Executive Summary

Q4 2024 delivered strong execution: revenue $342.9M (+6.9% y/y), non-GAAP operating margin 50.6%, and non-GAAP EPS $2.37, aided by lower expenses and operating leverage .
Russia exit drove a $35.5M ACV write-off, a $5.5M revenue reversal in Q4, and reclassification of $11.5M restricted cash; ACV ended FY24 at $932.9M post write-off, up 10.0% y/y ex-Russia .
FY2025 guidance targets ACV growth ~9%, revenue ~$1.19B, free cash flow ~$340M, and non-GAAP EPS ~$7.47, with flat expenses and ~$25M annualized savings from a 5% workforce reduction .
Catalysts: accelerating DGM suite (~40% growth FY24; major wins in Europe and South America), cost discipline (flat expenses), and $100M FY25 buyback; potential headwind is continued chemicals downturn and cautious customer spending .

What Went Well and What Went Wrong

What Went Well

DGM suite momentum: approximately 40% growth in FY24, with large competitive wins (national grid operator upgrade in Europe; transmission utility expansion in South America), and deployment of OSI outage management system in North America .
Operating leverage and margins: non-GAAP operating income $173M in Q4 (50.6% margin) and $456M for FY24 (40.5% margin), reflecting productivity and expense control in H2 .
Clear FY25 plan: ~9% ACV growth from a $933M base (ex-Russia), flat expenses, ~$340M FCF, and continued enhancements including new microgrid solution in V14.4; “attractive combination of top-line growth and margin expansion” per CEO .

What Went Wrong

Russia exit headwinds: $35.5M ACV write-off, $5.5M Q4 revenue reversal, and $11.5M restricted cash; added complexity to reported metrics and near-term FCF .
Chemicals and APM softness: prolonged chemicals downturn weighing on MSC; APM net flat with higher attrition in non-core segments, prompting sharpened go-to-market focus .
Sales execution timing in prior quarters: Q3 saw pushouts and cautious spending, especially in Heritage AspenTech; management addressed onboarding and rigor, but acknowledged Q1 FY25 attrition concentration due to renewal timing .

Financial Results

Quarterly Trend: Revenue, Margins, EPS, and FCF

Metric	Q2 2024	Q3 2024	Q4 2024
Revenue ($USD Millions)	$257	$278	$342.9
Non-GAAP Operating Margin %	34.0%	41.8%	50.6%
Non-GAAP Diluted EPS ($)	$1.37	$1.70	$2.37
Free Cash Flow ($USD Millions)	$29	$137	$153.0

Q4 2024 Revenue Mix vs Prior Year

Revenue Component ($USD Millions)	Q4 2023	Q4 2024
License and Solutions	$222.8	$231.0
Maintenance	$82.6	$89.2
Services and Other	$15.2	$22.7
Total Revenue	$320.6	$342.9

Profitability vs Prior Year

Metric ($USD Millions; EPS in $)	Q4 2023	Q4 2024
GAAP Operating Income	$6.0	$39.2
Non-GAAP Operating Income	$148.9	$173.4
GAAP Net Income	$27.3	$44.7
GAAP Diluted EPS	$0.42	$0.70
Non-GAAP Net Income	$138.2	$150.7
Non-GAAP Diluted EPS	$2.13	$2.37

KPIs

KPI	Value	Context
ACV (pre write-off, end FY24)	$968.4M	+9.4% y/y; +3.5% q/q
ACV (post write-off, end FY24)	$932.9M	+10.0% y/y ex-Russia
Russia-related revenue reversal (Q4)	$5.5M	Contract modification under ASC 606
Restricted Cash (Russia)	$11.5M	Non-current assets
Bookings	$416M (Q4) ; $1.16B (FY24)	Includes early renewal in Q4
Operating Cash Flow	$154.9M (Q4) ; $339.9M (FY24)
Free Cash Flow	$153.0M (Q4) ; $335.3M (FY24)
Share Repurchases	$56.9M in Q4; $300M completed FY24	277,913 shares in Q4; 1,520,993 shares in FY24
Credit Facility	$200M revolver, maturing 2029	Replaced prior facility

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
ACV Growth (%)	FY2025	N/A	~9% from $933M base	New
Total Revenue ($)	FY2025	N/A	~$1.19B	New
Total Bookings ($)	FY2025	N/A	~$1.17B	New
GAAP Total Expense ($)	FY2025	N/A	~$1.21B	New
Non-GAAP Total Expense ($)	FY2025	N/A	~$675M	New
GAAP Operating Loss ($)	FY2025	N/A	~$24M	New
Non-GAAP Operating Income ($)	FY2025	N/A	~$514M	New
GAAP Net Income ($)	FY2025	N/A	~$52M	New
Non-GAAP Net Income ($)	FY2025	N/A	~$478M	New
GAAP Diluted EPS ($)	FY2025	N/A	~$0.81	New
Non-GAAP Diluted EPS ($)	FY2025	N/A	~$7.47	New
Operating Cash Flow ($)	FY2025	N/A	~$357M	New
Free Cash Flow ($)	FY2025	N/A	~$340M	New
Tax Rate (for non-GAAP items)	FY2025	N/A	21.79%	New
Workforce Reduction Savings ($)	FY2025	N/A	~$25M annualized; $7–$9M restructuring charge (mostly Q1)	New
Share Repurchase Authorization ($)	FY2025	N/A	Up to $100M	New

