Q1 2024 Aspen Technology Inc Earnings Call

[music].

Speaker 1: Oh.

Okay.

Speaker 2: Ladies and gentlemen, thank you for standing by. And welcome to the Aspen Tech.

Ladies and gentlemen, thank you for standing by and welcome.

Two D Aspen Tech.

Speaker 2: 2023 conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand to raise. 2 would draw you a question, please press star 1-1 again.

2023 conference call.

At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press star one on your telephone you will.

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Speaker 2: Please be advised that today's conference is being recorded. I would like now to turn the conference over to Brian DeNue from my CR. Please go ahead.

Please be advised that today's conference is being recorded.

I would like now to turn the conference over to Brian to New from ICR. Please go ahead.

Yeah.

Speaker 3: Thank you, operator. Good afternoon, everyone. And thank you for joining us to discuss our financial results for the first quarter of fiscal 2024 and the September 30 of 2020.

Thank you operator.

Everyone and thank you for joining us to discuss our financial results for the first quarter of fiscal 2024, ending September 32023.

Speaker 3: And as we may not be on the call today, our Antonio P. H.R.E. Asimtex President and CEO , and Chantel Brightup Asimtex, yes.

With me on the call today are Antonio Pietri asset texts, President and CEO.

Chantelle, Brian asymptotic CFO.

Speaker 3: Please note, we have posted an earnings presentation on our entire website and we asked that you, we asked that in about a few minutes, refer to this presentation in conjunction with today's call.

Please note we are present in the earnings presentation on our IR website, and we ask that you.

We ask that you refer to this presentation and in conjunction with today's call.

Speaker 3: Starting on slide two, I would like to take this opportunity to remind you that our remarks today will include four looking

On slide two I want to take this opportunity to remind you that our remarks today will include forward looking statements.

Speaker 3: Actual results may differ materially from those contemplated by these four looking.

Actual results may differ materially from those contemplated by these forward looking statements.

Speaker 3: Back to the cause are these results are different materially or sent forth in today's press release and in our annual report on form 10K and other subsequent filings made with the SQS.

Factors that could cause these results to differ materially are set forth in today's press release and in our annual report on Form 10-K, and other subsequent filings made with the SEC.

Speaker 3: Any four-looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events.

Any forward looking statements that we make on this call are based on assumptions as of today and we undertake no obligation to update these statements as a result of new information or future events.

Speaker 3: During this presentation, we present both GAP and Stern non- GAAP financial measure.

During this presentation, we present, both GAAP and certain non-GAAP financial measures.

Speaker 3: A reconciliation of gap to non- GAAP measures is included in today's earnings press release and investor presentation, both of which are available on our investor relations website. With that, let me turn the call over to...

A reconciliation of GAAP to non-GAAP measures is included in today's earnings press release and Investor presentation.

Both of which are available on our Investor Relations website.

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

Speaker 4: Thanks Brian and thanks to all of you for joining us today.

Thanks, Brian and thanks to all of you for joining us today.

Speaker 4: Beginning on slide three, these are the four key takeaways for today's call.

Beginning on slide three.

These are the four key takeaways for today's call.

Speaker 4: First, Q1 was a solid quarter, which once again delivered double-digit ACV growth. We have hit the ground ground in to start the new fiscal year, shifting our focus from integration and transformation to execution and expansion.

First Q1 was a solid quarter, which once again delivered double digit ACB growth.

We have hit the ground running to start the new fiscal year shifting our focus from integration and transformation to execution and expansion.

Speaker 4: Second, demand remains strong in most end markets. More than ever, our product solutions are mission critical and uniquely positioned to help customers meet their profitability and sustainability object.

Second demand remains strong in most end markets more than ever our products and solutions are mission critical and uniquely positioned to help customers meet their profitability and sustainability objectives.

Speaker 4: Third, we continue to see promising signs of growth across many different sustainability pathways that are expanding our market opportunity. We are highly encouraged about the potential to help new and existing customers achieve their sustainability objectives through partnership, collaboration, and co-innovation in different use cases.

Third we continue to see promising signs of growth across many different sustainability pathways that are expanding our market opportunity.

We're highly encouraged about the potential to help new and existing customers achieve their sustainability objectives through partnership collaboration and co innovation in different use cases.

Speaker 4: And fourth, we remain confident in our ability to deliver against our guidance targets for the full fiscal year.

And fourth we remain confident in our ability to deliver against our guidance targets for the full fiscal year.

Speaker 4: Our ability to generate double-visit ACB growth and expand free cash flow margins while also making a strategic investment for growth is a great example of the scalability of our business model.

Our ability to generate double digit ACB growth and expand free cash flow margins, while also making strategic investments for growth is a great example of the scalability of our business model.

Speaker 4: looking at our quarterly results in more detail. Annual contract value or ACB was $898 million, increasing 10.9% year over year. And free cash flow was $16 million. As stated last quarter, our cash flow is generally lowest in Q1 due to the seasonality of cash collections in our business.

Looking at our quarterly results in more detail.

Annual contract value or ACB was $898 million.

Kris and 10, 9% year over year.

And free cash flow was $16 million as I stated last quarter, our cash flow is generally lowest in Q1 due to the seasonality of cash collections in our business.

Turning to slide four.

