Q2 2022 Aspen Technology Inc Earnings Call
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Good day and thank you for standing by welcome to the Aspen Technology second quarter 2022 earnings Conference call. At this time all participants are in a listen only mode. After the presentation. There will be a question and answer session to ask a question during that session you will need to press.
Star one on your telephone please be advised that today's conference is being recorded if you require any further assistance. Please press star zero.
I would now like to hand, the conference over to Brian <unk> from ICR. Please go ahead.
Thank you.
Afternoon, everyone and thank you for joining us to discuss our financial results for the second quarter of fiscal 2022, ending December 31 2021.
With me on the call today are Antonio Pietri, Aspen, Tech's, President and CEO and shed cell bright up CFO of Aspen Tech.
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 copy 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 and contained in our most recently filed Form 10-Q .
Also please note that the following information relates to our current business conditions and our outlook as of today January 26 2022.
With our prior practice, we expressly disclaim any obligation to update this information.
The structure of today's call will be as follows and turn it over to Scott business highlights from the second quarter and our pending transaction with Emerson and then <unk> will review, our financial results and discuss our guidance for fiscal year 2022.
With that let me turn the call over to Antonio Antonio.
Thanks, Brian .
Thanks to all of you for joining us today.
We delivered a strong second quarter results that reflect continued improvement in the spending environment and good execution by our team.
Our second quarter performance reinforces our belief in the strategic importance to customers of enhancing the operational efficiency and sustainability of their assets.
We're now seeing this customer trend materialize embedded growth as market conditions have normalized.
Not all the way back to pre Covid levels market conditions are moving concretely in the right direction for us been Pik.
We're confident this will continue to support improved annual spend growth across our business over time.
We've also made significant progress towards completing the proposed transaction with Emerson, which remains on track to close during our fourth fiscal quarter.
As we've as we've gotten to know the Emerson business is better with continually we're continually impressed by the team and their quality.
Since the announcement, we've also received more and more positive feedback from customers in a number of industries about their enthusiasm for this transaction.
Given all of these were even more excited about the transformational opportunity the new Aspen Tech has in current and new verticals as well as the sustainability.
Low end for increased value creation opportunities for both our customers and shareholders.
Looking quickly at our financial results in the second quarter.
Revenue was 171 $4 million.
GAAP EPS was <unk> 92 cents and non-GAAP EPS was $1 20.
Annual spend was $640 million up one 7% in the quarter and 6% year over year.
Free cash flow was $51 9 million.
Looking at the second quarter in more detail one of the key areas of improvement was the normalization of transaction closing cycles, which are now back to pre pandemic cycle times I am pleased at how our sales organization has navigated these changes in recent quarters.
In terms of vertical performance has been.
Lending by our refining customers saw notable improvement for the second consecutive quarter.
As we have discussed in the past.
Finding has been a consistent source of strength for us been pik as our solutions are critical to delivering on the short term and long term operational and sustainability priorities of our customers.
During the second half of calendar 2021, refining margins improved meaningfully and trended back to their historical range ending up on a strong note in December .
We're also encouraged by the fact that the Omi Chrome variant has not reduced fuel demand for transportation, despite causing record numbers of Covid cases.
With low inventories for diesel and jet fuel now being reported.
The performance of our refining customers in the first half of the fiscal year gives us confidence that this vertical will support the MSC business returning to consistent double digit annual spend growth, assuming stronger budgets and spending in calendar 2022.
Chemicals once again had a solid quarter and has been the most consistent vertical over the past two years with.
Within chemicals, there continue to be some area that face supply chain constraints, but overall, we've had consistently good conversations with customers on their future investment priorities.
We believe there are exciting opportunities for growth in this market and that Aspen Tech will continue to be an important partner to our customers as they drive operational excellence and transition to a more sustainable future.
Which for them means lower emissions as well as plastics circularity.
The positive results from our refining and chemicals customers drove better than expected performance for our engineering and MSC suites, which are ahead of plan for the first half of the fiscal year.
Okay.
The E&C industry performed better than expected delivering that slightly positive growth quarter the market dynamics affecting this industry have largely stabilized.
Backlog trends have shown modest positive improvement in the first half of the year.
Importantly, attrition amongst these customers has been tracking marginally better than expectations and we are optimistic about our ability to forecast this patrick.
This is a critical first step towards improved demand and a return to a stronger positive annual spend growth.
While we do not expect the E&C sector to be our primary growth driver for our business short term.
We're encouraged by the acceleration in final investment decisions.
For LNG projects and in the oil and gas sector in the Middle East region as well as the expected increase in global oil and gas Capex in calendar 2022.
In addition, the shifting their focus towards sustainability investments will help accelerate the recovery as increasingly capex spend will be driven by hydrogen projects carbon capture and sequestration biofuels wind solar and other projects.
We believe this will drive E&C customers to be greater contributors to our long term growth target than they are today.
Yes.
Finally, I would like to provide an update on our APM suite.
We're beginning to see some improvement in demand conversion in this area of the business as customers increase opex spend on maintenance and reliability in facilities, where a lot of this work was postponed throughout the pandemic.
As we have discussed during the same period of the pandemic interest and demand for our APM solutions have been strong with consistent growth in customer engagement pipeline and pilots.
Through the first half of the year APM contributed <unk> 28 points of annual spend growth just under our first half year plan.
We believe this suite is well positioned to benefit from increased spending and contribute approximately one point of annual spend growth in fiscal 2022.
Also confident that our pandemic tested APM business will be better positioned for growth longer term.
Following our references to a few of the customer transactions closed in the quarter.
First our U S headquarter engineering firm a customer for close to 15 years increased it spend with Aspen Tech now that its business outlook is improving after having reviews. Its software license entitlement as renewal at the beginning of the pandemic after conducting a thorough analysis of the Mark.
Including competitive offerings, the customer increased its commitment to the suite the availability and the suite of Aspen Tech's ACC E product for capital cost estimation was fundamental in the decision because the customer is in the process of reconstituting its capital cost estimation team.
That had been dismantled at the beginning of the pandemic and its functionality is not available in the market from other competitors.
Second <unk>.
European Energy and petrochemical company and long term user of our multi variable control technology in refining and chemicals decided to standardized all operating assets on our Aspen DMC III multi variable control technology through an enterprise license agreement.
Two main reasons supported their decision.
The operational improvements and value created by the technology.
And the customers focus on energy efficiency and emissions reduction.
Part of our commitment to net zero carbon emissions by 2050.
Third refining customer aviation conducted an extensive evaluation of asset predictive maintenance solutions, including <unk>.
