azpn-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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 ended September 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-41400

ASPEN TECHNOLOGY, INC.

(Exact name of registrant as specified in its charter)


Delaware						87-3100817
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


20 Crosby Drive
Bedford
Massachusetts						01730
(Address of principal executive offices)						(Zip Code)

(Registrant’s telephone number, including area code): (781) 221-6400

____________________________________________

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

____________________________________________

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes ý No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act): Yes ☐ No ý

There were 63,249,719 shares of common stock outstanding as of October 30, 2024.

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TABLE OF CONTENTS


		Page
	PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited).	4
	Condensed Consolidated Statements of Operations for the Three Months Ended September 30, 2024 and 2023.	4
	Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended September 30, 2024 and 2023.	5
	Condensed Consolidated Balance Sheets as of September 30, 2024 and June 30, 2024.	6
	Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended September 30, 2024 and 2023.	7
	Condensed Consolidated Statements of Cash Flow for the Three Months Ended September 30, 2024 and 2023.	8
	Notes to Condensed Consolidated Financial Statements.	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	26
Item 4.	Controls and Procedures.	27

	PART II - OTHER INFORMATION

Item 1.	Legal Proceedings.	28
Item 1A.	Risk Factors.	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	28
Item 3.	Defaults upon Senior Securities.	29
Item 4.	Mine Safety Disclosures.	29
Item 5.	Other Information.	29
Item 6.	Exhibits.	30
	SIGNATURES

Aspen Technology, Inc. (“AspenTech”) has many registered trademarks including aspenONE and Aspen Plus. All other trade names, trademarks and service marks appearing in this Form 10-Q not owned by AspenTech are the property of their respective owners.

Our fiscal year ends on June 30th, and references to a specific fiscal year are to the twelve months ended June 30th of such year (for example, “fiscal 2025” refers to the year ending June 30, 2025).

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Condensed Consolidated Financial Statements (Unaudited)

ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


	Three Months Ended September 30,
	2024		2023

	(Dollars and Shares in Thousands, Except per Share Data; Unaudited)
Revenue:
License and solutions	$	101,659	$	148,648
Maintenance	90,686		84,968
Services and other	23,532		15,692
Total revenue	215,877		249,308
Cost of revenue:
License and solutions	63,654		71,578
Maintenance	10,688		10,200
Services and other	21,105		16,282
Total cost of revenue	95,447		98,060
Gross profit	120,430		151,248
Operating expenses:
Selling and marketing	125,661		122,378
Research and development	50,000		53,676
General and administrative	33,008		35,405
Restructuring costs	7,726		—
Total operating expenses	216,395		211,459
Loss from operations	(95,965)		(60,211)
Other income (expense), net	2,041		(5,830)
Interest income, net	17,176		14,049
Loss before benefit for income taxes	(76,748)		(51,992)
Benefit for income taxes	(16,284)		(17,467)
Net loss	$	(60,464)	$	(34,525)
Net loss per common share:
Basic	$	(0.96)	$	(0.54)
Diluted	$	(0.96)	$	(0.54)
Weighted average shares outstanding:
Basic	63,244		64,319
Diluted	63,244		64,319

See accompanying notes to these unaudited condensed consolidated financial statements.

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ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS


	Three Months Ended September 30,
	2024		2023

	(Dollars in Thousands; Unaudited)
Net loss	$	(60,464)	$	(34,525)
Other comprehensive income (loss):
Foreign currency translation adjustments	5,202		(11,201)
Total other comprehensive income (loss)	5,202		(11,201)
Comprehensive loss	$	(55,262)	$	(45,726)

See accompanying notes to these unaudited condensed consolidated financial statements.