Speaker 4: I will now provide an update on the dynamics we're seeing in our end markets, where the man remains strong excluding chemicals.

I will now provide an update on the dynamics, we're seeing in our end markets, where demand remains strong excluding chemicals.

Speaker 4: In upstream and mid-stream energy, customers are experiencing favorable market conditions and healthy demand growth. With recent acquisition announcements by US oil majors, demonstrating their confidence in the industry's long-term process.

In upstream and midstream energy.

Customers are experiencing favorable market conditions and healthy demand growth with recent acquisition announcements by U S oil majors demonstrating their confidence in the industry's long term prospects.

Speaker 4: from the men combined with a persistently tight-to-plat environment has led to higher oil prices and increased upstream topics investments, especially from national oil companies.

<unk> demand combined with a persistently tied to cloud environment has led to higher oil prices and increased upstream capex investments, especially from national oil companies.

Speaker 4: Traffic investment is not only targeted at increasing oil supply, but also at sustaining existing production rates, as a depletion rate of oil fields is a major area of folks.

Capex investment in not only targeted at increasing our supply, but also at sustaining existing production rates at the depletion rate of oilfield, it's a major area of focus.

Speaker 4: With addition of SCC suite, we can now offer an even more compelling life cycle solution to manage and optimize the entire value.

With the addition of the FCC suite, we can now offer an even more compelling lifecycle solution to manage and optimize the entire value chain and.

Speaker 4: And we expect demand in these markets to remain positive for us and take going forward.

And we expect demand in these markets to remain positive for our spend going forward.

Speaker 4: In refining, while margins have fluctuated over the last three months, they remain strong as industry players benefit from a combination of increasing demand for fuels and capacity rationalization in Europe and North America.

In refining while margins have fluctuated over the last three months. They have remained strong as industry players benefit from a combination of increase in demand for fuels and capacity rationalization in Europe and North America.

Speaker 4: The same owner operator remains focused on extending asset life spans and reducing emissions through and up are thousand times

The same owner operators remain focused on extending asset life spans and reducing emissions through capex and opex investments.

Speaker 4: Targeting improvement in operational efficiencies will be detailed, place of fundamental role.

Targeting improvements in operational efficiencies, while digitalization plays a fundamental role.

Speaker 4: We remain well positioned to support refiners with their initiatives through our ability to drive higher efficiency and therefore improve sustainability.

We remain well positioned to support refiners with their initiatives through our ability to drive higher efficiency and therefore improve sustainability.

Speaker 4: ENC customers are benefiting from positive cap extrins in both traditional energy and energy transition projects, driving higher pipeline and industry optimists.

E&C customers are benefiting from positive capex trends in both traditional energy and energy transition projects driving higher pipeline and industry optimism.

Speaker 4: As we have mentioned in the past, we believe that sustainability initiatives will ultimately support faster and less cyclical growth than we have seen historically in this end mark.

As we have mentioned in the past, we believe that sustainability initiatives will ultimately support faster and less cyclical growth than we have seen historically in this end market.

Speaker 4: We're encouraged by the trends we see with the ANC customers and expect they will come.

We're encouraged by the trends we received we'd be with agency customers and expect they will compete.

Speaker 4: The environment for chemicals remains consistent with the first half of this calendar year, as industry players manage operating costs to support margins in response to weaker demand.

The environment for chemicals remains consistent with the first half of this calendar year as industry players managed operating costs to support margins in response to weaker demand.

Speaker 4: While this is impacting our growth in the chemicals market, chemicals customers remain interested in aspect solutions to help drive efficiencies, reduce emissions and plastic waste and accelerate the development of the circular economy.

While this is impacting our growth in the chemicals market.

Chemicals customers remain interested in Aspen Tech solutions to help drive efficiencies reduce emissions and plastic waste and accelerated development of the circular economy.

Speaker 4: This gives us confidence that we will deliver faster growth from this vertical as market conditions improve.

This gives us confidence we will deliver faster growth from this vertical as market conditions improve.

Speaker 4: Finally, demand in the power T&D industry remains robust as the industry benefits from an immense and ongoing investment cycle to expand, modernize and strengthen the grid.

Finally demand in the powered PND industry remains robust as the industry benefits from an immense and ongoing investment cycle to expand modernize and strengthen the grid.

Speaker 4: This has been driven by increasing consumer and industrial demand for electricity, rapid adoption of renewables, and significant government funding. For example, the international energy agencies or IEAs' most recent update to its mid-zero roadmap for 2050 predicts that $680 billion in global annual grid investments is needed by 2030 to meet the expected increase in electricity demand.

This is being driven by increasing consumer and industrial demand for electricity rapid adoption of renewables and significant government funding for.

For example, the international energy agencies or Iea's, most recent update to its net zero roadmap for 2050 predicts that $680 billion in global annual grid investment is needed by 2030 to meet the expected increase in electricity demand.

Speaker 4: The IEA also predicted that nearly 70% of this investment will be used for distribution grids with the aim of expanding strengthening and digitalizing networks.

IEA also predicted that nearly 70% of this investment will be used for distribution grids with the aim of expanding and strengthening and utilizing networks.

Speaker 4: All of which were well prepared to help support our DGMs.

All of which were well prepared to help support through our <unk> suite.

Speaker 4: where bullish on the long-term growth potential of this market and it remains a key strategic area for investment going forward.