The customer selected Aspen <unk> on the basis of its technical capabilities and ease of implementation.
The acquisition of an APM solution support the planned digitalization of the customers' maintenance functional areas. It is expected that Aspen <unk> will be rolled out to multiple units and equipment in the refinery and in time expand it to other refineries.
Operator are you able to hear at least.
Operator are we back.
Yes, you are live Sir.
Okay. Thank you will.
We lost our network connection here in the office. So let me, let me get back to that.
Is the audience able to hear me.
Yes, Sir.
Okay, Great, let me get back to our customer references.
<unk>.
Refining customer in Asia conducted an extensive evaluation of asset predictive maintenance solutions, including Aspen Enfield.
Customer selected Aspen <unk> on the basis of its technical capabilities and ease of implementation there.
The acquisition of an APM solution support the planned digitalization of the customers' maintenance functional area. It is suspected that Aspen <unk> will be rolled out to multiple units and equipment in the refinery and in time expanded to other refiners.
Fourth and final.
Our northern Europe independent Refiner recently formed from the acquisition of assets divested by one of the major oil companies sought to upgrade the optimization technologies in the refinery to increase profitability and reduce emissions as part of the customers and host countries commitment to <unk>.
Net zero carbon emissions after a detailed analysis of the value capture opportunity, which was determined to be greater than $75 million per year and the estimation of the expected reduction in emissions the customer committed to a site license for the Aspen DMC III multi variable control technology.
And the Aspen <unk> Multiunit optimization technology in the MSC suite.
This agreement was signed in a three month sales cycle.
I would point out that in two of the highlighted transactions the customers requested enterprise license agreement to deploy certain solutions across the entire asset base.
We're encouraged by these examples of customers preparing comprehensive agreements to deploy solutions that are critical to their sustainability initiatives at <unk>.
Portal to note that these agreements are still a structure as part of our token based licensing model.
As we look to the second half of the fiscal year and calendar 2022.
We're encouraged by the recent trend in key macro indicators for our business.
Oil demand, while no data at pre pandemic levels has exceeded growth expectations.
Oil prices in the range of 75 to $80 $85 per barrel and an equally strong or stronger outlook for calendar 2022.
Finally margins back in their historical range with industry expectations for acceleration in fuels consumption and a strengthening margins in 2022.
Chemical demand and margins expected to remain strong in calendar 2022.
Capex spending in oil and gas and chemicals are expected to increase by double digits with capex spend in hydrogen carbon capture and sequestration and biofuels projects experiencing significant increases our sustainability investments accelerate.
And software spend in our customer base projected to increase 10% to 15% based on customer surveys we conducted late last year.
All of this leads to our expectation of solid increases in customer budgets and spending in calendar 2022.
While we also remain vigilant about the evolution of the Covid pandemic and geopolitical events.
Together with our year to date performance, we're adjusting our annual spend guidance for the fiscal year 272, 8% up from 5% to 7% previously.
In addition in support of our growth guidance, we're adjusting our fiscal year guidance for attrition to five to five 5% compared to approximately 6% previously.
While we're pleased with our performance in the first half of the year and the market trends. We're seeing will remind you of the potential uncertainties that still exist in the market that could change that could change the outlook for our business.
Our other primary focus in the second half of the fiscal year is complete and our transaction with Emerson.
Detailed information concerning the transaction can be found in the registration statement on form S. Four recently filed with the SEC and available on the Investor Relations page of our website.
Based on current information, we continue to expect we will close the transaction during our fourth fiscal quarter.
As I previewed earlier.
We have been incredibly impressed with the OSI and geological simulation software businesses and their employees.
Like Aspen Tech the teams at these two businesses are passionate about their customers and creating value for them.
There are also passionate about the industries they serve.
It is clear that both businesses have very talented workforces.
Lead with product innovation and modeling simulation on optimization and have developed impressive product portfolios that are truly best in class.
The more we learn the more excited we are for the long term opportunities, we will have the new aspirin pig.
Unique position to drive profitability and sustainability for customers.
We continue to be confident in the new Aspen Tech's ability to be a consistent mid teens grower with high recurring revenue best in class margins and substantial free cash flow.
Under underpinning our confidence in the growth opportunity for new Aspen Tech is the increasing importance of sustainability among operators in capital intensive industries.
While sustainability has long been part of the value proposition of <unk> in recent years, we have seen it become a critical lens through which many customers make purchasing decisions.
With this goal in mind, we focused our November software release on introducing over 50, new sustainability models that accelerate digitalization efforts for customers in support of their initiatives.
Our customers are taking a truly comprehensive view of how their businesses need to adapt both in the near and the long term to meet their sustainability targets. They have set for themselves.
The combined product portfolio of the new Aspen Tech, which will include new electrification on carbon capture capabilities as well as increasingly leverage AI to enhance the sustainability benefits of mainly existing Aspen Tech solutions will make us a key strategic partner for all asset.
Incentive businesses.
We're confident sustainability will support significant investment cycles in this industry over the coming decades.
Before I turn the call over to Chantelle I would like to reiterate the key takeaways from the second quarter.
Demand trends and growth continue to improve throughout the first half of fiscal 2022, which coupled with greater confidence at calendar 2022 budgets will lead to increased spending supports our decision to raise the guidance for the full year.
Speaker 1: budget will lead to increased spending, support our decision to raise the guidance for the full year.
Speaker 1: while spending is not all the way back to pre-COVID levels, we're increasingly confident that it will continue to trend positively and support our long-term growth target.
While spending is not all the way back to pre Covid levels were increasingly confident that he will continue to trend positively and support our long term growth targets.
Speaker 1: The improvement amongst owner operators, particularly refiners, is an important trend that is now firmly in place.
The improvement amongst owner operators, particularly refiners is an important trend that is now firmly in place.
Speaker 1: These customers have been the primary growth drivers for the business for a number of years, and we feel good that they will once again deliver consistent double-digit growth for our MSC suite.
These customers have been the primary growth drivers for the business for a number of years and we feel good that they will once again deliver consistent double digit growth for our MSC suite.
Our strong year to date free cash flow performance demonstrates the scalability and efficiency of our business and our ability to generate high margins, while investing in our growth initiatives.
Speaker 1: Our strong year-to-date free cash flow performance demonstrates the scalability and efficiency of our business and our ability to generate high margins while investing in our growth initiatives.
Speaker 1: Finally, we are on track to close with Emerson and create the new Aspen Tech in the coming months.
Finally, we're on track to close with Emerson and create the new Aspen Tech in the coming months.
