Aspen Technology(AZPN) - 2024 Q2 - Quarterly Report

Financial Performance - As of December 31, 2023, the Annual Contract Value (ACV) grew by approximately 9.6%, from $833.7 million in 2022 to$ 914.1 million in 2023[120]. - The Total Contract Value (TCV) increased to $3.8 billion as of December 31, 2023, compared to$ 3.4 billion in 2022[121]. - Bookings for the three months ended December 31, 2023, were $233.4 million, a decrease from$ 242.8 million in the same period of 2022[122]. - Total revenue increased by $14.3 million, or 5.9%, to$ 257.2 million for the three months ended December 31, 2023, compared to the same period in the prior fiscal year[133]. - Total revenue increased by $12.8 million, or 2.6%, to$ 506.5 million for the six months ended December 31, 2023, compared to $493.7 million in the same period of 2022[152]. - Net loss decreased by$ 44.7 million, or 67.5%, to $21.5 million for the three months ended December 31, 2023[145]. Revenue Breakdown - License and solutions revenue rose by$ 2.6 million, or 1.7%, primarily due to new term license orders[134]. - Maintenance revenue grew by $6.4 million, or 8.2%, driven by an increase in the base of arrangements[135]. - Services and other revenue surged by$ 5.3 million, or 36.7%, attributed to the timing and volume of professional services engagements[136]. - License and solutions revenue decreased by $9.0 million, or 2.9%, to$ 301.1 million, primarily due to the timing of renewals and new contracts[153]. - Maintenance revenue increased by $13.0 million, or 8.3%, to$ 170.0 million, driven by growth in the base of arrangements[154]. - Services and other revenue increased by $8.7 million, or 32.9%, to$ 35.3 million, due to increased professional services engagements[155]. Costs and Expenses - Total cost of revenue increased by $1.8 million, or 2.0%, mainly due to higher compensation costs and headcount[137]. - Total cost of revenue increased by$ 8.8 million, or 4.8%, to $193.0 million, primarily due to increased compensation costs and headcount[156]. - Selling and marketing expenses rose by$ 4.3 million, or 3.6%, due to higher compensation costs related to expanding sales capacity[141]. - Selling and marketing expenses increased by $8.4 million, or 3.6%, to$ 244.6 million, mainly due to higher compensation costs[161]. - Research and development expenses increased by $3.2 million, or 6.4%, primarily due to higher compensation costs[142]. - Research and development expenses increased by$ 7.1 million, or 7.1%, to $106.8 million, primarily due to higher compensation costs[162]. Cash Flow and Investments - Free cash flow (non-GAAP) for the six months ended December 31, 2023, was$ 45.2 million, down from $51.4 million in 2022[124]. - Net cash provided by operating activities decreased by$ 7.8 million, primarily due to unfavorable changes in working capital[170]. - Free cash flow decreased by $6.2 million during the six-month period, driven by the decrease in net cash provided by operating activities[173]. - Net cash provided by operating activities for the six months ended December 31, 2023, was$ 46.8 million, a decrease of 14.5% from $54.6 million in 2022[174]. - As of December 31, 2023, standby letters of credit amounted to$ 31.5 million, compared to $39.0 million as of June 30, 2023[175]. - The company's total commitment under a limited partnership investment fund is$ 5.0 million CAD (approximately $3.7 million USD)[182]. - As of December 31, 2023, the fair value of the investment in the partnership was$ 3.2 million CAD (approximately $2.4 million USD)[182]. Foreign Currency and Interest Rates - Approximately 85% of the company's ACV was denominated in U.S. dollars as of December 31, 2023[119]. - During the three months ended December 31, 2023, 12.1% of total revenue was denominated in foreign currencies, up from 8.3% in the same period of 2022[179]. - Net foreign currency exchange losses for the three months ended December 31, 2023, were$ 0.3 million, a significant decrease from $3.6 million in 2022[180]. - A hypothetical 10% change in foreign currency exchange rates could have impacted results of operations by approximately$ 3.0 million for the three months ended December 31, 2023[180]. - A hypothetical 100 basis point change in interest rates would not have a material impact on the fair value of the company's investment portfolio[181]. - Interest income, net increased by $8.2 million, or 198.1%, due to higher interest income on cash and cash equivalents[146]. Strategic Focus - The company aims to support energy transition and a net zero future through new processes such as green hydrogen and carbon capture technologies[113]. - The company is focused on optimizing asset lifecycle management to enhance operational excellence and sustainability for its customers[112]. - The company expects higher levels of amortization of intangible assets following the transaction with Emerson, impacting future financial results[128]. Inflation Impact - Inflation has not materially impacted the company's business or operating results, but may affect future acquisition strategies[176].