We're bullish on the long term growth potential of this market and it remains a key strategic area for investment going forward.

Turning to slide five.

Speaker 4: I'd like to provide an update on our self-effortes we kicked off the year. As I highlighted on slide three, we're making investments to increase self-capacity in both mute and existing markets.

I'd like to provide an update on our sales efforts as we kicked off the year.

Highlighted on slide three we're making investments to increase sales capacity in both new and existing markets.

Speaker 4: We believe this investment combined with our Emerson commercial relationship will enable us to capitalize on the numerous growth opportunities we see across our business in the years ahead.

We believe these investments combined with our Emerson commercial relationship will enable us to capitalize on the numerous growth opportunities, we see across our business in the years ahead.

Speaker 4: We begin this process in the fourth quarter of fiscal 2023 and have made significant progress in these efforts since then.

We began this process in the fourth quarter of fiscal 2023 and have made significant progress in this effort since then.

Speaker 4: We expect to start benefiting from this additional capacity towards the end of fiscal 2024 and realize its full impact in fiscal 2025 and beyond.

We expect to start benefiting from this additional capacity towards the end of fiscal 2024 and realize its full impact in fiscal 2025 and beyond.

Speaker 4: I now like to provide some additional color around software transactions close in the core.

I'd now like to provide some additional color around software transactions closed in the quarter.

Speaker 4: Our customers continue to recognize the exceptional value and breadth of our innovation for their businesses. Both to meet their needs today and their long-term development objectives.

Our customers continue to recognize the <unk>.

Exceptional value and breadth of our innovation for their businesses both to meet their needs today and our long term development objectives. As a result, we have continued to win new business, while also deepening our relationships with existing customers.

Speaker 4: As a result, we have continued to win new business while also deepening our relationship so that the existing cost.

Speaker 4: The first customer reference is a wall leader in industrial gases that is in the process of expanding from its traditional role in the production of industrial gases to become a leader in the production of green hydrogen.

The first customer references a world leader in industrial gases that is in the process of expanding from its traditional role in the production of industrial gases to become a leader in the production of Green hydrogen.

Speaker 4: But of this journey, these customers using our software to design next generation process technology and estimate investment costs for green hydrogen, green ammonia and renewable.

As part of this journey these customers using our software to design next generation process technology and estimated investment cost for green hydrogen green ammonia and renewables.

Speaker 4: This customer doubled their engineering suite, token entitlement, as foundational technology for their ambitious growth objectives, with plans to explore further standardization on our all-frains going forward.

This customer doubled their engineering suite token entitlement as foundational technology for their ambitious growth objectives with plans to explore further standardization on our offerings going forward.

Speaker 4: The second customer is a leading refiner that decided to more than double their business with us, citing its conviction in the capabilities of our engineering suite and intention to explore additional use cases in alternative field development.

The second customer is a leading refiner that decided to more than double their business with us, citing its conviction in the capabilities of our engineering suite and intention to explore additional use cases in alternative fuel development.

Speaker 4: This latest transaction builds on our long-standing relationship with the customer and we're excited to continue partnering with them going forward.

This latest transaction builds on our longstanding relationship with the customer and we're excited to continue partnering with them going forward.

Speaker 4: Third, for the GM, we secured a large scale perpetual licensed transaction with a US Power utility. The utility was in search of a better way to manage its transmission network and recognizing the strength of our monoclipon shows us over the incumbent following a competitive process.

Third for the AGM, we secured a large a large scale perpetual license transaction with a U S buyer power utility <unk>.

Utility was in search of a better way to manage its transmission network and.

Recognizing the strength of our monarch platform chose us over the incumbent following a competitive process.

Speaker 4: customer is interested in additional DGM suite products and we plan to continue working with them to expand the relationship on forward.

This customer is interested in additional <unk> products and we plan to continue working with them to expand their relationship going forward.

Speaker 4: The fourth and final references from our collaboration with Emerson were we displaced and incumbent in the pop-up paper business of a leading global manufacturing.

The fourth and final references from our collaboration with Amazon, where we displaced an incumbent in the pulp and paper business of a leading global manufacturing.

Speaker 4: Emerson's existing relationship with this customer through its Delta V install base provided valuable insights into its evaluation process and help to identify that the value of our adaptive process control technology for more efficient and sustainable plant operations would be a key relationship.

Emerson's existing relationship with this customer through its delta be installed base provided valuable insights into its evaluation process and helps us identify that the value of our adaptive process control technology for more efficient and sustainable plant operations would be a key differentiator we.

Speaker 4: We see room for expansion across these customers at a base and remain confident in our ability to continue partnering with Emerson in pursuit going forward.

We see room for expansion across these customers asset base and remain confident in our ability to continue partnering with Emerson pursuits going forward.

Moving to slide six.

Speaker 4: I would like to provide an update on the sustainability opportunities we are seeing.

I would like to provide an update on the sustainability opportunities we're seeing.

Speaker 4: The global mega-transition and net zero targets continue to drive significant investment into the development of existing and novel technologies that can scale to achieve customers net zero ambition.

The global Mega trends of the energy transition and net zero target continued to drive significant investment into the development of existing and novel technologies that can scale to achieve customers net zero ambitions.

