Company Overview - Xueqiudoc.xueqiu.com/146e91566e7a1d3fc82a1f22.pdf · © 2014 Aspen Technology, Inc. All rights reserved 1 President and CEO May 15, 2014 Company Overview Antonio

© 2014 Aspen Technology, Inc. All rights reserved

1

President and CEO

May 15, 2014

Company Overview

Antonio Pietri


2

Safe Harbor Statement

These slides may contain forward-looking statements for purposes of the

safe harbor provisions of the Private Securities Litigation Reform Act of

1995. Actual results may vary significantly from AspenTech’s expectations

based on a number of risks and uncertainties, including, without limitation,

the risk factors described in AspenTech’s most recent Annual Report on Form

10-K and any subsequent quarterly reports on Form 10Q, each as filed with

the U.S. Securities and Exchange Commission. AspenTech cannot guarantee

any future results, levels of activity, performance, or achievements. Further,

AspenTech expressly disclaims any current intention to update any

forward-looking statements after the date hereof.


3

Multi-Billion Dollar TLCV Opportunity

Key Highlights

Market Leadership Position

World-Class Customer Base with Significant Upsell Opportunities

Subscription Model with Long-Term

Contracts

Focus on Driving Shareholder Value

Best-in-Class Profitability and

Cash Flow Generation


4

Global Market

Complex manufacturing processes

High capital costs

High volume production

$10 trillion global industries

Energy Chemicals Engineering & Construction

characteristics industry

Engineering and technology


5

Globalization

Volatility

Changing demographics

Energy Chemicals Engineering & Construction

Environmental and safety regulations

Focus on operational excellence

Industry Dynamics


6

Industry Competitive Dynamics

Upstream CAPEX: increasing costs

Refining capacity: supply chain challenges

North American tight oil production

Alternative fuels

Energy

Disruptive dynamics: shale gas

New capacity plans in North America

Integrated refinery-chemical complexes

Specialty chemicals

Chemicals

Growth in emerging economies

Growth in upstream E&P projects

Need to manage projects globally

Productivity drivers

Engineering & Construction

Focus on operational excellence: optimization and productivity


7

Energy

Largest petroleum companies1

19/20

AspenTech’s Customers

Chemicals

Engineering/ Construction

Largest chemical companies1

20/20

Largest engineering & construction companies2

18/20

1 As of June 30, 2011

2 As of June 30, 2011 - Engineering and Construction companies ranked by revenues from the process industries


8

Product Suites

ENGINEERING MANUFACTURING SUPPLY CHAIN

Simulation

Economic Evaluation

Physical Properties

Equipment Design

Basic Engineering

Advanced Process Control

Real Time Optimization

Information Management

Petroleum Planning and Scheduling

Chemicals Planning and Scheduling Distribution


9

From Point Products…

…to aspenONE…

Engineering


10

Produce

Plan

Concept

Operations

Supply

Demand

Integrated Software

ENGINEERING MANUFACTURING SUPPLY CHAIN


11

…to aspenONE Collaboration

Engineering

Plant Planning &

Performance Mgmt

Plant Scheduling

Process Dev &

Conceptual Eng

Primary

Distribution Mgmt

Demand Mgmt

Production Tracking

Detailed Engineering

Basic Engineering

Regional Planning

Secondary

Distribution

Order Mgmt &

Execution

Operations

Plant Ops

& Planning


12

Why AspenTech?

2. Ref: Published article authored by WorleyParsons and AspenTech in Hydrocarbon Engineering Magazine, 2008, AspenTech Case Study, EPC Leader Adopts Integrated Engineering Solution to Drive Growth in Feed Business 2009, Multiple presentations at OPTIMIZE2009, 2010, 2011

4. Ref: Ecopetrol APC Programs: A Close Collaboration Francisco Trespalacios Vergara, Ecopetrol 2010 Aspen Global Conference, Boston, May 2010

3. Ref: ICIS Chemical Business, “Chemical firms lower energy use with new technologies”, 17 August 2009

5. Ref: Kumar KisJay, Essar Oil, based on a paper, Using PIMS-AO to Improve Business Processes, presented at the aspenONE Global Conference, May 3-5, 2010 in Boston, MA

1. Dr. Axel Polt, BASF (2004), “Paradigm Shifts in Process Simulation: SuccessStories in Day-to-Day Business”, presented at AspenWorld 2004

Control optimization for over 10 years

$14M Collaborative APC Rollout across refineries

$1,000M Manufacturing

$12M Improves processes and reduces feedstock cost by 10 c/bbl

Supply Chain

>$100M Engineering Capital and energy savings (10 – 30%)

20% Corporate energy savings


13

Why is AspenTech unique?