Speaker 1: Taken together, we have made great progress on each of our key priorities for fiscal 2022. We believe that the combination of the transaction with Emerson and the factors discussed on this call will provide increased confidence in our ability to generate mid-tint growth and exceed $1.5 billion in annual spend in fiscal year 2026.
Taken together, we have made great progress on each of our key priorities for fiscal 2022, we believe that the combination of the transaction with Emerson and the factors discussed in this call will provide increased confidence in our ability to generate mid teens growth and exceed $1 5 billion.
In annual spend.
In fiscal year 2026.
Speaker 1: We believe that the steps we have taken this year to create compelling opportunities to generate significant value for our customers and shareholders over the long term.
We believe that the steps we have taken this year to create compelling opportunities to generate significant value for our customers and shareholders over the long term.
Now, let me turn the call over to Chantal Chantal.
<unk>.
Thank you Antonio I will now review our financial results for the second quarter fiscal 2022.
A reminder, these results are being reported under topic 606, which has a material impact on both the timing and method of revenue recognition for our term license contracts. Our license revenue is heavily impacted by the timing of bookings and more specifically renewal bookings a decrease or increase in bookings between fiscal periods, resulting from a change in the amount of time.
Speaker 2: Our license revenue is heavily impacted by the timing of bookings and more specifically renewal bookings.
Speaker 2: A decrease or increase in bookings between fiscal periods resulting from a change in the amount of term license contracts up for renewal is not an indicator of the health or growth of our business.
License contracts up for renewal is not an indicator of the health or growth of our business.
Speaker 2: The timing of renewals is not linear between quarters or fiscal years, and this nonlinearity will have a significant impact on the timing of our revenue.
The timing of renewals is not linear between quarters or fiscal years and this nonlinearity will have a significant impact on the timing of our revenue.
Speaker 2: As a result, we believe our income statement will provide an inconsistent view into our financial performance, especially when comparing between fiscal periods.
As a result, we believe our income statement will provide an inconsistent view into our financial performance, especially when comparing between fiscal periods in our view annual spend will continue to be the most important metric in assessing the growth of our business and annual free cash flow. The most important metric for assessing the overall value our business generates.
Speaker 2: In our view, annual spend will continue to be the most important metric in assessing the growth of our business, and annual free cash flow the most important metric for assessing the overall value our business generates.
Speaker 2: Annual spend, which represents the accumulated value of all the current invoices for our term license agreements at the end of each period with $640 million at the end of the second quarter.
Annual spend which represents the accumulated value of all the current invoices for our term license agreements at the end of each period with $640 million at the end of the second quarter. This represented an increase of approximately 6% on a year over year basis, and one 7% sequentially.
Speaker 2: This represented an increase of approximately 6% on a year-over-year basis and 1.7% sequentially.
Speaker 2: Total bookings, which are defined as the total value of customer license, term license contracts where the associated term licenses were being delivered in the quarter under topic 605.
Total bookings, which are defined as the total value of customer license term license contracts, where the associated term licenses were being deliberate in the quarter under topic 606 was $182 million, a 34% decrease year over year.
Speaker 2: was $182 million, a 34% decrease year over year.
Speaker 2: The year-over-year decline reflects a particularly strong bookings quarter in the year-ago period, which included our largest ever renewal.
ERP year decline reflects a particularly strong bookings quarter in the year ago period, which included our largest ever renewal.
Speaker 2: Total revenue was $171.4 million for the second quarter.
Total revenue was $171 4 million for the second quarter.
Turning to profitability beginning on a GAAP basis.
Speaker 2: Operating expenses for the quarter were $88 million compared to $70 million in the year ago period.
Operating expenses for the quarter were $88 million compared to $70 million in the year ago period.
Speaker 2: The year-over-year increase in GAAP operating expenses was primarily driven by acquisition and integration planning related expenses associated with our pending transaction with Emmer.
The year over year increase in GAAP operating expenses was primarily driven by acquisition and integration planning related expenses associated with our pending transaction with Henderson.
Speaker 2: Total expenses, including cost of revenue, were $102.9 million, which was up from $84.3 million a year ago.
Total expenses, including cost of revenue.
$102 9 million, which was up from $84 $3 million from a year ago period.
Speaker 2: operating income was $68.5 million and net income for the quarter was $61.9 million or $92,000.
Operating income was $68 $5 million and net income for the quarter was $61 9 million or <unk> 92 per share.
Speaker 2: Turning to non-GAAP results, excluding the impact of stock-based compensation expense, amortization of intangibles associated with acquisitions and integration planning related.
Turning to non-GAAP results, excluding the impact of stock based compensation expense amortization of intangibles associated with acquisitions and integration planning related fees, we reported non-GAAP operating income for the second quarter of $92 2 million.
Speaker 2: We reported non-GAAP operating income for the second quarter of $92.2 million.
Speaker 2: representing a 53.8% non-GAAP operating margin, compared to a non-GAAP operating income margin of $162.2 million and 69.4% respectively in the year ago.
<unk> 53, 8% non-GAAP operating margin compared to a non-GAAP operating income margin of $162 2 million and $69.
<unk>, respectively in the year ago period.
Speaker 2: As a reminder, margins will fluctuate period to period due to the timing of customer renewals and therefore license revenue recognized during the quarter. In particular, the second quarter of fiscal 2021 was an exceptionally strong license quarter due to the timing of some very large renewals.
As a reminder, margins will fluctuate period to period due to the timing of customer renewals and therefore license revenue recognized during the quarter in particular, the second quarter of fiscal 2021.
Exceptionally strong license quarter due to the timing of some very large renewals.
Speaker 2: non-GAAP net income was $80.6 million or $1.20 per share based on 67.2 million shares outstanding.
non-GAAP net income was $86 million or $1 20 per share based on 67 2 million shares outstanding.
Speaker 2: Turning now to the balance sheet in cash flow. We ended the quarter with approximately $211 million of cash and cash equivalents and $285 million outstanding under our credit.
Turning now to the balance sheet and cash flow.
We ended the quarter with approximately $211 million of cash cash equivalents and $285 million outstanding under our credit facility.
Speaker 2: In the second quarter, we generated $41.3 million of cash from operations and $51.9 million of free cash flow after taking into consideration the net impact of capital expenditures, capitalized software, acquisition, and integration planning-related payments.
In the second quarter, we generated $41 $3 million of cash from operations at $51 $9 million of free cash flow after taking into consideration.
Net impact of capital expenditures capitalized software acquisition and integration planning related payments.
From a capital allocation perspective, we repurchased approximately 439000 shares for $65 million during the second quarter.
Speaker 2: From a capital allocation perspective, we repurchased approximately 439,000 shares for 65 million during the second quarter. The final settlement of shares associated with the ASR executing Q2 will occur in.