Speaker 4: As a result, customer's interest in our solution to support the start of sustainability projects is drawn.

As a result customer customers interest in our solution to support this type of sustainability projects is growing.

Speaker 4: This is manifested through ongoing cap expand, which drives increased interest and use in our engineering suite and represents most of our growth in this market today. As these answers are still.

This is manifested through ongoing capex spend which drives increased interest in using our engineering suite and represents most of our growth in this market to date.

At these assets are still in the initial design phase.

Speaker 4: However, over time, we expect to see a benefit from sustainability related projects in our manufacturing and subluching and asset performance management suite as well. Since we provide customer value across the entire asset life cycle from the basic design phase to asset operation and maintenance.

However over time, we expect to see a benefit from sustainability related projects and our manufacturing supply chain and asset performance management suite as well since we provide customer value across the entire asset life cycle from the basic design phase two asset operation and maintenance.

Speaker 4: The customer reference mentioned a moment ago, around Greenhazardin is an excellent example of these land and expand opportunities, and we continue to see many other compelling projects in different areas of sustainable.

Our customer I referenced mentioned a moment ago around green hydrogen is an excellent example of this land and expand opportunities and we continue to see many other compelling projects in different areas of sustainability.

Speaker 4: We also want in the quarter several sustainability related opportunities to our high velocity sales team.

We also won in the quarter several sustainability related opportunities through our high velocity sales team.

Speaker 4: This wins included companies still in their initial startup journeys and later stage companies that have advanced into the testing and development stages of a specific sustainability use case.

These wins included companies are still in their initial startup journeys and later stage companies that have advanced into the testing and development stages of our specific sustainability use cases.

Speaker 4: By leveraging our technology, these companies are developing solutions in areas such as carbon capture, plastics recycling, green hydrogen, renewable fuels and batteries.

By leveraging our technology. These companies are developing solutions in areas such as carbon capture plastics recycling green hydrogen.

Renewable fuels and batteries.

Speaker 4: We're excited about the potential to help them scale up their digitalization initiatives going forward.

We're excited about the potential to help them scale up their digitalization initiatives going forward.

Speaker 4: Turn into slide 7. I will now provide an update on our innovation initiative.

Turning to slide seven I will now provide an update on our innovation initiatives.

Speaker 4: In Q1, we continue to drive innovation across our portfolio to help customers run their assets safer, greener, longer and faster, resulting in the planned release of enhancements to our current version 14 software, and a new version 14.2 update later this month.

In Q1, we continued to drive innovation across our portfolio to help customers run their asset safer greener longer and faster, resulting in the planned release of enhancements to our current version 14 software and a new version 14 to update later this month.

Speaker 4: This operates will include new machine learning and neural net capabilities across many of our products to enhance their hybrid modeling functionality.

These upgrades will include new machine learning and neural net capabilities across many of our products to enhance their hasn't hybrid modeling functionality.

Speaker 4: expansion of our sustainability application library and product integration for Emerson's observation power generation control system among other areas.

Expansion of our sustainability application library and product integration for MSS ovation power generation control system among other areas.

Speaker 4: We also remain focused on helping our partners reach their sustainability goals through co-innovation in the quarter.

We also remain focused on helping our partners reached their sustainability goals through co innovation in the quarter.

Speaker 4: For example, we have completed the productization of the technology license to Maramco, Arcata 3 to be released at Aspen Strategic Planning for Sustainability Path.

For example, we have completed the product deflation of the technology licensed from Morocco, or cut architect III to be released as has been our strategic planning for sustainability pathways.

Speaker 4: This product holds significant potential to help our customers make more informed decisions in their carbon management strategy and over time, it should also incorporate capabilities to help customers better navigate multiple other sustainability paths.

This product holds significant potential to help our customers make more informed decisions in their carbon management strategies and overtime. It should also incorporate a capability to help customers better navigate multiple other sustainability pathways.

Speaker 4: In its initial release, the product will simultaneously consider economics, process design and operating constraints to help customers optimize their carbon management strategy.

In its initial release the product will somewhat simultaneously consider economics process design and operating constraints to help customers optimize their cargo management strategies.

Speaker 4: Additionally, at the announcement afternoon, we're expanding our relationship with OMV Group, a multinational integrated energy company based in Austria to accelerate the company's energy transition initiative.

Additionally, as announced this afternoon, we're expanding our relationship with OMB group, a multinational integrated energy company based in Austria to accelerate the company's energy transition initiatives.

Speaker 4: As a first step in this partnership, we will focus on the renewable fuel optimization strategy by helping them better leverage their industrial data and develop a simplified integrated supply chain model across OMVs, fuels, and chemical supply chain. Thank you.

As a first step in this partnership we will focus on the renewable fuels optimization strategy by helping them better leverage their industrial data and develop a simplified integrated supply chain model across omb's fuels and chemicals supply chain.

Now turning to slide eight.

Speaker 4: I will discuss our outlook for the remainder of fiscal 2020.

We'll discuss our outlook for the remainder of fiscal 2024.

Speaker 4: We remain confident in our ability to deliver ACB growth of at least 11.5% and pre-cash flow of at least $360 million. Industry demand for greater operational efficiency coupled with higher investment levels to support sustainability goals and energy transition initiatives is driving a strong demand for our innovation.

