Aspen Technology (AZPN) Q1 2025 earnings summary

Executive summary

• Q1 FY2025 delivered resilient ACV growth of 9.4% year-over-year to $941.4M, with strong demand in utilities, energy, and industrial AI, despite a decline in total revenue and bookings due to contract renewal timing and higher attrition.

• Free cash flow was negative $6.4M, below expectations due to collection timing, workforce reduction, and Russia exit, but full-year guidance remains unchanged.

• Net loss widened to $60.5M from $34.5M prior year, reflecting lower revenue and restructuring costs.

• Announced acquisition of Open Grid Systems Limited for $45M to enhance digital grid management, expected to close in Q2 FY2025.

• Continued innovation in industrial AI, sustainability, and microgrid solutions, with new product launches and expanded partnerships.

Financial highlights

• Q1 revenue was $215.9M, down from $249.3M year-over-year, driven by a 31.6% decline in license and solutions revenue, partially offset by growth in maintenance and services.

• Non-GAAP operating income was $48.6M (22.5% margin), down from $77.8M prior year; non-GAAP net income was $53.9M ($0.85/share), down from $74.9M ($1.16/share).

• Free cash flow was negative $6.4M, compared to $16.0M a year ago, impacted by timing of collections and one-time Russia exit/restructuring payments.

• Cash and equivalents at quarter-end were $221.1M, with $194.5M available under the revolving credit facility and no debt.

• Bookings for the quarter were $151.4M, down from $211.8M a year ago, due to renewal timing and higher attrition.

Outlook and guidance

• FY2025 guidance reaffirmed: ACV growth of ~9%, total revenue ~$1.19B, bookings ~$1.17B, GAAP net income ~$52M ($0.82/share), non-GAAP net income ~$478M ($7.52/share), and free cash flow of ~$340M, with most FCF expected in the second half.

• Q2 revenue expected between $290M-$300M; Q4 anticipated as the highest revenue quarter.

• Attrition for FY2025 projected at ~4.5%, with higher attrition in Q1 and Q4 due to renewal timing.

• GAAP and non-GAAP EPS estimates raised slightly due to share repurchases.

• Management expects existing cash and cash flows to be sufficient for at least the next 12 months.