Aspen Technology(US:AZPN)2022-10-27 02:30Financial 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]