We remain confident in our ability to deliver ACB growth of at least 11, 5% and free cash flow of at least $360 million industry.

Industry demand for greater operational efficiency, coupled with higher investment levels to support sustainability goals and energy transition initiatives is driving strong demand for our innovation.

Speaker 4: macro-trains remain consistent with our expectations at the beginning of the year, and we're closely monitoring the ongoing conflict in the Middle East or any potential impact on market dynamics, which so far has been million.

Macro trends remain consistent with our expectations at the beginning of the year our closely monitoring the ongoing conflict in the middle east or any potential impact of market dynamics, which so far has been minimal.

Speaker 4: I would also like to give an update on the ASP and Tech team in Israel. Our priority has been the physical and mental safety of our team members there. We remain focused on these and we will continue to make sure we're doing all that we can to support our affected employees.

I would also like to give an update on the Aspen Tech team in Israel, our priority has been the physical and mental safety of our team members. There. We remain focused on these and we will continue to make sure. We're doing all that we can to support our affected employees.

Speaker 4: We also want to extend our heartfelt condolences to all those directly and indirectly impacted by this event in Israel and throughout the region.

We also want to extend our heartfelt condolences to all those directly and indirectly impacted by this event in Israel and throughout the region.

Speaker 4: Lastly, as announced a few weeks ago, Chantal will be stepping down from her role here as CFO at the end of December . Chantal has been a great partner to me and a leader for the organization.

Lastly, as announced a few weeks ago Chantel will be stepping down from her role here as CFO at the end of December.

<unk> has been a great partner to me and a leader for the organization on.

Speaker 4: On behalf of the entire team here at Aspen Tech, I'd like to thank her for her many contributions and wish her all the best in the next chapter of her career. We have full confidence in Chris Taigno, SVP and keep accounting officer to step into the interim CFO role after Chantal De Parture, should we need additional time to complete our search for a permanent CFO .

On behalf of the entire team here at Aspen Tech I'd like to thank her for her many contributions and wish her all the best in the next chapter of her career we.

We have full confidence increased stagnant SVP and chief accounting officer to step into the interim CFO role. After Chantel departure should we need additional time to complete our search for a permanent <unk>.

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Speaker 4: With that, I would now like to turn the call over to Chantal for a discussion of our Q1 financial results. Chantal.

With that I.

I would now like to turn the call over to Chantelle for a discussion of our Q1 financial results Chantelle.

Speaker 5: Thank you for the kind words Antonio. It has been a privilege to serve as CFO for the past two and a half years of life.

Thank you for the kind words Antonio it has been a privilege to serve as CFO for the past two and a half years.

Speaker 5: I'm highly appreciative of your leadership, vision and commitment to the come.

And highly appreciative of your leadership vision and commitment to the company.

Speaker 5: I am proud of what we have accomplished and I am very confident in asymptotexability to continue delivering strong top and bottom line growth going forward. I remain committed to working with Antonio Chris and the entire team to ensure a successful trend.

Proud of what we have accomplished and I'm very confident in <unk> ability to continue delivering strong top and bottom line growth going forward.

Remain committed to working with Antonio Chris and the entire team to ensure a successful transition.

Speaker 5: Turning to our Q1 performance, I'd like to start out by highlighting that our earnings presentation includes explanations regarding the impact of AFC topic 606 on our financial results.

Turning to our Q1 performance I'd like to start out by highlighting that our earnings presentation includes explanations regarding the impact of ASC topic 606 on our financial results.

Speaker 5: We have also included definitions of annual contract value or ACV, bookings and free cash flow among other metrics. In our earnings presentation now available on our IAR website.

We have also included definitions of annual contract value or ACD bookings and free cash flow among other metrics in our earnings presentation now available on our IR website, we ask that investors referred to these definitions together with today's call.

Speaker 5: Yes, that investors referred to these definitions together with today's call.

Speaker 5: Starting on slide nine, annual contract value was $898 million on the first quarter of fiscal 2024. Up 10.9% year over year, and 1.4% quarter over quarter.

Starting on slide nine annual contract value was $898 million in the first quarter of fiscal 2024 up 10, 9% year over year, and one 4% quarter over quarter.

Speaker 5: As a reminder, Q1 typically sees the lowest number of transactions closed, given our historical sales.

As a reminder, Q1 typically sees the lowest number of transactions closed given our historical sales cadence in.

Speaker 5: In addition, ACB performance in the first quarter of fiscal 2023 included one time transformation and integration benefits from SSC and our acquisition of NNation, which together represented approximately $10 million of net new ACB or 1.3 points of sequential growth in Q1 of fiscal 2020.

In addition, ACD performance in the first quarter of fiscal 2023 included onetime transformation and integration benefits from SSE and our acquisition of emission, which together represented approximately $10 million of net new ACD are one three points of sequential growth in Q1 of fiscal 2023.

Speaker 5: Total bookings were $212 million in the first quarter, decreasing 5.4% year-over-year. As a reminder, bookings are impacted by the time your renewals, which were down year-over-year, consistent with expectations.

Total bookings were $212 million in the first quarter decreasing five 4% year over year.

As a reminder, bookings are impacted by the timing of renewals, which were down year over year consistent with expectations.

Speaker 5: We expect $131 million in bookings up for renewal in the second quarter of fiscal 2020.

