&type=chunk) Free Cash Flow (Non-GAAP, in thousands) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $5,077 | ($9,186) | | **Free cash flow** | **$10,716** | **($11,739)** | [Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) The company faces market risks from foreign currency and interest rates, hedging its AU $900 million Micromine acquisition payment, resulting in **$8.3 million in net foreign currency exchange losses** for the quarter - Foreign currency forward contracts hedging the **AU $900 million Micromine acquisition payment** had a **negative fair value of $50.3 million** as of September 30, 2022[135](index=135&type=chunk)[136](index=136&type=chunk) - Net foreign currency exchange losses for the quarter totaled **$8.3 million**, compared to $1.5 million in the prior-year period[137](index=137&type=chunk) - A hypothetical **10% change in interest rates** on outstanding borrowings would not materially impact financial results[139](index=139&type=chunk) [Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures.) As of September 30, 2022, management concluded that disclosure controls and procedures were effective, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures were **effective** as of September 30, 2022[143](index=143&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter[144](index=144&type=chunk) [PART II - OTHER INFORMATION](index=32&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings.) The company reported no legal proceedings during the quarter - No legal proceedings were reported[146](index=146&type=chunk) [Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors.) This section updates risk factors, specifically addressing foreign operations and the Russia-Ukraine conflict, which impacts Russian net sales of **$10.0 million** and assets of **$24.5 million** - Risk factors from Form 10-KT remain current, with a specific revision regarding foreign operations[147](index=147&type=chunk) - The Ukraine conflict poses risks to Russian operations, which generated approximately **$10.0 million in net sales** and held **$24.5 million in total assets** for the quarter[150](index=150&type=chunk) - Potential impacts from the conflict include operational suspension, revenue loss, collection difficulties, and reputational harm[152](index=152&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) The company reported no unregistered sales of equity securities or use of proceeds during the quarter - No unregistered sales of equity securities or use of proceeds were reported[154](index=154&type=chunk) [Exhibits](index=34&type=section&id=Item%206.%20Exhibits.) This section lists all exhibits filed with the Form 10-Q, including executive agreements, Sarbanes-Oxley Act certifications, and Inline XBRL documents for financial reporting - Certifications from the Principal Executive Officer (31.1) and Principal Financial Officer (31.2) are included per Sarbanes-Oxley Act Section 302[156](index=156&type=chunk) - A joint certification from the CEO and CFO (32.1) is included per Sarbanes-Oxley Act Section 906[156](index=156&type=chunk)

Financial Performance - ACV reached $810 million at the end of Q1-FY23, representing a year-over-year growth of 7.7% and a quarter-over-quarter growth of 2.3%[4] - Total revenue for Q1 FY23 was $250.819 million, a 226% increase year-over-year and a 5% increase quarter-over-quarter[11] - GAAP Total Expenses for Q1 FY23 were $302.001 million, a 232% increase year-over-year and a 51% increase quarter-over-quarter[11] - Non-GAAP Total Expenses for Q1 FY23 were $158.247 million, a 157% increase year-over-year and a 44% increase quarter-over-quarter[11] - Non-GAAP Net Income for Q1 FY23 was $142.039 million, a 1,165% increase year-over-year and a 16% increase quarter-over-quarter[11] - Free Cash Flow for Q1 FY23 was $10.716 million, a 119% increase quarter-over-quarter[11] - The company anticipates FY23 total revenue between $1.14 billion and $1.20 billion[13] Business Updates - The company completed the acquisition of Inmation during Q1-FY23[4] - The company expects the Micromine acquisition to close in Q2 FY23, subject to regulatory approvals[4] Guidance - The company projects ACV growth between 10.5% and 13.5% for FY23[13] - The company anticipates total bookings between $1.07 billion and $1.17 billion for FY23[13]

Financial Data and Key Metrics Changes - Annual contract value (ACV) was $809.6 million, up 7.7% year-over-year [12] - Total revenue for the quarter was $250.8 million [36] - GAAP loss per share was $0.17, while non-GAAP EPS was $2.20 [37][38] - Free cash flow was $10.7 million [39] Business Line Data and Key Metrics Changes - The DGM product portfolio generated $16.9 million in software license orders not accounted for in ACV results [12] - The SSE product portfolio began to show transformation in commercial relationships, with some customers converting from perpetual to term license agreements [13] - Annual spend for heritage AspenTech was approximately $682.3 million, an increase of 8.3% year-over-year [35] Market Data and Key Metrics Changes - Demand trends remained strong across key end markets, with refining and upstream sectors showing significant growth [14][17] - The refining industry is expected to continue benefiting from increased diesel and jet fuel demand [17] - Upstream verticals are seeing initial demand for SSE products, indicating a positive outlook for oil and gas companies [18] Company Strategy and Development Direction - The company is focused on executing its integration plan following the Emerson transaction, aiming for significant growth and profitability [6][11] - Synergies are expected in four areas: growth, business transformation, costs, and commercial agreements [11] - The company is optimistic about the dual challenge of meeting rising resource demand while reducing environmental impact, which will drive investment in new technologies [15][16] Management's Comments on Operating Environment and Future Outlook - The management expressed confidence in the macro environment, noting solid CapEx budgets and strong performance in the refining sector [46] - There is cautious optimism regarding the chemicals market due to recent profit warnings, but no significant changes in customer behavior have been observed [52][73] - The company expects to see growth and synergies from DGM and SSE materializing in the second half of the fiscal year [29][30] Other Important Information - The company acquired Inmation, which will enhance its AIoT industrial data and connectivity business [28] - The company is maintaining its ACV growth target of 10.5% to 13.5% for the fiscal year [40] - The first quarter is typically the lowest cash flow quarter due to seasonality [39] Q&A Session Summary Question: Guidance on key metrics and macro outcomes - Management sees a solid macro environment and expects budgets to remain strong for calendar year 2023, despite challenges in the chemicals sector [45][46] Question: Impact of energy security on business - Some benefits from energy security are already being realized through investments in LNG facilities, which will optimize operations for customers [48] Question: Strength in upstream and SSE deals - The combination of AspenTech's engineering suite with SSE's capabilities is generating excitement among customers, leading to optimistic conversations about future deals [53] Question: Inmation acquisition and technology rationalization - The acquisition of Inmation is expected to enhance data management capabilities, providing significant opportunities for customers to leverage their data [56][57] Question: ACV and heritage annual spend metrics - The flat growth in ACV was impacted by a write-off related to Russia sanctions, but overall performance in Q1 was satisfactory [60] Question: Future acquisition pace and funding - The company plans to be judicious with future acquisitions, focusing on integration and leveraging existing capabilities [62][63] Question: Profitability and demand in refining and LNG - The outlook for LNG remains positive, with long-term investments expected to continue despite short-term fluctuations [67][68] Question: Migration timelines for SSE and DGM - The release of the SSE suite was ahead of schedule, and management is optimistic about the transformation benefits materializing in the latter half of the fiscal year [70]