Aspen Technology, Inc. :AZPN-US: Earnings Analysis: 2016 By the Numbers : August 26, 2016

Aspen Technology, Inc. reports financial results for the year ended June 30, 2016.

We analyze the earnings along side the following peers of Aspen Technology, Inc. – Rockwell Automation, Inc., PTC Inc., Honeywell International Inc., General Electric Company and SAP SE Sponsored ADR (ROK-US, PTC-US, HON-US, GE-US and SAP-US) that have also reported for this period.


  • Gross margins widened from 88.58% to 89.71% compared to the same period last year, operating (EBITDA) margins now 47.14% from 42.24%.
  • Year-on-year change in operating cash flow of -19.92% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth from operating margin improvements as well as one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2012 2013 2014 2015 2016
Relevant Numbers (Annual)
Revenues 243.13 311.39 391.45 440.4 472.34
Revenue Growth (YOY) N/A N/A N/A N/A N/A
Earnings -13.81 45.26 85.78 118.41 139.95
Earnings Growth (YOY) -234.62 427.8 89.53 38.03 18.19
Net Margin -5.68 14.54 21.91 26.89 29.63
EPS -0.15 0.47 0.92 1.33 1.68
Return on Equity -10.18 42.01 92.45 674.11 N/A
Return on Assets -3.54 12.05 21.7 32.74 38.08

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Earnings Growth Analysis

The company’s earnings growth was influenced by year-on-year improvement in gross margins from 88.58% to 89.71% as well as better cost controls. As a result, operating margins (EBITDA margins) rose from 42.24% to 47.14% compared to the same period last year. For comparison, gross margins were 88.58% and EBITDA margins were 42.24% in the last reporting period.

Gross Margin Versus EBITDA Margin

Cash Versus Earnings – Sustainable Performance?

AZPN-US‘s change in operating cash flow of -19.92% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth


The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from 40.82% to 45.85% and (2) one-time items. The company’s pretax margins are now 44.59% compared to 40.75% for the same period last year.

EBIT Margin Versus PreTax Margin
EBIT Margin History
PreTax Margin History

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Company Profile

Aspen Technology, Inc. engages in the provision of mission-critical process optimization software solutions designed to manage and optimize plant and process design, operational performance, and supply chain planning. Its aspenONE software and related services was developed specifically for companies in the process industries, including the energy, chemicals, and engineering and construction industries. It operates through the Subscription and Software, and Services segments. The Subscription and Software segment provides licensing of process optimization software solutions and associated support services. The Services segment offers professional services and training. The company was founded by Lawrence B. Evans in 1981 and is headquartered in Bedford, MA.

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