#1 global provider of optimization software solutions for the process industries

− Vertical focus

− Deep domain knowledge and expertise on hydrocarbon processes

− Large return on investment

− Mission critical solutions

Solve complex optimization problems

Breadth of solutions

Track record of innovation

Singular focus on software


14

Subscription Model Since FY2010

Strong financial position built on the aspenONE Licensing Model

Bundled License and Maintenance

Long-term Contracts

Customers Have Access to All Products

90% of Contract Value Converted


15

Growth Strategy

Usage and Product Adoption


16

Usage and Product Adoption Strategy

Invest in High Growth Markets

Pursue Acquisitions

Product Innovation

Penetrate Customer

Base

Scale through Digital

Channels

Expand Total Addressable Market


17

Access Anywhere/ Anytime

Faster and Easier Implementation

Product Innovation

Automation of Knowledge Work

Breakthrough Innovations

Modern User Experience


18

Current Usage

− Activation

− Integrated workflow

− Search

− Analytics

− Visualization

− Easier to use

− New functionality

Penetrate Customer Base

Potential Usage


19

China

Latin America

Middle East

Russia

Inside Sales (SME)

− High productivity

− New customers

Invest in High Growth Markets


20

Hundreds of Thousands of Users

− Variety of skills, experience and business needs

Need to Distribute Specific Content to Key Segments

− Map and deliver targeted messages to each segment

Digital Channel Solutions are Scalable and Cost Effective

− Especially among global base of customers

Technology Trends Require Multi Channel Access

− Mobility and Collaboration

Deploying a Comprehensive Digital Strategy

Webinars

Social Media

Community

Blog Article Content

Discussion Forum Content

Resource Library Content

Website


21

market addressable total

Existing Customers

Current Usage


22

An effective way to drive shareholder value

− Four small tuck-in acquisitions in last 24 months

Buy versus make decision

Growth and profitability a key consideration

Continuously evaluating opportunities

Acquisitions


23

Total Addressable Market

AspenTech


24

Methodology

Pro

du

cts

Sites

Focus on top 350 accounts

Calculate whitespace by site and product for each account

Estimate revenue and TLCV potential for each

Total extrapolated to all accounts


25

Industry Growth

− 1-3% for Energy and Chemicals

− Up to 9% for Engineering

Price Increases

− 2% price escalation on average on term contracts

Product Innovations

− Example: Adaptive Process Control, Acid Gas Modeling

Acquisitions

− Examples: Solids Modeling, PSV Plus

Driving Expansion of Total Addressable Market

Existing Customers

Current Usage


26

AspenTech Current Usage

$1.8B

Competitors Current Usage*

$1.8B

$10.1B

market

Total License Contract Value (TLCV) $6.5B (Available TAM)

addressable total Potential

Total License Contract Value (TLCV)

* Estimated by AspenTech from internal white-space methodology on existing customer base


27

Existing Customers

Current Usage

$1.8B

Estimated TLCV from Pressure Relief Valve Sizing and Solids Modeling

− $100 Million

$6.5B

$300M $100M

Estimated TLCV from Adaptive Process Control

− $300 Million

through innovation

expanding TAM

AspenTech

$8.3B

(TLCV)

Examples


28

Usage and Product Adoption

Sales Leverage and Alignment

aspenONE Licensing Model

Large Installed Base Significant White Space

Sales Organization Productivity

High Growth Areas


29

Multi-Billion Dollar Market Opportunity

Conclusion: focus on execution



Subscription Model with Long-Term

Contracts

Shareholder Value Driven Focus

Best-in-Class Profitability and

Cash Flow Generation


30

One more point…


31

Announced relocation of headquarters from Burlington to Bedford, MA

− Effective November 1st 2014

Consolidating our Burlington, MA and Nashua, NH operations into one location:

− Co-location benefits in R&D and Product Management

Move to Bedford provides:

− Cost advantage over the life of 10-year lease versus co-location in Burlington location Lease cost (net of tenant allowance) of $8 million

One-time CAPEX costs associated with moving to Bedford impact cash-flow in Fiscal year 2015 of $7 to $8 million

