Aspen Technology(AZPN) - 2024 Q4 - Annual Results

Financial Results Overview The company demonstrated strong FY2024 performance with significant ACV and cash flow growth, alongside increased Q4 revenue and profitability Fiscal Year 2024 and Recent Business Highlights AspenTech reported strong FY2024 execution, highlighted by a 9.4% year-over-year increase in Annual Contract Value FY2024 Key Performance Indicators | Metric | Value | YoY Change | Note | | :--- | :--- | :--- | :--- | | ACV (pre-write-off) | $968.4 million | +9.4% | Excludes $35.5M Russia write-off | | ACV (post-write-off) | $932.9 million | - | Adjusted for Russia, growth was 10.0% YoY | | Cash Flow from Operations | $339.9 million | +13.6% | - | | Free Cash Flow | $335.3 million | +14.7% | - | - The Board of Directors has approved a new share repurchase authorization of up to $100.0 million for fiscal 2025, following the completion of the $300.0 million authorization in fiscal 2024[3] - The company suspended all commercial activities in Russia due to expanded sanctions, resulting in a write-off of approximately $35.5 million in ACV[3] Summary of Fourth Quarter and Fiscal Year 2024 Financial Results In Q4 FY2024, total revenue grew to $342.9 million, with significant year-over-year increases in net income Q4 FY2024 vs Q4 FY2023 Revenue Breakdown (in millions) | Revenue Stream | Q4 FY2024 | Q4 FY2023 | | :--- | :--- | :--- | | License and solutions | $231.0 | $222.8 | | Maintenance | $89.2 | $82.6 | | Services and other | $22.7 | $15.2 | | Total Revenue | $342.9 | $320.6 | Q4 FY2024 vs Q4 FY2023 Profitability (in millions, except EPS) | Metric | Q4 FY2024 | Q4 FY2023 | | :--- | :--- | :--- | | GAAP Income from Operations | $39.2 | $6.0 | | Non-GAAP Income from Operations | $173.4 | $148.9 | | GAAP Net Income | $44.7 | $27.3 | | Non-GAAP Net Income | $150.7 | $138.2 | | GAAP EPS (Diluted) | $0.70 | $0.42 | | Non-GAAP EPS (Diluted) | $2.37 | $2.13 | - Cash and cash equivalents stood at $237.0 million as of June 30, 2024, with $153.0 million in free cash flow generated in Q4 FY2024[7] Recent Developments The company ceased operations in Russia and initiated key corporate actions including a workforce reduction and a new share repurchase program Russia Business Exit AspenTech suspended all Russian commercial activities, resulting in a $35.5 million ACV write-off and a $5.5 million revenue reversal - The company suspended all commercial activities in Russia, including sales, service, maintenance, and support, due to new U.S. sanctions[8] - The exit resulted in a write-off of $35.5 million in Russia-based ACV and a reversal of $5.5 million of revenue in Q4 FY2024[9] - Cash balances held in Russia amounting to $11.5 million have been classified as restricted cash as of June 30, 2024[9] Corporate Actions The company initiated a workforce reduction, a new $100 million share repurchase program, and renewed its credit facility - A workforce reduction of approximately 5% was implemented in Q1 FY2025, with expected restructuring expenses of $7.0 million to $9.0 million[10] - The company completed its $300.0 million share repurchase authorization in FY2024 and the Board has approved a new authorization of up to $100.0 million for FY2025[11] - On June 27, 2024, AspenTech entered into a new Second Amended and Restated Credit Agreement, providing a $200.0 million revolving credit facility[12] Fiscal Year 2025 Business Outlook The company projects approximately 9% ACV growth and provides detailed revenue, profitability, and cash flow guidance for fiscal year 2025 FY2025 Guidance AspenTech projects 9.0% ACV growth, $1.19 billion in revenue, and non-GAAP EPS of approximately $7.47 for FY2025 Fiscal Year 2025 Guidance | Metric | Guidance (approx.) | | :--- | :--- | | ACV Growth | ~9.0% YoY | | Total Revenue | ~$1.19 billion | | GAAP Operating Loss | ~($24) million | | Non-GAAP Operating Income | ~$514 million | | GAAP Net Income per Share | ~$0.81 | | Non-GAAP Net Income per Share | ~$7.47 | | Free Cash Flow | ~$340 million | - The fiscal 2025 ACV guidance is based on the adjusted ACV balance of $932.9 million as of June 30, 2024, which reflects the impact of the Russia business write-off[14] Financial Statements The consolidated financial statements detail the company's revenue growth, asset composition, and cash flow generation for fiscal year 2024 Consolidated Statements of Operations Total revenue increased to $1.13 billion in FY2024, while the company reported an improved GAAP net loss of $9.8 million Fiscal Year 2024 vs 2023 Statement of Operations (in thousands) | Metric | FY 2024 | FY 2023 | | :--- | :--- | :--- | | Total Revenue | $1,127,482 | $1,044,178 | | Gross Profit | $744,906 | $670,589 | | Income (Loss) from Operations | $(89,540) | $(183,065) | | Net Income (Loss) | $(9,771) | $(107,760) | | Diluted EPS | $(0.15) | $(1.67) | Consolidated Balance Sheets As of June 30, 2024, total assets were $14.07 billion, with goodwill and intangible assets representing the majority Balance Sheet Summary (in thousands) | Account | June 30, 2024 | June 30, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $236,970 | $241,209 | | Goodwill | $8,328,201 | $8,330,811 | | Intangible assets, net | $4,184,750 | $4,659,657 | | Total Assets | $14,071,707 | $14,486,052 | | Total Liabilities | $1,258,852 | $1,415,123 | | Total Stockholders' Equity | $12,812,855 | $13,070,929 | Consolidated Statements of Cash Flows The company generated $339.9 million in net cash from operations in FY2024, with significant cash used for stock repurchases Fiscal Year 2024 vs 2023 Cash Flow Summary (in thousands) | Cash Flow Category | FY 2024 | FY 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $339,886 | $299,209 | | Net cash used in investing activities | $(25,706) | $(107,317) | | Net cash used in financing activities | $(294,273) | $(383,771) | Non-GAAP Financial Measures and Reconciliations This section reconciles GAAP financial results to non-GAAP measures, highlighting adjustments for items like amortization and stock-based compensation Reconciliation of GAAP to Non-GAAP Results For FY2024, non-GAAP net income was $422.1 million, a significant adjustment from the GAAP net loss of $9.8 million FY2024 GAAP to Non-GAAP Net Income Reconciliation (in thousands) | Description | Amount | | :--- | :--- | | GAAP net loss | $(9,771) | | Stock-based compensation | $57,311 | | Amortization of intangibles | $486,490 | | Acquisition and integration planning related fees | $1,947 | | Income tax effect on Non-GAAP items | $(113,923) | | Non-GAAP net income | $422,054 | FY2024 Free Cash Flow Reconciliation (in thousands) | Description | Amount | | :--- | :--- | | Net cash provided by operating activities (GAAP) | $339,886 | | Purchases of property, equipment and leasehold improvements | $(4,432) | | Payments for capitalized computer software development costs | $(183) | | Free cash flow (non-GAAP) | $335,271 | Reconciliation of Forward-Looking Guidance The company reconciles its FY2025 GAAP net income guidance of $52 million to a non-GAAP expectation of $478 million FY2025 Guidance Reconciliation for Net Income (in thousands) | Description | Amount | | :--- | :--- | | GAAP expectation - net income | $52,000 | | Stock-based compensation | $56,000 | | Amortization of intangibles | $474,000 | | Restructuring | $8,000 | | Income tax effect on Non-GAAP items | $(112,000) | | Non-GAAP expectation - net income | $478,000 |