The final settlement of shares associated with the ASR executed executing Q2 Q3.
Speaker 2: We do not currently anticipate repurchasing additional shares in fiscal 2022.
We do not currently anticipate repurchasing additional shares in fiscal 2022.
I would now like to close with guidance.
Speaker 2: Our updated outlook reflects the strong performance in the first half of the year and the improving demand trends we see in many areas of our business.
Our updated outlook reflects the strong performance in the first half of the year and the improving demand trends, we see in many areas of our business.
Speaker 2: We believe the importance of asset optimization and sustainability are durable growth drivers that give us confidence to rate our guidance for the year.
We believe the importance of asset optimization and sustainability, our durable growth drivers that give us confidence to raise our guidance for the year.
Speaker 2: With respect to annual spend, as Antonio mentioned, we are increasing our outlook for the year to 7 to 8% growth.
With respect to annual spend as Antonio mentioned, we are increasing our outlook for the year, two 7% to 8% growth.
Speaker 2: We are increasing our bookings guidance range from $814 million to $840 million, which includes $486 million of contracts that are up for renewal in fiscal 2021.
We are increasing our bookings guidance range from $814 million to $840 million, which includes $486 million of contracts that are up for renewal in fiscal 'twenty two.
Speaker 2: This includes approximately $136 million of contracts up for renewal in the 30s.
This includes approximately $136 million of contracts up for renewal in the third quarter.
Speaker 2: Our expected revenue range is now 737 to 754 million dollars.
Our expected revenue range is now 737 or $754 million.
Speaker 2: We now expect licensed revenue in the range of $513 to $530 million and maintenance revenue and service and other revenue of approximately $196 and $28 million.
Now expect license revenue in the range of $513 million to $530 million.
Maintenance revenue and service and other revenue.
Approximately 196 and $28 million respectively.
From an expense perspective, we now expect total GAAP expenses of $413 million to $418 million.
Speaker 2: From an expense perspective, we now expect total GAAP expenses of $413 to $418 million.
Speaker 2: This outlook continues to incorporate our ongoing investments in our go-to-market organization, product development, and business units, including APM, AOT, and pharmaceutical.
Outlook continues to incorporate our ongoing investments in our go to market organization product development and business units.
Holding APM Iot and pharmaceuticals.
Speaker 2: We expect GAAP operate the income in a range of $324 to $336 million for fiscal 2022, with GAAP net income of approximately $295 to $306 million.
We expect GAAP operating income in the range of $324 million to $336 million for fiscal 2022 with GAAP net income of approximately $295 million to $306 million.
Speaker 2: We expect gap in the income per share to be in the range of $4.37 to $4.
We expect GAAP net income per share to be in the range of $4 37 to $4 53.
Speaker 2: From a non-GAAP perspective, we now expect non-GAAP operating income of $397 to $409 and now expect non-GAAP income per share in the range of $5.23 to $5.39.
From a non-GAAP perspective.
Now expect non-GAAP operating income of $397 million to $409 million and now expect non-GAAP income per share in the range of $5 23 to $5.39.
Speaker 2: From a free cash flow perspective, we are now targeting free cash flow of $280-290 million.
From a free cash flow perspective, we're now targeting free cash flow of $280 million to $290 million.
Our updated fiscal 2022 free cash flow guidance still assumes cash tax payments in the range of $60 million to $66 million or free cash flow outlook is equivalent to between 42 inch 43% of annual spend and highlights our predictable and sustained cash generation.
Speaker 2: To wrap up, Aspen Tech delivered strong second quarter results. We are pleased with the improvements we have seen across the business and the strong execution from our team.
To wrap up Aspen Tech delivered strong second quarter results. We are pleased with the improvements we've seen across the business and the strong execution from our team.
Speaker 2: Our updated outlook for the year reflects our increased confidence that we are now firmly on the path of faster growth and towards our long-term targets.
Our updated outlook for the year reflects our increased confidence that we are now firmly on the path of faster growth towards our long term targets.
Speaker 2: We are looking forward to the completion of our transaction with Emerson and the significant opportunities that new Aspen Tech will have to create value for our shareholders. And with that operator, we would now like to begin the Q&A.
Looking forward to the completion of our transaction with <unk>.
And the significant opportunities that new Aspen Tech will help to create value for our shareholders and with that operator, we would now like to begin the Q&A.
Thank you and as a reminder to ask a question simply press star one on your telephone to withdraw your question press the pound or husky.
One moment, while we compile the Q&A roster.
First question is from Andrew <unk> with Bank of America. Your line is open.
Yes.
Good afternoon.
Speaker 3: Yeah, hi, good afternoon, Andrew. Yeah, congratulations. Seems like we're at the bottom or past the bottom. So the question is, annual spend guidance raised by 1 and 1?2 points in the midpoint to 7 and 1?2 from 6.
Yes, hi, good afternoon Andrew.
Congratulations seems like we're at the bottom.
We're past the bottom. So the question is annual spend guidance raised by one five points and the midpoint to seven five from FX. So can you just unpack a little bit how much of the upside versus your plan in the first half of FY 'twenty two how much is around better market conditions and how much is more sort of execution.
Specific.
Hello, E&C attrition and APM wins, thank you.
Okay.
Speaker 1: Well, Andrew, it's a combination of a number of factors. I'd like to think that our execution in the last few quarters has improved significantly, and that's a contributor.
Yes.
Andrew.
It's a combination of a number of factors.
I'd like to think that.
Our execution in the last.
A few quarters.
<unk> has improved significantly.
That's a contributor.
Speaker 1: Two, no doubt that our customers are now spending more money. Clearly, the sales cycles are back to pre-pandemic levels. Deals are now being escalated to the C-suite for final approval, and that gives us also then better predictability.
Two.
No doubt that our customers are now spending more money clear.
Clearly the the sales cycles are back to pre pandemic levels deals are being escalated to the C suite for final approval and that gives US also the and better predictability.
Speaker 1: And then there's a sort of improvement in the macro, which is driving gross growth and supported by the spending, but also I think as the macros improve, attrition, we're getting better insights into how we can reduce attrition, and the race in the guidance is a combination of.
And then.
There is a set of improvements in the macro which is driving gross growth.
Supported by the spending but also I think the macros improve attrition.
And we're getting a better a better were getting better insight into into how we can reduce attrition.
And the race in the in.
And the guidance is a combination of the expectation that will drive.
Speaker 1: expectation that will drive some increase in new growth, gross growth, but also that reduction of half a point to a point of attrition. And that supports sort of the, from the midpoint, the 1.5 points of increase in the guidance.