New Corporate Headquarters – A one-time CAPEX event


32

Crosby Corporate Center Bedford, MA

200 Wheeler Rd. Burlington, MA


33

Thank you


1

Chief Financial Officer

May 15, 2014

Financial Review

Mark Sullivan


2

Financial Highlights

Subscription-based revenue model

Towards end of 5th year of a 6 year transition

Multi-year history of growing license contract value

Best in class financials

Growing cash flow and strong balance sheet

Returning capital to shareholders via share repurchase

Strong FY 2014 performance and outlook for FY 2015


3

Revenue Model Transition aspenOne Licensing Model Introduced at Beginning of FY ‘10

$ Millions

* Includes professional services, training and other revenue


4

Revenue Model Transition Coming to Completion

From FY2009 to 2010, GAAP revenue decreased almost 50% as a result of the business model change

From FY2010-2014, GAAP revenue and deferred revenue growth rates significantly exceeded the growth rates of TLCV and Annual Spend

FY2015 is the final year of the 6-year transition

Transition timeframe due to contract durations at end of FY2009

After FY2015, GAAP revenue and deferred growth rates will no longer be impacted by revenue model transition


5

FY ‘14 & ‘15 Revenue Guidance

$ Millions


6

FY ‘14 & ‘15 Revenue Guidance

$ Millions

26%

14%


7

Total Term Contract Value (TCV)

$ Billions

Represents the estimated renewal

value of all active term license

contracts

Provides financial stability and

predictability

• Typically 5-6 year contracts

• Annual escalation

• High renewal rates


8

Term License Contract Value (TLCV) Year over Year Growth


9

Annual Spend(1) Year over Year Growth

(1) Annual spend is a proxy for the annualized subscription and software revenue associated with the term license business. Represents the aggregate annualized license and maintenance invoice value for all active term contracts.


10

Free Cash Flow(1)

$ Millions

FCF Per Share2

$0.61 $0.37 $1.04 $1.50 $1.81-$1.87

YTD Q3 FY’14

¹ Free cash flow is cash flow from operations less (1) purchases of property, equipment and leasehold improvements and (2) capitalized software development costs, plus non-capitalized acquired technology. FY ’13 also includes insurance proceeds. 2 Diluted shares outstanding are estimates for FY 2010 – FY 2012 and FY 2014

143

170 - 175


11

Quarterly Free Cash Flow

$ Millions

$100M $143M $170-175M Guidance Full Year:


12

Stock Repurchase Plan


13

Expense Management GAAP & Non-GAAP Total Costs

$ Millions


14

Expense Trends

$ Millions


15

Target Long Term Operating Model

Current

Revenue 100%

Gross Margin 83-85%

Sales & Marketing 24-26%

Research & Development

14-15%

General & Administrative

12-13%

GAAP Operating Expenses

50-53%

GAAP Operating Margin

30-35%

Non-GAAP Operating Margin

33-38%

GAAP Non-GAAP


16

Target Long Term Operating Model

Current Updated

Revenue 100% 100%

Gross Margin 83-85% 87-90%

Sales & Marketing 24-26% 22-24%

Research & Development

14-15% 14-15%

General & Administrative

12-13% 9-10%

GAAP Operating Expenses

50-53% 47-49%

GAAP Operating Margin

30-35% 40-43%

Non-GAAP Operating Margin

33-38% 42-45%

GAAP Non-GAAP


17

Revenue Model Transition Impact on Taxes

Revenue recognition for GAAP and Tax accounting is comparable

Contributed to pretax losses from FY2010-2012

But losses for tax purposes exceeded GAAP losses due to differences in accounting for stock compensation expense

When stock prices rise, tax expense from stock compensation exceeds GAAP expense

Incremental tax expense/deduction/tax benefit isn’t included on the balance sheet as a deferred tax asset (DTA)

Disclosed annually in the tax footnote as additional paid-in capital (APIC) NOL

We have tax benefits in excess of our balance sheet DTA’s and don’t expect to become US corporate taxpayer until FY2016, based on current projected results


18

APIC NOL Illustrative Example

*

* Stock price as of 5/12/2014


19

APIC NOL Illustrative Example GAAP Cost Basis established on grant date

*


Annual Grant 8/1/10: RSU @ $10.93 Option @ $4.54


20

APIC NOL Illustrative Example Tax Cost Basis established on vest/exercise date

*


12/31/13 Value: $41.80

RSU Vest Option Exercise



21

APIC NOL Illustrative Example Calculation

*



Calculation RSU Option

12/31/13 Value $41.80 $41.80

Exercise Price ($10.93)

IRS Expense Basis $41.80 $30.87

GAAP Expense Basis ($10.93) ($4.54)