We expect $131 million in bookings up for renewal in the second quarter of fiscal 2024.

Speaker 5: So the revenue was $249 million for the first quarter, which was approximately flat on a year-over year base.

Total revenue was $249 million for the first quarter, which was approximately flat on a year over year basis. Please.

Speaker 5: Please note that revenue in our model is heavily impacted by contract renewal timing and variability under ASC topic six of

Please note that revenue in our model is heavily impacted by contract renewal timing and variability under ASC topic 606.

Speaker 5: Now turning to profitability on a non-gap basis, which excludes the impact of stock based compensation expense, amortization of intangibles, and acquisition and integration planning related fees, we reported operating income of $78 million into one, representing a 31% non-gap operating margin, compared to a non-gap operating income of $90 trillion for a 37% non-gap operating margin a year ago.

Now turning to profitability on a non-GAAP basis, which excludes the impact of stock based compensation expense amortization of intangibles and acquisition and integration planning related fees, we reported operating income of $78 million in Q1, representing a 31% non-GAAP operating margin.

Compared to a non-GAAP operating income of $93 million for 37% non-GAAP operating margin a year ago.

Speaker 5: As a reminder, margins will fluctuate period to period due to the timing of customer rules, and the resulting impact on licensed revenue recognition in the given quarter.

As a reminder, margins will fluctuate period to period due to the timing of customer renewals and the resulting impact on license revenue recognition in a given quarter.

Speaker 5: Additionally, on expenses, please note that the increase was driven by increased head count and compensation costs. In line with Antonio's commentary around our expansion in inches and fiscal 24. This increase in expenses was expected and is consistent with our fiscal year 2024 guidance.

Additionally on expenses. Please note that the increase was driven by increased head count and compensation costs in line with antonio's commentary around our expansion initiatives in fiscal 'twenty for this.

This increase in expenses was expected and is consistent with our fiscal year 2020 for guidance.

Speaker 5: Non-gap nin income was $75 million in the quarter or $1.16 per share. Compared to non-gap nin income of $142 million or $2.20 per share a year ago.

non-GAAP net income was $75 million in the quarter or $1 16 per share compared to non-GAAP net income of $142 million or $2 20 per share a year ago.

Speaker 5: Please note that the difference in non-gap that income between periods was mainly due to a lower benefit from income taxes in the first quarter compared to a year ago. Driven by the change in our approach to computing our tax provision, which originally occurred in the second quarter of fiscal 2020.

Please note that the difference in non-GAAP net income between periods was mainly due to a lower benefit from income taxes in the first quarter compared to a year ago driven by the change in our approach to competing our tax provision, which I originally occurred in the second quarter of fiscal 2023.

Speaker 5: Turning to our balance sheet, we ended the quarter with approximately $121 million of cash and cash equivalence, reflecting the impact of share repurchase under our $300 million share repurchase program. In addition, we had $198 million available on our revolving credit facility.

Turning to our balance sheet, we ended the quarter with approximately $121 million of cash and cash equivalents, reflecting the impact of share repurchase under our $300 million share repurchase program in.

In addition, we had $198 million available on our revolving credit facility.

Speaker 5: During the quarter we purchased approximately 580,000 shares for $114 million under a $300 million share rate purchase authorization announced in fiscal year 2024. We also said of our $100 million accelerated share rate purchase program in the quarter to receive an additional 107,000 shares.

During the quarter, we purchased approximately 580000 shares for $114 million under our $300 million share repurchase authorization announced with fiscal year 2024.

We also settled our $100 million accelerated share repurchase program in the quarter to receive an additional 107000 shares.

Speaker 5: Please note that the $100 million ASR program was paid for in full in just 2020.

Please note that the $100 million ASR program was paid for in full in fiscal 2023.

Speaker 5: For cash flow, we generated $17 million of cash from operations and $16 million of pre-cash flow in the quarter, compared to $5 million in cash from operations and $4 million in pre-cash flow a year ago. As Antonio noted, this was in line with our expectations. As Q1 has historically been our lowest cash flow quarter, due to the amount of cash available per collection in the period.

For cash flow, we generated $17 million of cash from operations and $16 million of free cash flow in the quarter compared to $5 million in cash from operations and $4 million in free cash flow a year ago.

As Antonio noted this was in line with our expectations as.

Q1 has historically been our lowest cash flow quarter due to the amount of cash available for collection in the period.

Speaker 5: Turning to slide 10, I would now like to close with guidance.

Turning to slide 10, I would now like to close with guidance for the full year of fiscal 2024, we are reiterating our outlook across all metrics. This includes at least 11, 5% of ACD growth and a free cash flow target of at least $360 million for the period.

Speaker 5: For the full year of fiscal 2024, we are reiterating our look across all metrics. This includes at least 11.5% of ACD growth and a free cash flow target of at least $360 million for the period.

Speaker 5: We continue to expect total bookings of at least 1.04 billion with 580 million of bookings up for renewal in fiscal 2024. Our non-GAP EPS range has increased by six cents from our prior guide to reflect the impact of our share-re-purchase activity in the first quarter on share-to-standings. There was no impact to GAP EPS.

We continue to expect total bookings at least one 4 billion with $580 million of bookings up for renewal in fiscal 2024, our non-GAAP EPS range has increased by six tenths from our prior guide to reflect the impact of our share repurchase activity in the first quarter on shares outstanding there was no impact to GAAP EPS.