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ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS


	September 30, 2024		June 30, 2024

	(Dollars in Thousands, Except Share Data; Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	221,093	$	236,970
Accounts receivable, net	102,867		115,533
Current contract assets, net	426,387		409,177
Prepaid expenses and other current assets	33,670		27,441
Receivables from related parties	45,300		78,483
Prepaid income taxes	2,909		8,462
Total current assets	832,226		876,066
Property, equipment and leasehold improvements, net	18,093		17,389
Goodwill	8,330,124		8,328,201
Intangible assets, net	4,063,852		4,184,750
Non-current contract assets, net	518,562		515,106
Contract costs	26,265		24,903
Operating lease right-of-use assets	95,001		96,034
Deferred income tax assets	7,627		6,989
Other non-current assets	25,189		22,269
Total assets	$	13,916,939	$	14,071,707

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	12,050	$	8,099
Accrued expenses and other current liabilities	78,926		100,167
Due to related parties	24,979		47,449
Current operating lease liabilities	12,172		13,125
Income taxes payable	21,656		44,249
Current contract liabilities	117,768		124,312
Total current liabilities	267,551		337,401
Non-current contract liabilities	33,569		27,512
Deferred income tax liabilities	758,389		790,687
Non-current operating lease liabilities	85,676		84,875
Other non-current liabilities	18,795		18,377
Stockholders’ equity:
Common stock, $0.0001 par value Authorized—600,000,000 shares Issued— 65,453,489 and 65,367,159 shares Outstanding— 63,245,006 and 63,251,495 shares	7		7
Additional paid-in capital	13,293,704		13,277,851
Accumulated deficit	(111,626)		(51,162)
Accumulated other comprehensive loss	(2,059)		(7,261)
Treasury stock, at cost — 2,208,483 and 2,115,664 shares of common stock	(427,067)		(406,580)
Total stockholders’ equity	12,752,959		12,812,855
Total liabilities and stockholders’ equity	$	13,916,939	$	14,071,707

See accompanying notes to these unaudited condensed consolidated financial statements.

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ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY


	Accumulated Other Comprehensive Loss		Common Stock			Additional Paid-in Capital		Accumulated Deficit		Treasury Stock			Total Stockholders’ Equity
			Number of Shares	Par Value						Number of Shares	Cost

	(Dollars in Thousands, Except Share Data; Unaudited)

Balance June 30, 2024	$	(7,261)	65,367,159	$	7	$	13,277,851	$	(51,162)	2,115,664	$	(406,580)	$	12,812,855
Net loss	—		—	—		—		(60,464)		—	—		(60,464)
Other comprehensive income	5,202		—	—		—		—		—	—		5,202
Issuance of shares of common stock	—		48,326	—		6,662		—		—	—		6,662
Issuance of restricted stock units and net share settlement related to withholding taxes	—		38,004	—		(5,623)		—		—	—		(5,623)
Repurchase of common stock	—		—	—				—		92,819	(20,487)		(20,487)
Stock-based compensation	—		—	—		14,814		—		—	—		14,814
Balance September 30, 2024	$	(2,059)	65,453,489	$	7	$	13,293,704	$	(111,626)	2,208,483	$	(427,067)	$	12,752,959


	Accumulated Other Comprehensive Income (Loss)		Common Stock			Additional Paid-in Capital		Accumulated Deficit		Treasury Stock			Total Stockholders’ Equity
			Number of Shares	Par Value						Number of Shares	Cost

	(Dollars in Thousands, Except Share Data; Unaudited)

Balance June 30, 2023	$	2,436	64,952,868	$	6	$	13,194,028	$	(41,391)	487,626	$	(84,150)	$	13,070,929
Net loss	—		—	—		—		(34,525)		—	—		(34,525)
Other comprehensive loss	(11,201)		—	—		—		—		—	—		(11,201)
Issuance of shares of common stock	—		29,644	—		3,826		—		—	—		3,826
Issuance of restricted stock units and net share settlement related to withholding taxes	—		47,896	—		(4,585)		—		—	—		(4,585)
Repurchase of common stock	—		—	—		20,210		—		686,843	(134,434)		(114,224)
Stock-based compensation	—		—	—		16,699		—		—	—		16,699
Balance September 30, 2023	$	(8,765)	65,030,408	$	6	$	13,230,178	$	(75,916)	1,174,469	$	(218,584)	$	12,926,919

See accompanying notes to these unaudited condensed consolidated financial statements.