Some increasing.
New growth gross growth, but also the reduction of half a point to a point of.
Of attrition and that supports the sort of the from the midpoint of one five points of increase in the guidance.
Thank you.
Thank you.
Speaker 4: Our next question comes from Rob Oliver with Bird. Your line is open.
Our next question comes from Rob Oliver with Baird. Your line is open.
Great.
Speaker 5: Thank you very much. Good evening, guys. I appreciate you taking my questions. I had two. One, Antonio, just to start, it's a nice commentary about the core, you know, refining customers really coming back strong, you know, you cited in particular that that nice Aspen Intel win, and I think you mentioned that
Thank you very much good evening guys. I. Appreciate you taking my questions I had two one Antonio just to start.
Some nice commentary about.
Refining customers really coming back strong.
You saw that even particular that nice aspen.
I think you mentioned that.
Shortened sales cycles are shortening I'm just curious.
It seems like there might be a bit of pent up demand there for some of those.
APM related projects in General project. So just wanted to kind of maybe get a sense for how much do you think.
This you think is pent up demand from stuff that was shelved during the pandemic.
Speaker 1: was shelved during the pandemic and how much of it represents sort of ongoing opportunity. And then I had a quick follow-up. Yeah, yeah. Well, look, specifically around APM, the fact is that the majority of the growth that we deliver in the first half of the year for APM came into, it came in Q2. Q1 was a challenging quarter for APM.
How much of it represents sort of ongoing opportunity.
I had a quick follow up.
Speaker 1: Yeah, yeah. Well, look, specifically around 8 p.m.
Yes, yes.
Look our specifically.
Around APM.
Speaker 1: The fact is that the majority of the growth that we deliver in the first half of the year for APM came in Q2. Q1 was a challenging quarter for APM, so the real pick-up in demand for APM in the first half of the year was in the Q2 quarter.
The fact is the.
The majority of the growth.
We deliver in the first half of the year for APM came into that came in Q2.
Q1 was a challenging quarter for APM. So so the real pickup in demand for APM in the in the first half of the year was in the Q2 quarter.
Speaker 1: And I do think, like we saw in Q1 with our engineering and MSC suite, and then also in Q2, there's somewhat of that pent-up demand. I mean, our Q3 and Q4 quarters fiscal 21 were quite constrained from a spending standpoint by customers.
And I do think.
Like we saw in Q1 with our engineering and MSC suite and then also in Q2, there is somewhat of a pent up demand.
Our Q3, and Q4 quarters fiscal 'twenty, one where we're quite constrained from a spending standpoint by close to mers.
Customers.
Speaker 1: remain very interested in our technologies. The demand is being there, the engagement, the conversations. And then in Q1, we saw that sort of release as the macro improved, especially oil prices in engineering and MSC. We saw some of that now with APM. And look, all the key indicators that we track are up and to the right, they're green.
Have remained very interested in our technologies. The demand has been there the engagement the conversations and then in Q1, we saw that sort of release as the macro improves, especially oil prices in engineering and MSC. We saw some of that now with APM.
Sure.
Look at all the all the key indicators that we track are up into the right. They are green.
Speaker 1: We believe that through commentary from our customers, through analysis of an analyst in the market, budgets will be better. Our own research through the survey that we conducted last year, which in a way gives us
We believe that through commentary from our customers through analysis of an analyst in the market Buzz.
Budgets will be will be better our own research through the survey that we conducted last year, which in a way it gives us the confidence to raise the guidance and believe in that.
Speaker 1: the confidence to raise the guidance and believe in that both APM and our engineering MSC suites will have stronger demand. We're a month into our Q3 quarter, we have good visibility in the quarter and Q4 normally is our strongest quarter of the fiscal year.
Both APM and our engineering and MSC suites will will will have stronger demand. We're a month into our Q3 quarter. We have good visibility in the quarter in Q4 normally is our strongest quarter of the fiscal year.
Speaker 1: So, we raised our guidance with a lot of insight and visibility into our pipeline.
So we we've raised our guidance with with a lot of insight and visibility into our pipeline.
Speaker 2: The other thing I was going to add to that point is the one hypothesis, which I assume is in your question, but as a team we were considering is to make sure that the great growth in the first half wasn't a pull-in, like it's not a we just got the quarter
Yes, great. Yes go ahead, sorry, Rob the other thing I was hoping to add to that point is yes, but one hypothesis.
As soon as in your question, but.
We are considering.
Make sure the great growth in the first half with an appalling like it we just got the quarter kind of pulp.
Profile of our portfolio overall.
Given to Antonio's point, we don't see any pull in we see it is actually that pent up demand and quality and hygiene and our second half pipeline.
One of those lines Youre looking for your question.
Speaker 5: That's great. No, thanks, Chantel. Thanks, Antonio. And then I just had one follow-up, and it could be for either of you guys, but just on, you know, Antonio, you called out in the deals that you guys are always, you know, generous with the color around the deals in the corridor, and, you know, a bunch of them that you referenced were ELAs, and I think you guys had done a little bit of that with your APM business in the past, but I can't say, you know, I recall you stressing ELAs so much, having followed you guys for so many years, and just was curious if you could talk a little bit about what the ELA structure, you know, means and how, if at all, it differs, and are durations in these contracts similar to what we're used to with ASP and any color there would be helpful. Thanks again, guys.
No. Thanks, Chad Thanks, Antonio and then I just had one follow up and it could be for either of you guys. Just on Antonio you called out in the deals that you guys are always generous with the color around the deals in the quarter.
A bunch of them that get you referenced were Elas and I think you guys had done a little bit of that with your ATM business in the past, but I can't say.
I recall, you stressing uli so much having followed you guys for so many years. So just was curious.
If you could talk a little bit about what the lease structure means.
If at all it differs at all durations and these contracts similar to what we're used to with Aspen any color there would be helpful. Thanks again guys.
Speaker 6: Yeah, thank you.
Yes. Thank you.
Speaker 1: So let me start, so certainly with APM we've seen multi-site agreements and even a couple of enterprise agreements that cover a lot of sites.
So let me start.
So certainly with APM, we've seen multi site.
Agreement.
And even.
A couple of enterprise agreements that cover a lot of sites.
Speaker 1: Especially in MSC, when it comes to technologies like APC and optimization, we're now seeing – and this is a third of those agreements in about a year's time, actually, going back to Q4 of last year – where customers...
Especially in MSC.
Yes.
When it comes to technologies like APC and optimization.
We're now seeing.
This is a third of those agreements and about a year.
A year's time actually going back to Q4 of last year.
Where customers.
