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Aspen (AZPN) Q2 Earnings Miss Estimates, Revenues Rise Y/Y

Aspen Technology AZPN reported second-quarter fiscal 2024 non-GAAP earnings per share (EPS) of $1.37, which missed the Zacks Consensus Estimate of $1.49. AZPN reported non-GAAP EPS of 35 cents in the year-ago quarter.

Revenues of $257.2 million increased 5.9% year over year driven by solid demand for products and solutions across most of the end markets. However, it lagged the Zacks Consensus Estimate by 1%.

Quarter in Detail

License and solutions’ revenues (59.3% of revenues) were up 1.7% year over year to $152.5 million.

Maintenance’s revenues (33.1%) rose 8.2% year over year to $85.1 million.

Revenues from Services and other (7.6%) increased 36.7% year over year to $19.6 million.

Aspen Technology, Inc. Price, Consensus and EPS Surprise

Aspen Technology, Inc. Price, Consensus and EPS Surprise
Aspen Technology, Inc. Price, Consensus and EPS Surprise

Aspen Technology, Inc. price-consensus-eps-surprise-chart | Aspen Technology, Inc. Quote

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The Zacks Consensus Estimate for fiscal second-quarter revenues for the License, Maintenance and Services and other segments was pegged at $158 million, $86 million and $15.3 million, respectively.

 

Margins

Gross profit increased to $162.2 million from the year-ago quarter’s $149.7 million. As a percentage of total revenues, the figure reached 63.1% from 61.7% reported in the prior-year quarter.

Total operating expenses amounted to $211.4 million from the year-ago quarter’s $209.1 million due to higher selling, marketing, and research and development costs.

Non-GAAP operating income totaled $88.7 million compared with $86.6 million reported in the year-ago quarter.

Balance Sheet & Cash Flow

As of Dec 31, 2023, cash and cash equivalents were $130.7 million compared with $120.5 million as of Sep 30, 2023.

The company generated $29.8 million in cash from operations compared with $49.5 million reported in the previous quarter. Non-GAAP free cash flow was $29.2 million in the fiscal second quarter compared with $47.8 million in the prior-year quarter. Free cash flow performance was affected due to the variability of contract cycle renewals and billings between quarters coupled with higher expenses and cash tax in the fiscal second quarter.

Aspen repurchased 375,041 shares for $72.1 million in the fiscal second quarter. As of Dec 31, 2023, a total of 954,839 shares worth $186.3 million had been repurchased under the share repurchase authorization of $300 million announced in August 2023. The company has shares worth $113.7 million left under its buyback authorization.

Fiscal 2024 View

For fiscal 2024, Aspen expects revenues to be at least $1.12 billion. The Zacks Consensus Estimate is pegged at $1.12 billion.

Non-GAAP net income is now anticipated to be at least $6.59 per share compared with earlier guidance of $6.57 per share. The consensus estimate is pegged at $6.63 per share.

Management projects Annual Contract Value growth to be at least 11.5% from a year ago and total bookings to be at least $1.04 billion.

Non-GAAP operating income is estimated to be at least $445 million, while non-GAAP total expenses are expected to be nearly $675 million.

Free cash flow is projected to be at least $360 million.

Zacks Rank

Aspen currently has a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked stocks worth consideration in the broader technology space are Watts Water Technologies WTS, Manhattan Associates MANH and Microsoft MSFT. While Manhattan Associates currently sports a Zacks Rank #1 (Strong Buy), Watts Water and Microsoft carry a Zacks Rank of 2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Watts Water Technologies’ 2023 EPS has improved by 1.1% in the past 60 days to $8.09.

WTS’ earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 11.8%. Shares of WTS have jumped 19.9% in the past year.
The Zacks Consensus Estimate for MANH 2024 EPS has increased by 3.6% in the past 60 days to $3.76.

Manhattan Associates’ earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 27.6%. Shares of MANH have surged 71.4% in the past year.

The Zacks Consensus Estimate for Microsoft’s fiscal 2024 earnings is pegged at $11.60 per share, indicating growth of 18.3% from the year-ago levels. Microsoft’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 8.8%. The long-term growth rate is pegged at 16.2%. MSFT has gained 52% in the past year.

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Manhattan Associates, Inc. (MANH) : Free Stock Analysis Report

Watts Water Technologies, Inc. (WTS) : Free Stock Analysis Report

Aspen Technology, Inc. (AZPN) : Free Stock Analysis Report

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