AspenTech targets growth despite market exit By Investing.com

Aspen Technology (NASDAQ:), Inc. (AspenTech), a global leader in asset optimization software, reported a robust fourth quarter for fiscal 2024, with significant growth in its Annual Contract Value (ACV) and strategic advancements despite exiting the Russian market. The company announced an ACV growth of 9.4% year-over-year and 3.5% sequentially, while free cash flow for the fiscal year reached $335 million, marginally below the provided guidance.

Excluding the impact from Russia, the growth rates for fiscal years 2023 and 2024 were even stronger. AspenTech also revealed plans for a new microgrid solution and anticipates ACV growth for fiscal 2025, along with a workforce reduction aimed at cost savings.

Key Takeaways

• AspenTech achieved 9.4% YoY ACV growth and 3.5% sequential growth in Q4 fiscal 2024.
• The company’s free cash flow for the fiscal year was $335 million, slightly below guidance.
• AspenTech’s exit from the Russian market reduced ACV by about $35 million.
• Growth rates excluding Russia improved to 12.4% for fiscal 2023 and 10% for fiscal 2024.
• The Digital Grid Management suite grew by 40% in fiscal 2024, contributing significantly to growth.
• AspenTech plans to release a new microgrid solution and targets ACV growth for fiscal 2025.
• Workforce reduction of 5% is expected to result in $25 million in annual savings.

Company Outlook

• AspenTech is targeting approximately 9% ACV growth for fiscal 2025.
• The company expects total bookings of $1.17 billion and revenue of approximately $1.19 billion for the upcoming fiscal year.
• An Investor Day is scheduled for September 17, 2025, to discuss long-term growth plans.

Bearish Highlights

• The chemicals market remains depressed and is not anticipated to contribute significantly to growth in fiscal 2025.

Bullish Highlights

• The company has reported strong growth in its MSC suite, especially in Q4 fiscal 2024.
• Several large deals have been secured, including with leading refiners in North America and Europe.
• AspenTech’s DGM product is gaining competitive advantage and displacing incumbents in utility upgrades.

Misses

• Free cash flow for the fiscal year was slightly below the guidance provided by the company.

Q&A Highlights

• CEO Antonio Pietri emphasized the token licensing model’s benefits, providing immediate availability of new products to customers.
• The company’s restructuring efforts are broad-based and not limited to the Russian market exit.
• Guidance for fiscal 2025 accounts for the discontinuation of Russian operations and associated…