APIC NOL $30.87 $26.33

12/31/13 Value: $41.80 RSU Vest

Option Exercise


22

Tax Attributes

IRS

Net Operating Losses (NOLs)

Foreign Tax Credits

R&D Tax Credits

GAAP

Regular NOLs

Foreign Tax Credits

R&D Tax Credits

APIC NOLs


23

Value of Tax Attributes(1) expected to be utilized As of 3/31/14 (Q3 FY 14)

GAAP

Regular NOLs

Foreign Tax Credits

R&D Tax Credits

APIC NOLs

On Balance Sheet

Off Balance Sheet

$32M

$45M

(1) Tax attributes are presented on a tax-effected basis


24

Regular vs. APIC NOLs Impact on GAAP Cash Flow Statement

ILLUSTRATIVE CASH FLOW STATEMENT

($000's)

Regular NOLs APIC NOLs

Net Income 100,000 100,000

Deferred Income Taxes 30,000 -

Other non-cash operating activities 10,000 10,000

Source/(Use) of Working Capital - -

Cash Flow From Operating Activities 140,000 110,000

Cash Provided by/(Used in) Investing Activities

Purchase of fixed assets (4,000) (4,000)

Software Development Costs (1,000) (1,000)

Cash Provided by/(Used in) Investing Activities (5,000) (5,000)

Cash Provided by/(Used in) Financing Activities

Excess tax benefits from stock-based compensation - 30,000

Cash Provided by/(Used in) Financing Activities 0 30,000

Change in Cash, End of Period 135,000 135,000


25

Tax Status - Recap

Don’t expect to become US corporate cash taxpayer until FY2016, based on current projected results

GAAP requires differentiation between “Regular and APIC” NOLs

GAAP treats the value of the APIC deduction like an issuance of stock

Treated as a financing source of cash on GAAP cash flow statement

Will impact FY2014 to FY2015 GAAP cash flow comparisons

We will report non-GAAP cash flow metrics in FY2015 to show cash flow on historically comparable basis

All tax expenses/benefits, irrespective of source, will flow through operating cash flow


26

FY 15:

Will continue to provide:

TLCV growth guidance

TLCV/TCV and Annual Spend reported quarterly

FY 16 (preliminary):

Will provide:

Annual Spend growth guidance

Annual Spend reported quarterly

TLCV/TCV on milestone basis or at year-end

Non-GAAP Metrics


27

FY 2015 Guidance


28

FY ‘15 Free Cash Flow(1) Guidance

$ Millions

FCF Per Share2

¹ Free cash flow is cash flow from operations less (1) purchases of property, equipment and leasehold improvements and (2) capitalized software development costs, plus non-capitalized acquired technology. FY ’13 also includes insurance proceeds. 2 Diluted shares outstanding are estimates for FY 2010 – FY 2012 and FY 2014 – FY 2015 3 Based on projected results as of 5/15/14

$0.61 $0.37 $1.04 $1.50 $1.81-$1.87 $2.05-$2.10

APIC NOL

($35-40M)3

Includes $7-8M capital expense related to new headquarter

building


29

FY ‘14 & ‘15 Guidance

(1)Guidance assumes 93.7M & 92.8M weighted average diluted shares outstanding for FY ‘14 and FY ‘15 respectively

$Million except per share

License TCV Growth 11% or Better Double digit range

Free Cash Flow 170 - 175 190-195

Total Revenue 385 - 387 430-440

Subscription & Software % of Revenue ~ 90% > 90%

Total GAAP Expense 264 - 267 280 - 285

Operating Income 119 - 121 147 - 157

Operating Margin 31% 35%

Net Income 75 - 77 93 - 100

Net Income per share $.80 - $.82 $1.01 - $1.08

Non-GAAP Operating Income 138 - 141 164 - 174

Non-GAAP Net Income per share $.94 - $.96 $1.12 - $1.19

FY '15 Full Year

Guidance (1)

Proposed

FY '14 Full Year

Guidance (1)


30

Multi-Billion Dollar Market Opportunity



Subscription Model with Long-Term Contracts

Shareholder Value Driven Focus

Best-in-Class Profitability and Cash Flow Generation

Conclusion and Q&A

Documents

Company Overview - Xueqiudoc.xueqiu.com/146e91566e7a1d3fc82a1f22.pdf · © 2014 Aspen Technology, Inc. All rights reserved 1 President and CEO May 15, 2014 Company Overview Antonio