Aspen Technology’s transition from a perpetual sales model to one based on subscriptions continues. For the quarter ended March 31, AspenTech’s FQ3, total revenue was $61 million, up increased 17% from $52.6 million a year ago. Subscription and software revenue was $42 million, up 38% year/year, while Services and other revenue was $19 million, down 14%. The company reported a loss from operations of $2.8 million in FQ3, a significant improvement from the $7.2 million loss reported a year ago.

You may recall that AspenTech created several metrics to explain to investors how a transition that appears to lead to far lower revenue actually has benefit in the long run. Using those measures, the company says that its total contract value, including the value of bundled maintenance, was $1.59 billion for FQ3, an increase of 19% over last year and a 3% increase sequentially. The license portion of total contract value was $1.40 billion in FQ3, up 15% year/year and 3% sequentially. Finally, annual spend, which the company defines as the”annualized value of all term license and maintenance revenue contracts at the end of the quarter”, was $292 million at the end of the third quarter, up 13% from a year ago.

The company did record one deal recently where it sounds as though the customer simply did not want to deal with a subscription. CFO Mark Sullivan said the customer purchased its a “$6 million full term contract on an upfront basis with zero discount”. The customer wasn’t named, but we can speculate on their logic: Some countries allow companies to depreciate software, which favors a perpetual/maintenance buy; some companies prefer to “own” their software because of how they bill clients; or it may simply be that the customer had budget now and wasn’t sure of the future. But the point needs to be made that customers want to buy in a way that suits them, and it’s unlikely that we will ever see a single license model dominate in this industry.

CEO Mark Fusco told investors on the earnings call that “Q3 and the first 9 months of fiscal 2012 have been strong a strong performance. Looking at the full year, we are a full year ahead of where we expected we’d be in business model transformation. The majority of customers have converted to the subscription model. They are using more of our products and overall usage has been increasing.”

Mr. Fusco also said that AspenTech is now “in a position to use our strong cash flow to increase shareholder value.” That can mean many things, but he spoke about doing “tuck in” technology acquisitions to get new tools into the hands of customers. He’s looking for companies that lack a global scale for distribution, have a product that’s complimentary for AspenTech’s core markets and can be distributed via the AspenOne subscription model. During FQ3, AspenTech acquired SolidSim to launch this strategy. At the time, nothing was said about purchase price or SolidSim revenue; Mr. Fusco said that the company had “small revenue” and that the purchase price was “a few million”. Look for more acquisitions of this size.

The company reports that it saw nothing unusual on a geographic or end-industry basis. Mr. Fusco reports “strong global demand and in energy, chemicals, engineering and construction (E&C), which still account for 90% of revenue.” Interestingly, he saw “consistent demand in E&C, as customers are quite busy even in regions where the global economy would indicate a slowdown.”

CFO Mark Sullivan updated the company’s outlook, saying that the TCV is now expected to up 11% to 12% for fiscal 2012. That translates to revenue of $240 million to $242 million for fiscal 2012 and a non-GAAP operating loss of $18.5 million to $20.5 million (much better than the $23 million to $33 million earlier forecast and the reported $55 million in fiscal 2011). For FQ4, the company expects revenue between $61 million to $63 million.

UPDATE: These results were made public after the stock markets closed on Tuesday, May 1. As of 11 AM ET today, AspenTech’s stock price is up 16% at a time when US markets, in general are down about 0.5%. Clearly, investors like the progress the company has made so far and believe in its future potential.