Schnitger Corporation

AspenTech continues trend of good PLMish news

AspenTech continues trend of good PLMish news

Aug 17, 2020 | Hot Topics

We’re learning a lot about what works and what doesn’t when a global pandemic hits — there’s no guarantee that this will work next time but, so far: low-touch subscriptions sales and renewals, anything that lets people work remotely, and risk reduction technologies and methods, have made all the difference so far this year.

AspenTech, maker of process modeling and asset optimization software reported results last week that relied on all of these — and they were surprisingly good results. For the fourth quarter, total revenue was $199.3 million, up 2%, while license revenue was basically flat at $147.2 million. Maintenance revenue was $45.7 million was up 16% while revenue from services and other was $6.4 million down 18%.

That doesn’t sound all that awesome, on the numbers alone, but CEO Antonio Pietri told investors that his customers are investing in digitalization — and it appears as though many hope to leapfrog their competitors by moving straight into technologies like artificial intelligence to optimize asset operations. In conjunction with the earnings release, AspenTech announced the debut of AIoT Hub, which “enables seamless and flexible data mobility and integration across the enterprise from sensors to the edge and cloud and accelerates the delivery of visualization and insights for capital-intensive industries. This AIoT Hub is also the cloud-ready environment for AspenTech’s next-generation Industrial AI products and solutions.” AIoT Hub combines data from operating assets with “ready-to-use and built-for-industry applications” like Aspen’s InfoPlus.2 and integrates technologies from recent acquisitions including cloud-native connectivity from RtTech Software, cloud capabilities and ability to assemble and deploy AI-driven IoT applications from Mnubo, and enterprise analytics and visualization from Sabisu.

We also got our first look at a vendor’s outlook for 2021, as Aspen Tech also initiated guidance for fiscal 2021 (ends June 30, 2021) — the first company in our PLMish world to go that far out For F21, the company forecasts total revenue of $704 million to $754 million, a huge range that has 23% growth at the midpoint. License revenue is expected to be in the range of $485 million to $534 million, up 35% at the midpoint.

Mr. Pietri said “We felt our fourth-quarter results are a good barometer for the rest of the calendar year and current visibility into the business [informs] our expectations of how the macro environment will impact our business in fiscal 2021 … As the macro environment margins get tightened and demand suffers for [chemical, refining, and other industrial] customers, they focused more and more on efficiencies, on flexibility, on agility and that’s what our products do. [As just one example], one of the largest global chemical companies had been using our multivariable control technology to drive more throughput through their units, their ethylene crackers, and their propylene plants prior to COVID. Of course, with the demand destruction [created by economies shutting down], the objective was no longer increased throughput through those plants. They shifted the objective function for our controllers to drive operational stability, better quality in their products. [The client] was so excited because they could do this and drive that sort of flexibility, have that sort of flexibility via our technology.”

Mr. Pietri also spoke about the difficulty in closing deals right now: “Some of the deals from Q3 closed in Q4. Some of them crossed all of Q4 and they’re now in Q1 … The opportunities haven’t disappeared. It’s just that they all got pushed into the future.”

So, what does it all mean? Mr. Pietri’s outlook for fiscal 2021 far exceeded what investors anticipated, given the perceived economic backdrop in the company’s end-verticals. But he’s absolutely right that many of the solutions AspenTech (and its PLMish peers) bring to market are about optimizing products and production processes and tuning supply chains. It sounds as though his customers are relying on these solutions to build resilience into their businesses. Whether AspenTech can achieve its massive goals for 2021 remains to be seen — but there’s no denying the potential.

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