Aspen Technology, Inc. (AZPN) Q3 2023 Earnings Call Transcript

For the period ending March 31, 2023

April 26, 2023 4:30 p.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Thank you for standing by, and welcome to the Third Quarter 2023 Aspen Technology Earnings Conference Call. [Operator Instructions] As a reminder, today's program is being recorded.

And now I'd like to introduce your host for today's program, Brian Denyeau, ICR. Please go ahead, sir.

Brian Denyeau

Thank you. Good afternoon, everyone, and thank you for joining us to discuss our financial results for the third quarter of fiscal 2023 ending March 31, 2023. With me on the call today are Antonio Pietri, AspenTech's President and CEO; and Chantelle Breithaupt, AspenTech's CFO.

Before we begin, I will make the safe harbor statement that during the course of this call, we may make projections or other forward-looking statements about the financial performance of the company that involve risks and uncertainties. The company's actual results may differ materially from such projections or statements. Factors that might cause such differences include, but are not limited to, those discussed in today's call as well as those contained in our periodic reports with the SEC, including our most recently filed Form 10-K with the SEC.

Although please note the following information relates to our current business conditions and our outlook as of today, April 26, 2023. Consistent with our prior practice, we expressly disclaim any obligation to update this information. Please note that we have posted our financial update presentation on the Investor Relations portion of our website. The structure of today's call will be as follows: Antonio will discuss business results of highlights from the third quarter. Chantelle will review our quarterly financials and guidance for the remainder of fiscal year 2023.

With that, let me turn the call over to Antonio. Antonio?

Antonio Pietri

Thanks, Brian, and thanks to all of you for joining us today. AspenTech's third quarter performance was solid despite an uncertain macro environment, with strong demand in many of our end markets and a return to double-digit ACV growth. While we did see the macro environment have a more pronounced impact on sales during the quarter. Primarily in chemicals, we're glad to be reporting double-digit growth for the last 12 months and are on track to deliver against our initial guidance range for the full year.

As we noted last quarter, chemical customers have been reporting weakness in the demand environment starting in their September calendar quarter with the drop in demand being significant in the December quarter as reported in the related earnings announcements. As a result of these dynamics, we believe the calendar year 2023 budgets reflect tighter OpEx budgets which resulted in a material pullback on software spending in the quarter for AspenTech led by bulk chemical producers. We will remain cautious about the software spending outlook from this industry for the remainder of the calendar year.