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024 and Q3 2024)	Current Period (Q4 2024)	Trend
Industrial AI/Technology initiatives	V14 updates; AVA and hybrid models; AI in Unified; sustainability pathways with generative AI	Continued focus on industrial AI; microgrid solution releasing in V14.4	Building momentum
Macro/customer spending	Budgets broadly in line/up; utilities CapEx strong; chemicals OpEx weak	Dynamic macro and cautious spending; Q1 FY25 higher attrition due to renewal timing	Mixed; cautious
DGM utilities suite	Strong pipeline; term deals up ~500% (12 months) ; 2.5 points growth targeted	~40% growth FY24; large competitive wins; outage management deployment	Strengthening
Chemicals	Ongoing weakness impacting MSC	Little contribution expected in FY25; downturn persists	Persistent headwind
Emerson relationship	Joint wins in pharma; targeted non-core industries	Contribution improving; more joint go-to-market benefit expected	Improving
Russia sanctions/exit	Not applicable	ACV write-off ($35.5M), Q4 revenue reversal ($5.5M), restricted cash ($11.5M)	New structural change
Cost discipline/productivity	Focus on efficiencies and productivity	5% workforce reduction; ~$25M annualized savings; flat expenses planned	Margin-positive

Management Commentary

“AspenTech’s fourth quarter results reflected excellent execution across all areas of our business… we are focused on driving toward best-in-class profitability… attractive combination of top-line growth and margin expansion” – CEO, Antonio Pietri .
“For fiscal 2025, we're targeting ACV growth of approximately 9%… free cash flow of approximately $340 million… we aim to deliver flat expenses year-over-year” – CEO .
“On a non-GAAP basis, we reported operating income of $173 million in Q4, representing a 50.6% non-GAAP operating margin” – CFO, David Baker .
“We expect to realize approximately $25 million in annualized cost savings… restructuring charge $7–$9 million, majority in Q1 FY25” – CFO .
“We have written off all Russia ACV (~$35M reduction)… new ACV balance is $933M after adjusting… Russia contract modification resulted in reversal of $5.5M of revenue in Q4” – CEO and press release .

Q&A Highlights

Sales execution and renewals: Management addressed Q3 sales execution issues; more rigorous deal reviews and deploying experienced sellers; Q1 FY25 attrition higher due to renewal timing, but confidence in lower attrition for the year (~4.5%) .
DGM competitive positioning: Wins driven by modern, adaptable, cybersecure technology; utilities seeking reliable real-time operations amid renewables growth; elongated initial cycles (12–24 months), shorter add-ons (6–12 months) .
Chemicals outlook: OpEx spending still depressed; early signs of demand improvement are preliminary; Aspen expects little contribution in FY25 .
Bookings and linearity: Q4 bookings above expectations helped by early renewal packaged in a larger growth deal; FY25 renewals $681M (Q1 ~$85M); FCF heavily back-half weighted; near breakeven in Q1 due to one-offs .
Emerson channel: Joint go-to-market improvements in H2 FY24; expectation of greater contribution in FY25 .

Estimates Context

Wall Street consensus estimates via S&P Global were unavailable due to a CIQ mapping issue for AZPN at the time of retrieval, so we cannot provide definitive “vs. estimates” comparisons for Q4 2024 or FY2025 guidance. Values retrieved from S&P Global were unavailable.*

Where estimates may need to adjust: Given a 50.6% non-GAAP operating margin in Q4 and FY2025 non-GAAP EPS guidance ~$7.47, consensus models likely need to reflect a higher margin trajectory, offset by Russia-related adjustments, restructuring timing, and chemicals headwinds .

Key Takeaways for Investors

DGM is a structural growth driver: ~40% growth in FY24, major international wins, and new outage/microgrid solutions should support ACV additions despite elongated procurement cycles .
Margin expansion is credible: H2 expense discipline, workforce reduction (~$25M savings), and focus on productivity underpin FY2025 non-GAAP operating income ~$514M and EPS ~$7.47 .
Russia exit cleans up ACV base: Post-write-off ACV $932.9M, with Q4 revenue reversal ($5.5M); ex-Russia growth +10% y/y clarifies underlying momentum .
Chemicals remain a drag: Expect muted contribution in FY25; engineering and refining plus utilities should offset, but model conservatively on MSC/APM .
Cash flow timing: FCF is back-half weighted; watch Q1 near breakeven given one-offs (Russia exit, restructuring) and renewal timing .
Capital returns and flexibility: $100M FY25 buyback, no debt, $200M revolver provide optionality for M&A and shareholder returns .
Trading implications: Near-term prints may hinge on bookings linearity and DGM deal timing; upside skew from sustained margin discipline and utilities-driven pipeline, downside risk from chemicals and macro caution .

Aspen Technology, Inc. (AZPN)·Q4 2024 Earnings Summary