Speaker 5: For a complete overview of our fiscal 2024 guidance, please refer to our earnings press release and presentation available on our IRWIP.

Yes.

For a complete overview of our fiscal 2024 guidance. Please refer to our earnings press release and presentation are available on our IR website.

Speaker 5: As investors think about linearity for the remainder of the year, we continue to expect the cadence consistent with our historical performance.

As investors think about linearity for the remainder of the year, we continue to expect a cadence consistent with our historical performance.

Speaker 5: This includes fiscal 2023, when adjusting for the one-time contributions from FSC animation Q1 that I discussed earlier.

This includes fiscal 2023, when adjusting for the onetime contributions from FSC intimation in Q1 that I discussed earlier, we expect to.

Speaker 5: We expect to generate net new ACV in the low 60% range in the second half of fiscal 2024.

Generate net new ACD in the low 60% range in the second half of fiscal 2024.

Speaker 5: In addition, they expect that we will begin to see the impact from our sales investments in the second half of fiscal 2024. Consistent with the assumptions we provided around our fiscal year 2024 guidance on our last quarterly earnings call.

In addition, we expect that we will begin to see the impact from our sales investments in the second half of fiscal 2024, consistent with the assumptions we provided around our fiscal year 2020 for guidance on our last quarterly earnings call.

Speaker 5: Please refer to slide 13 of our earnings presentation for a detailed overview of our linearity expectations.

Please refer to slide 13 of our earnings presentation for a detailed overview of our linearity expectations.

Speaker 5: To wrap up, we delivered a solid start to fiscal year 2024. Remain on track to meet our failure targets while also strategically investing in different areas that are supportive of our long-term growth objectives.

To wrap up we delivered a solid start to fiscal year 2024.

And on track to meet our full year targets, while also strategically investing in different areas that are supportive of our long term growth objectives.

Speaker 5: We believe Aspen Tech is in a great position to benefit from many of the largest and most important Aspen trends impacting asset intensive industries today.

We believe Aspen Tech is in a great position to benefit from many of the largest and most important investment trends impacting asset intensive industries today.

Speaker 5: which should support our ability to generate attractive levels of growth and profitability for the foreseeable future. With that, I will turn it back over to Antonio for closing comments.

Which should support our ability to generate attractive levels of growth and profitability for the foreseeable future.

That I will turn it back over to Antonio for closing comments.

Thank you Chantelle.

Speaker 4: Q1 was a solid quarter where we once again delivered double digit ACB growth.

Q1 was a solid quarter, where we once again delivered double digit ACB growth.

Speaker 4: Following our initial Foundation Building Year, we have shifted focus to execution and expansion in fiscal year 24.

Following our initial foundation building year, we have shifted focus to execution and expansion in fiscal year 'twenty four.

Speaker 4: We're investing in areas that can drive our growth while also managing our expenses for a return to besting class profitability over time.

We're investing in areas that can drive our growth while also managing our expenses for a return to best in class profitability over time.

Speaker 4: We're pleased to report that the man remains resilient for our mission critical solutions across most end marks.

We're pleased to report that demand remains resilient for our mission critical solutions across most end markets. We also continue to see encouraging signs of growth in different areas of sustainability.

Speaker 4: We also continue to see encouraging sites of growth in different areas of sustainability as I have touched on today. Our team is clearly energized to continue helping our customers with their sustainability initiatives going forward and we remain confident in our fiscal year 24 guidance target.

<unk> touched on today.

Our team is clearly energized to continue helping our customers with their sustainability initiatives going forward and we remain confident in our fiscal year 'twenty four guidance targets.

Speaker 4: With that, we will open it up for Q&A operator.

With that we will open it up for Q&A operator.

Speaker 2: Thank you. As a reminder to ask a question, please press store 11 on your telephone and wait for your name to be announced. To withdraw your question, please press store 11 again. Please stand by while we compile the Q&A, Ross.

Thank you as a reminder to ask a question. Please press star one one on your telephone.

And wait for your name to be announced.

To withdraw your question. Please press star one again, please standby, while we compile the Q&A roster.

Speaker 2: The first question comes from Matthew Fowl with William Blair. Your line is open.

The first question comes from Matthew Pfau with William Blair. Your line is open.

Speaker 6: I met. Hey, and Tony, you shouldn't tell. Thanks for taking my questions. First, I wanted to ask on some of the momentum you're seeing with sustainability, catbacks, and investments. Is there any way to size how much new business is being driven by these initiatives? And how does that compare to perhaps a year ago?

Hi, Matt.

Hey, Matt, Hey, and Tony and Sean Tom Thanks for taking my questions.

First wanted to ask on some of the momentum you're seeing with sustainability Capex and investments is there any way to size how much new business is being driven by these initiatives and how does that compare to perhaps a year ago.

Speaker 4: Yeah, it might let me address that and then Chantal can add her thoughts as well.

Yes.

Matt.

Let me address that and then until Ken can add his thoughts as well so.

Speaker 4: We have an initiative internally to certainly first of all size the opportunity, the total addressable market that

We have an initiative internally to certainly first of all size.

The opportunity the total addressable market.

Speaker 4: that we believe will come to us from a sustainability capex investment and eventually all pecs as well as these planned.