Speaker 1: with very clear intentions to capture emissions.
With very clear intentions to capture emissions.
Speaker 1: are focusing on a total rollout of our APC, Advanced Control Technologies, to capture the emissions and the value.
Our focus in on a total rollout.
Our.
<unk> advanced control technologies to capture the emissions and their value.
Speaker 1: You know, normally, we would see one of those not very often, but now, you know, within a year, we've seen three, and it will, my sense is that it will be a more common occurrence.
Normally.
Could see one of those.
Very often but but now within a year we have seen three.
My sense is that it will be.
A more common occurrence.
Speaker 1: as our customers focus on accelerating the capture of the emission commitments, reduction in emission commitments that they've made and therefore are willing to negotiate this agreement.
As our customers focus on accelerating the capture of the emission commitments and reduction in emission commitments that they've made.
And therefore are willing to negotiate these these agreements.
Speaker 7: Look, the agreements are still based on the token licensing model. We just give them enough tokens to do a complete rollout of the technology, but it's all part of the MSC suite and the token licensing system. Thanks again. Hope that answers your question.
Look the agreements are still based on the token licensing model.
We just give them enough tokens to do complete.
Complete rollout of the technology.
But but it's all part of the of the MSC suite and the token licensing system.
Thanks again.
Hope that answers your question Rob.
Thanks again Antonio.
Thank you.
Our next question comes from Matt Pfau with William Blair. Your line is open.
Hi, Matt.
Speaker 8: Hey, guys, thanks for taking my questions. First, I just wanted to ask on the Russia-Ukraine situation. Does that have any impact on your business at all?
Hey, guys. Thanks for taking my questions first I just wanted to ask on the Russia, Ukraine situation does does that have any impact on your business at all.
Speaker 1: Well, we do do business in Russia and we've talked about the performance of our Russian business in the past, but it is not that material to our overall business.
Well, let me look at we do we do do business in in Russia.
Talked about.
The performance of our Russian business.
In the past.
But it is and it is not.
Material to our overall business.
Speaker 1: Having said that, you know, we have a great team in Russia that is working all the time to close business, but should something were to happen, you know, we're confident that our guidance will hold and then we'll have to determine what it means fiscal year 23 and going forward. But.
Having said that.
We have we have a great team in Russia that is working all the time to close business.
But should something were to happen.
We're confident.
Our our guidance will hold.
And then we'll have to determine what it means.
<unk> 23, and going forward, but.
Speaker 1: But it is not that material to our overall business.
But.
It is not that material to our overall business.
Got it and then just wanted to ask about your acquisition strategy and if you look at the document that was filed related to the transaction and the timeline of how that went down last year.
Speaker 8: Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host
Speaker 8: acquisition possibilities mentioned in there, not by name, but obviously that you were looking to acquire some businesses and it seemed like they could potentially be larger ones than maybe you've done historically. Any sort of update you can provide in terms of how you're thinking about your acquisition strategy would be helpful.
There are a few.
Acquisition possibilities mentioned and they're not not by name, but obviously that you were looking to acquire some businesses and it seemed like they could potentially be larger ones and maybe you've done historically.
So any sort of update you can provide in terms of how youre thinking about your acquisition strategy would be helpful.
Speaker 1: Yeah, well, when we announced the transaction back on October 11th, we did state that part of the reasons for the transaction that we were announcing with Emerson was to create a platform for us, Pentec, to...
Yes, well, let me look up when we announced the transaction back.
On October 11th.
We did stay that.
Part of the reasons for the transaction that we're announcing with Emerson was to create a platform for us to to become more acquisitive in the future. That's what we will say for now.
Speaker 1: to become more acquisitive in the future. That's what we will say for now. We're working on closing the transaction. Once we close it, well, then we lift our head and see what's ahead, but the goal has always been, and we said so in October , that we want to be more acquisitive going forward once the transaction closes.
We're working on closing the transaction.
Once we close that will lift our head and see whats ahead, but but the goal is always been and we said so in October .
We want to be more acquisitive going forward once that transaction closes.
Speaker 2: And the other thing, too, that has not changed, but just to reinforce for the question is our framework of potential acquisitions of any size support our double-digit growth strategy for annual spend and our annual spend operating margin framework of 47 to 50 percent. So all of those things will be incorporated into any future considerations.
Yeah, and the other thing too that has has not changed but just to reinforce further question is our framework of.
Potential acquisitions of any size support our double digit growth strategy for annual spend in our.
Annual spend operating margin framework.
As a percent so all of those things will be incorporated into any theaters congratulations.
Got it thanks, a lot guys I appreciate it.
Thank you Matt.
Thank you. Our next question comes from Gal Munda with Bahrenburg. Your line is open.
Speaker 9: Thank you for taking the time to speak with us today.
Hey, Thank you for taking.
Hi Antonio.
Hi.
Okay.
I had was just.
Speaker 9: depending a little bit on the ELAs that you mentioned.
Spending a little bit on the Elas.
But you mentioned.
Speaker 9: So you said that's the third one in about a year that you talked about, which is interesting.
So you said that the third one in about a year do you talked about which is interesting is there is there a way to think about.
Speaker 9: Is there a way to think about your MSC customers and how many of those ELA deals could come? I don't know if you can give us some sort of an idea of what's the uplift that those ELAs come compared to the previous contracts that they had signed in terms of the ACV or annual span of the way we look at it.
Your especially on MSC customers and thinking about this priority to have and how many of those deals could come and I don't know if you can give us just some sort of.
Idea of what the uplift those elas come compared to the previous contract signs in terms of the ACB or annual spend but the way we look at it.
Yeah.
Speaker 1: Yeah, well, I mean, look, my sense is that, well, we all know that sustainability is an imperative.
Yes.
Let me look at.
My sense is that.
But we all know that sustainability is an imperative.
Speaker 1: But achieving net zero carbon emissions by 2050 is a tall order, and therefore, my sense is that customers see themselves in a lot of urgency to start reducing their emissions.
But achieving net zero carbon emissions by 2050.
<unk> is a tall order and therefore my.
My sense is that customers.
See themselves in a lot of urgency to start reducing their emissions the low hanging fruit is through efficiencies.
Speaker 1: The low-hanging fruit is through efficiencies, through energy optimization, reductions in energy consumption in their operations, and so on. And this is what we do. We've been doing this for 40 years, and now the spotlight is on it.
Through energy optimization reductions in energy consumption and their operations and so on and this is this is what we do.
We've been doing this for 40 years and now it is the spotlight is on it.
Speaker 1: The focus, while still on profitability, has become equal or stronger on sustainability, which is what also excites us very much because you can deliver both profitability and sustainability using our technology.