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ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Three Months Ended September 30,
		2024		2023

		(Dollars in Thousands; Unaudited)
Cash flows from operating activities:
Net loss		$	(60,464)	$	(34,525)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization		122,856		123,219
Reduction in the carrying amount of right-of-use assets		3,961		3,562
Net foreign currency (gains) losses		(2,120)		5,894
Stock-based compensation		14,814		16,699
Deferred income taxes		(32,448)		(51,080)
Provision for uncollectible receivables		491		1,788
Other non-cash operating activities		(258)		19
Changes in assets and liabilities:
Accounts receivable		12,887		29,417
Contract assets		(18,851)		(24,062)
Contract costs		1,285		(1,163)
Lease liabilities		(3,041)		(3,770)
Prepaid expenses, prepaid income taxes, and other assets		(5,956)		(22,487)
Accounts payable, accrued expenses, income taxes payable and other liabilities		(37,052)		10,200
Contract liabilities		(501)		(36,730)
Net cash (used in) provided by operating activities		(4,397)		16,981
Cash flows from investing activities:
Purchases of property, equipment and leasehold improvements		(2,022)		(937)
Payments for business acquisitions, net of cash acquired		—		(8,273)
Payments for equity method investments		(30)		(98)
Payments for asset acquisitions		—		(12,500)
Net cash used in investing activities		(2,052)		(21,808)
Cash flows from financing activities:
Issuance of shares of common stock, net of taxes		6,262		3,285
Repurchases of common stock		(20,487)		(114,224)
Payment of tax withholding obligations related to restricted stock		(4,635)		(1,938)
Net transfers from Parent Company		8,836		3,890
Payments of debt issuance costs		(107)		—
Net cash used in financing activities		(10,131)		(108,987)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		3,264		(6,855)
Decrease in cash, cash equivalents and restricted cash		(13,316)		(120,669)
Cash, cash equivalents and restricted cash, beginning of period		248,468		241,209
Cash, cash equivalents and restricted cash, end of period		$	235,152	$	120,540

Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents		$	221,093	$	120,540
Restricted cash in other non-current assets		14,059		—
Total cash, cash equivalents and restricted cash		$	235,152	$	120,540

Supplemental disclosure of cash flow information:
Income taxes paid, net		$	32,945	$	31,842
Interest paid		$	702	$	663
Supplemental disclosure of non-cash activities:
Change in purchases of property, equipment and leasehold improvements included in accounts payable and accrued expenses		$	150	$	249
Lease liabilities arising from obtaining right-of-use assets		$	2,098	$	397

See accompanying notes to these unaudited condensed consolidated financial statements.

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ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Basis of Presentation

AspenTech, together with its subsidiaries (the “Company”), is a leading industrial software company that develops solutions to address complex industrial environments where it is critical to optimize the asset design, operations and maintenance lifecycle. Through the Company’s unique combination of product capabilities, deep domain expertise and award-winning innovation, customers across diverse end markets in asset-intensive industries can improve their operational excellence while achieving sustainability goals.

The Company had revenue from customers in 113 countries during the first quarter of fiscal 2025.

Basis of Presentation

The Company has prepared the accompanying unaudited condensed consolidated financial statements as of September 30, 2024, and for the first quarter of fiscal 2025 and 2024 pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) and in accordance with generally accepted accounting principles in the United States (“GAAP”). All intercompany balances and transactions have been eliminated in consolidation.

These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated and combined financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024.

The preparation of financial statements and related disclosures in conformity with GAAP requires us to make judgments, assumptions, and estimates that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. The actual results that the Company experiences may differ materially from these estimates.

Russia

In June 2024, the United States government announced new expanded restrictions that prohibit the sale, service, maintenance, and support (such as bug fixes and updates) of enterprise management software and design and manufacturing software in the Russian market. As a result, the Company announced that it had suspended all commercial activities in Russia in the fourth quarter of fiscal 2024. This includes the discontinuation of the following activities: all commercial discussions with customers, initiating or processing renewals, providing proposals to customers or selling products or services. In addition, the Company has written-off certain assets that are related to its operations in Russia, and will be closing certain facilities, and terminating or relocating substantially all employees based in Russia during fiscal 2025.

