Follows Good Quarter With Internet Launch
S. McVey - February 21st, 2000
Highlights of Aspen Technology's second fiscal quarter results were a 35% increase
in license fees over the same period last year and a positive bottom line. License
revenues grew to $29 million and services revenues remained flat at $32.8 million
for the quarter. Aspen's license and total reported revenues were the strongest
since the company's peak in the second quarter of calendar 1998. Net income
for the second quarter totaled $1.6 million or $0.06 per diluted share, compared
with net income of $0.5 million or $0.02 per diluted share for the same period
in fiscal 1999.
Larry Evans credits the stronger revenues to more sales in its core vertical
markets, demand from markets outside the refining and petrochemicals industries,
and increased popularity of its supply chain management solutions. It is probably
too early to say whether Aspen's recent good news will begin a trend. Looking
back two-and-a-half fiscal years, the period from October through December has
been its strongest quarter.
Soon after releasing its quarterly results, Aspen announced it would offer a
collaborative Internet portal for the process industries, ProcessCity.com. The
portal offers process industry-specific news and event information, discussion
forums, career guidance and employment information, and access to consultant
expertise among other information.
AspenWorld 2000, the company's annual user conference, more new Internet products
are being announced, including Aspen eSupply Chain Suite, a combination of
applications from its MIMI and PIMS suites, and Aspen Framework, web-enabled
integration software. The products will not be available until later this year.
Aspen's growth has stalled in recent years, though its last two quarters may
indicate a rebound is underway. Since 1995, its revenue mix has shifted increasingly
toward services and maintenance of existing installations, although its latest
quarter brought 47% of its total revenues from licenses. Its 1999 fiscal year
percentage was 42% licenses. Aspen has embarked on two strategies that, if executed
well, will improve its chances of remaining a strong player in the enterprise
Aspen has made its supply chain management applications the centerpiece of its
core functionality and invested greater resources to support its enhanced role
in the business. Aspen eSupply Chain Suite follows a previous offering (drop
the "e") that was built around Chesapeake Decision Sciences' MIMI, acquired
in May 1998. Unlike Aspen's older businesses, selling process manufacturing
control and simulation software, supply chain products can be more easily leveraged
to build applications for new markets beyond its core verticals in the process
Second, Aspen's newly announced Internet product initiatives will give it a
presence among the host of other e-business software players. Though it makes
sense for Aspen to pursue Internet markets due to its strong domain expertise,
its challenge will be in bringing the technology to bear on transforming its
products for the Internet. Aspen will likely need to expand its partnerships
beyond Extricity in order to accomplish its objectives.
Aspen's launch of ProcessCity.com mirrors a recent trend among old guard enterprise
application vendors to use Internet technology in leveraging accumulated expertise.
Supply chain management rival, Manugistics recently announced plans to share
domain expertise over the sponsored versions of its Internet marketplaces, bstreamz.com.
In addition to benefits for participating users, the forums allow vendors to
foster more dynamic relationships with customers and prospects than would be
possible through corporate websites, annual user conferences, or helpdesks.
for Aspen's other announced products, eSupply Chain and its enterprise application
integration (EAI) product, Framework, it will be difficult to determine whether
these are truly enhanced segments of its supply chain suite made Internet ready,
or merely its existing applications linked to a web browser interface via Framework.
companies will make bold announcements far in advance of tangible products to
build expectations among the buying public, encouraging existing clients to
wait out the new releases instead of considering competitive offerings. Users
should not expect to see Aspen's new eSupply Chain suite in advance of its announced
May 2000 release date.