The focus while still on profitability has become equal or stronger on sustainability, which is what what also excites us very much because you can deliver both profitability and sustainability using our technology. So.
Speaker 1: So what we are seeing is these customers that already have a significant penetration in the use of our technology, multivariable control and optimization in their assets, and normally in the past, they've been increasing the use or the deployment one unit at a time, one drink at a time.
So what we are seeing is as these customers that already have.
Our significant.
Penetration in the use of our technology.
The variable control and optimization in their assets.
And normally in the past.
<unk> been increasing the use or the deployment.
One unit at a time one drink at a time.
Speaker 1: And this imperative around sustainability is now driving them to say, no, we need to blanket all of our process units and refineries or chemical plants as quickly as possible with this technology so that we can account for those reduction in emissions.
And this imperative around sustainability is now driving them to say no we need to blanket all of our process units and refineries or chemical plants as quickly as possible with this technology. So that we can account for those reduction in emissions. So they are coming to the table and saying look.
Speaker 1: So they're coming to the table and saying, look, we know we already have this entitlement. What would it take to do an enterprise agreement? And then that's a negotiation. And depending on how much penetration that customer has of the technology, well, the uplift can be.
We know we already have these entitlement.
What would it take to do an enterprise agreement and then Thats a negotiation.
And depending on how much penetration that customer has the technology the uplift can.
Can be from six figure.
Speaker 1: from a six-figure number to a seven-figure number.
Number.
Two seven figure number.
Speaker 1: So my sense is that we'll see some of those with greater occurrence or frequency.
So so my sense is that we will see.
Some of those with greater occurrence.
Our frequency in the future.
Speaker 9: That's really helpful, thank you. And then the other comment you made, which was interesting, was how the customers have responded to your pending transaction with Emerson software side.
That's really helpful. Thank you and then.
Do you any comments you made which was interesting was how the customers have responded to your.
Pending transaction with Emerson software solid.
Speaker 9: When you said there's a positive feedback coming, does that imply some sort of revenue synergies that you think you can then extract because of the tie-up, either in both markets or just joint products together? Maybe if you can just note the excitement from the customers, what were they saying that they like in the tie-up itself?
Can you talk when you said there is a positive feedback coming is that.
Does that imply some sort of revenue synergies that you think you can then extract because of the because of the tie up is it in both markets.
<unk> product together, maybe if you can just note.
Excitement from the customers what were basing that daylight in the playoffs itself. Thank you.
Speaker 1: Yeah, I think I think from from a customer standpoint is not necessarily about revenue synergies.
Yes.
I think from a customer standpoint is not necessarily about revenue synergies.
Speaker 1: from our standpoint is certainly about revenue synergies. Look, I think customers are seeing two great engineering technology companies coming together that are, they both companies are key strategic suppliers
From our standpoint is certainly about revenue synergies look I think customers are saying to two great engineering technology companies coming together.
Are they both.
Both companies are key strategic suppliers to them.
Speaker 1: They rely on both companies for different technologies in different areas, but they also see the opportunity
They rely on both companies for different technologies in different areas, but they also see the opportunity to bring together our solutions and create package solutions.
Speaker 1: to bring together our solutions and create package solutions around sustainability, you know, emissions tracking, for example, greater productivity improvements and so on. So what they see is...
Around sustainability.
Emissions tracking for example.
Greater productivity improvements and so on so what they see.
Speaker 1: What they say is a lot of logic around the transaction, the culture of the companies, the focus on innovation and technology, the common customer base and so on, and then, okay.
What I'd say is a lot of logic around the transaction the culture of the companies that focus on innovation and technology.
The common customer base and so on and then okay.
I believe that there is significant technical synergies be.
Between the two companies and we're looking forward to seeing those of course from our side is it something.
I felt and we felt was part of the thesis for doing this with Emerson and as part of the revenue synergies, we talked about when we announced the transaction.
Yeah, and I think just in addition, the one thing I would add Antonio.
Speaker 2: Yeah, and I think just in addition, the one thing I would add, Antonio, is the other thing that I've heard that I would add they're excited about is just the joint go-to-market capabilities between the sales teams, the partner channels, etc. So, I think that's also a very powerful thing that they're looking at. Just one more thing to add.
The other thing that I've heard that over that Theyre excited about it.
The joint go to market capabilities between the sales teams the partner channels etcetera. So I think that's also a very powerful thing that theyre looking at just one more thank god.
Speaker 10: Thank you so much for answering the questions, and we'll get back to you in a bit.
Okay, great. Thank you so much for answering the questions.
Okay. Thank you.
Thank you Paul.
Thank you and as a reminder to ask a question simply press star one on your telephone to get in the queue.
Our next question is from Jackson Ader with Jpmorgan. Your line is open.
Speaker 11: Hi, Jack. Thanks, <expletive> . Hey, thanks, <expletive> . My questions, guys. Antonio, you mentioned the budget's improving and refining for 2022, I think, the outlook for 2022. I'm just curious how they compare to the budget levels of, say, 2019. Are we back to those levels yet?
Hey, Jack.
Thanks for taking my questions guys.
And Jay you mentioned the budget, some breathing and refining for 'twenty.
The outlook for 2022, I'm, just curious how they compare.
Two.
Levels of say 2019 are we back to those levels yet.
Speaker 1: Well, I mean, Jackson, time will tell. I don't necessarily think that we're there yet. If you read the analysis of the refining market in the second, in the calendar.
Yeah.
Well, let me Jackson and time will tell.
I don't I don't necessarily think.
Are there Jed.
Luca.
If you read the analysis of the refining market.
And the second in the calendar.
Speaker 1: fourth quarter, meaning the December quarter, refining margins even exceeded some of the most recent margins and were somewhere back to 2010 levels, sort of the golden years of refining margins, that sort of December . But, you know, we said in the October call that refining margins were back into the historical range, but at the low end of the range.
Fourth quarter, mainly in the December quarter.
Refining margins.
Even exceeded.
Some of the most recent.
Margins.
<unk>.
We're somewhere back to 2010 levels sort of the golden years of refining margins that sort of December .
Budd.
We said in the October call the refining margins were back into the historical range, but at the low end of the range.
Speaker 1: My sense is that, you know, refiners certainly see, and we've also heard CEOs from some of the refining companies talk about a much better outlook for 2022. So my sense is that, you know, that their budgets for 2022 will be much better.
My sense is.
<unk>.
Certainly.
And we've also heard Ceos from some of the refining companies talk about next.
A much better outlook for 2022, so my sense is.
That their budget for 2022 will be much better.