Beginning with the consolidated balance sheet as of June 30, 2024, the Company classifies cash balances that are both held in Russia and in excess of what it estimates will be required to wind down its operations in Russia as restricted cash due to current restrictions impacting the Company’s ability to transfer funds from bank accounts located in Russia to other countries. As of September 30, 2024 and June 30, 2024, the restricted cash held in Russia was $14.0 million and $11.5 million, respectively, which is included within other non-current assets on the condensed consolidated balance sheets.

2. Significant Accounting Policies

Our significant accounting policies are described in Note 2, “Significant Accounting Policies,” to the consolidated and combined financial statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024. There were no material changes to our significant accounting policies during the three months ended September 30, 2024.

(a) Recently Issued Accounting Standards Not Yet Adopted

In October 2023, the FASB issued Accounting Standards Updated (“ASU”) 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative (“ASU 2023-06”). ASU 2023-06 was issued to modify the disclosure or presentation requirements of a variety of topics in the codification. The effective date for each amendment will be the date on which the SEC removal of the related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The Company does not expect the adoption of ASU 2023-06 to have a material impact on its financial position or results of operations.

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In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 expands segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. The disclosures required under ASU 2023-07 are also required for public entities with a single reportable segment. The ASU is effective for the Company’s first fiscal year beginning after December 15, 2023 and for interim periods within the Company’s first fiscal year beginning after December 15, 2024, with early adoption permitted. The Company does not expect the adoption of ASU 2023-07 to have a material impact on its financial position or results of operations.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. ASU 2023-09 is effective for the Company’s first fiscal year beginning after December 15, 2024. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company does not expect the adoption of ASU 2023-09 to have a material impact on its financial position or results of operations.

3. Revenue from Contracts with Customers

Contract Assets and Contract Liabilities

The Company’s contract assets and contract liabilities were as follows as of September 30, 2024 and June 30, 2024:


	September 30, 2024		June 30, 2024

	(Dollars in Thousands)
Contract assets	$	944,949	$	924,283
Contract liabilities	(151,337)		(151,824)
Net contract assets	$	793,612	$	772,459

The majority of the Company’s contract balances are related to arrangements where revenue is recognized at a point in time and payments are made according to a contractual billing schedule. The change in the net contract asset balance during the three months ended September 30, 2024 was primarily due to greater revenue recognition as compared to billings. Revenue recognized during the first quarter of fiscal 2024 included $38.0 million that was included in the beginning contract liability balance.

Transaction Price Allocated to Remaining Performance Obligations

The following table includes the aggregate amount of the transaction price allocated as of September 30, 2024 to the performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period:


	Year Ended June 30,
	2025		2026		2027		2028		2029		Thereafter		Total

	(Dollars in Thousands)
License and solutions	$	158,801	$	57,595	$	19,618	$	10,301	$	5,063	$	182	$	251,560
Maintenance	246,297		234,058		172,742		114,627		67,181		34,640		869,545
Services and other	84,300		52,695		18,142		7,809		571		77		163,594
Total	$	489,398	$	344,348	$	210,502	$	132,737	$	72,815	$	34,899	$	1,284,699

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Disaggregated Revenue Information

The table below reflects disaggregated revenues by business for the three months ended September 30, 2024 and 2023:


	Three Months Ended September 30,
	2024		2023

	(Dollars in Thousands)
Heritage AspenTech	$	150,043	$	175,743
Subsurface Science & Engineering (“SSE”)	20,310		24,081
Digital Grid Management (“DGM”)	45,524		49,484
Total	$	215,877	$	249,308

The Company did not have any customers that accounted for 10 percent or more of the Company’s revenues for the three months ended September 30, 2024 and 2023, respectively.

4. Intangible Assets

Intangible assets consist of the following as of September 30, 2024 and June 30, 2024:


	Developed Technology		Trademarks		Customer Relationships and Backlog		Capitalized Software and Other		Total

September 30, 2024	(Dollars in Thousands)
Gross carrying amount	$	1,903,599	$	464,400	$	3,082,541	$	24,026	$	5,474,566
Less: Accumulated amortization	(585,236)		(18,900)		(796,521)		(10,057)		(1,410,714)
Net carrying amount	$	1,318,363	$	445,500	$	2,286,020	$	13,969	$	4,063,852

SEC Form 10-Q filed by Aspen Technology Inc.