When they were setting them.
Speaker 1: setting them, they were still somewhere in the, towards the low end of the range, but nonetheless, they'll be much better than they were in 20, in 21 and 2020.
We're still somewhere in the towards the low end of the range, but nonetheless.
There'll be there'll be much better than they were in 2020 , one and 2020, so are there going to be back to 2019.
Speaker 1: So, are they going to be back to 2019, you know, I.
Hi.
Speaker 1: time will tell. But I do see, based on what we saw in Q4, in our Q2 quarter, the December quarter, that these customers are now ready to spend, and that's what our guidance reflects.
Well time will time will tell.
But.
I do I do see based on what we saw in Q4.
So our Q2 quarter the December quarter.
These customers are now ready to spend on.
That's what our guidance reflects.
Okay.
Speaker 11: All right, great. And then a follow up on the APM suite. It seems like the business broadly is, you know, seeing a lot of tailwinds and I'm just curious, is there anything about, you know, the...
Alright, great and then a follow up on the APM suite.
It seems like the business broadly.
Seeing a lot of tailwind and I'm just curious.
Is there anything about.
Speaker 11: specific to APM that is easily explainable as to why that was kind of the only portion of the business that came in below what you were expecting in the first half.
The.
Specific to APM.
That easily explainable as to why that was kind of the only portion of the business that came in below what you were expecting in the first half.
Speaker 1: Yeah, I mean, just just below our plan. The fact is that our plan was was conservative, very conservative for APM in the first half of the year. We always felt that we needed new budgets in this calendar year for for APM to really start seeing a liftoff.
Yeah, just just below our plan and the fact is that our plan was conservative very conservative for APM in the first half of the year.
Always felt that we needed new budgets.
This calendar year for APM to really start seeing.
Left off.
Speaker 1: We saw that, we started to see that in Q2. Q1, you know, I would call the trough for APM being Q1. So, look, I think it's all about priorities in our customers' organizations. If you read about the industry in that October , November period, there was a lot of,
We saw that we started to see that in Q to Q.
Q1.
I would call.
Trough for APM being Q1.
So.
Look I think it's all about.
Our priorities and our customers' organizations.
If you if you read about the industry.
In that October November period, there was a lot of a lot of material written about these companies is starting to focus back on maintenance and reliability, which I think is what we saw in the quarter end and I'm sure. It will be reflected in their budgets for this calendar year. So.
Speaker 1: material written about these companies starting to focus back on maintenance and reliability, which I think is what we saw in the quarter, and I'm sure it will be reflected in their budgets for this calendar year.
Speaker 11: So we're optimistic about it, but also cautious. OK. All right, great. Thank you.
So we're optimistic about it but.
No.
Also also.
Russia so.
Okay, Alright, great. Thank you.
Thank you Jackson.
Thank you. Our next question is from Mark Chappell with loop capital. Your line is open.
Speaker 12: Antonio, pharma and metals and mining were two areas of your business that were receiving increased investment this year. I was wondering if you could just give us an update on the progress you're making on those fronts and also how did those businesses fare this quarter?
Alright, Thank you for taking my question.
Antonio of pharma and metals and mining were two areas of your business that we are receiving increased investment. This year I was wondering if you just give us an update on the progress we're making on those fronts.
And also how did those businesses fare this quarter.
Speaker 1: Yeah, well, look, we're not going to, we're not going to.
Yes.
One of them.
I'm going to give.
Speaker 1: give guidance on pharma or medicine mining because the fact of the matter is that
<unk> guidance on pharma or medicine mining because the fact of the matter is that.
Speaker 13: that business flows through our engineering, MSC, and APM suites, so a lot of what you hear about our engineering, MSC, and APM suites is also a reflection of the contribution from those two industries.
That business flows through our engineering and MSC and APM suite.
So a lot of work a lot of what you hear about our engineering and machine APM switches is also a reflection of the contribution from from those two industries.
Speaker 13: But what I'll give you at a high level around pharma is, look, we now have a sales team that has been engaged with our customers in those industries, is starting to gain traction and build pipeline, and we expect the contribution from the business to really start showing up here in the second half.
But what I gave you sort of at a high level around pharma as Luca we now have a sales team that has been engaged with our customers in those industries.
Is starting to gain traction and build pipeline.
And we expect the contribution from the business to really start showing up here in the second half.
Speaker 1: And then metals and mining has been an ongoing...
In the metals and mining has been an ongoing.
Speaker 13: an ongoing activity through our focus with APM on that sector. We saw business out of customers in the Q2 quarter and a little bit in the Q1 quarter as well. And really, the step-up in investments in metals and mining will come in the second half of this year and then certainly for fiscal year 23.
And ongoing activity through our focused with APM on that sector. We saw we saw business out of customers and the Q2 quarter and a little bit into Q1 quarter as well.
And really the step up in investment in metals and mining.
It will come in the second half of this year and then certainly for fiscal year 'twenty three.
Speaker 13: But look, part of the excitement around the Emerson transaction is also Emerson's
But luca.
Part of the.
Part of the excitement around the Emerson transaction is also a emerson's.
Speaker 13: market position in pharmaceuticals.
Market positioning and pharmaceuticals.
Speaker 13: In the space that they're in, in pharmaceutical software, they have an important market share.
In this space they are in.
In Pharmaceuticals software.
They have an important market share.
Speaker 13: So, certainly, Emerson will be an important channel to market for us in pharmaceuticals. And then, they have some capabilities in metals and mining, nothing like they have in pharma, and we'll also try to leverage those. But pharmaceuticals, we hope to benefit from their presence in that industry.
So certainly the Amazon will be an important channel to market for us in pharmaceuticals, and then they have some capabilities in metals and mining.
Nothing like they have in pharma and we will also try to leverage those but both pharmaceuticals.
Hope to benefit from their presence in the in the industry.
Great. That's helpful. Thank you.
Yes, Thank you Mark.
Thank you and this ends our Q&A session I will turn the call back to Antonio Pietri for his final remarks.
Speaker 4: And this ends our Q&A session. I will turn the call back to Antonio P.
Speaker 13: Thank you, Carmen. And thank you everyone for joining us today for this call. I look forward to participating in the different investor conferences and calls with you and investors over the coming months. Thank you, everyone.
Thank you Carmen and thank you everyone for joining us today for this call.
Look forward to participating in the different investor conferences and calls with you on.
And investors over the coming months thanks, everyone.
Speaker 4: Thank you, everyone. This concludes today's conference. Thank you for participating. And you may now disconnect.
Thank you everyone. This concludes today's conference. Thank you for participating and you may now disconnect.
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