That we believe will come to us from sustainability Capex investments and eventually opex as well as these plants are.

Speaker 4: our build, our manufacturing supply chain and APM solutions will play a role in all of that. Now in the near term, what we're seeing is

<unk> built.

Our manufacturing supply chain and APM solutions.

We will play a role in all of that now and in the near term.

We are seeing is.

Speaker 4: Opportunity is in sustainability and different use cases flowing through our insights health organization, our high velocity self-organization. And the benefit that we're seeing is from CAPEX investments and the initial front and engineering design for those assets.

Opportunities in sustainability and different use cases flowing through our inside sales organization, our high velocity sales organization and the benefit that we're seeing is from Capex investments and the initial.

Front end engineering design for those assets.

Speaker 4: We're also seeing a little bit of MSU opportunities for customers that already have facilities that are running.

We're also seeing a little bit of the MVC opportunities for customers that already have.

The facilities.

Speaker 4: Our advanced control technology, again, seems to be a target for some of these customers.

Ronnie.

Our advanced control technology.

It seems to be a target for some of these customers, but in general we do have a sense today for.

Speaker 7: But in general, we do have a sense today for...

Speaker 7: the amount of business that sustainability is generating. And this is a reason for the investments that we're targeting in our high-velocity self-organization, which are specifically to really position us better to capture that opportunity in that market and eventually through the broader market.

The amount of.

Business that sustainability is generating and this is the reason for the investments that we're targeting in our high velocity sales organization.

Specifically to really position us better to capture that opportunity in that market and eventually over the throughout the broader market that we have.

Speaker 5: Yeah, I think the only thing I would add in Tony with your point is definitely in specific math, you know, such as the high velocity sales that I'm Tony referred to, those are specific measures.

I think the only thing I would add to your point is yes definitely specifics, Matt such as the high velocity sales with Antonio referred to those are specific measures and at a more macro level for us the engineering suites, where we look first and then essentially falls into MFC as we build that land and expand and our engineering suite.

Speaker 5: And that a more macro level for us, you know, the engineering suite where we look first and then that eventually falls into MSC as we build out land and extend. And our engineering suite saw the strongest growth. It has that of 13 quarters, you know, last quarter we said engineering was the strongest out of 12. This is even stronger and of 13. So that's where we see it at a macro suite level and then I'm going to have some specific that kind of goal.

The strongest growth that has that is 13 quarters. You know last quarter. We said engineering was the strongest out of trials. This is even stronger and of 13, So thats, where we see it at a macro suite level and then Antonio Hudson specifics there.

Bolster it together.

Speaker 6: Very helpful and then you know wanted to just perhaps get an update on how you're thinking about acquisitions now that it seems like the Emerson Integration is going well and also the micro mine acquisition has gone away

Okay, Great very helpful. And then I wanted to just perhaps get an update on how youre thinking about acquisitions now that it seems like the Emerson integration is going well and also the micro mine acquisition has gone away.

Speaker 8: Yeah, we were still committed to M&A in the sense of, you know, it's still a part of what we're looking for and in focus on. You know, I think that we have, we have everything from tuck-ins to larger pieces from that perspective, you know, we remain committed to pursuing them as primary source capital. And I think that's, you know, we're waiting to see, we can't always time the market, but we definitely have a list of things from tuck-ins to larger that we're looking at. So it's still a good part of our capital, patience,

Go ahead gentlemen.

Yes, we're still committed to M&A in the sense of it's still a part of what we're looking for and focused on I think that we have we have everything from tuck ins to larger pieces from that perspective, Matt.

We remain committed to pursuing them.

Primary use of our capital and I think that.

We're waiting to see we can't always time the market, but we have we definitely have a list of things from tuck ins to larger that we're looking at.

Still a good part of our capital allocation strategy.

Okay.

Great I appreciate you taking my questions. Thank you.

Speaker 2: Thanks. Please stand by for the next question.

Please standby for the next question.

Speaker 2: The next question comes from Rob Oliver with Bayer. Your line is open.

The next question comes from Rob Oliver with Baird. Your line is open.

Hi, Rob.

Speaker 9: Hi, Tonyo. Hi, Shines. Out good afternoon. Thanks for taking my questions. I had to one. I was wondering if you could provide an update for us that you guys obviously got through a big.

Hi, Sean Good afternoon. Thanks for taking my questions I had two one I was wondering if you could provide an update for us that you guys. Obviously got through a big period of last fiscal year and the SSG business.

Speaker 9: uh... period elastical year in the ss c business uh... with uh... the contract timings and now you're moving into that uh... conversion from legacy perpetual to term and i know that is expected to be a contributor to uh... acv growth this year so i know we're only one quarter in but just wanted to see if i can get an update on how uh... that is progressing uh... so far and then i had a quick follow up

With the contract timings and now moving into that.

Conversion from perpetual to term.

And I know that is expected to be a contributor to ACB growth. This year. So I know, we're only one quarter in but just wanted to see if I can get an update on how that is progressing so far and then I had a quick follow up.

Speaker 7: Yeah, let me take that. And so, look, the year-float last year with SSE, certainly an important transformation benefit in the Q1 fiscal 23 quarter as we cleaned up distances, and we aligned the recognition of the spend in those contracts to our ACV policy.

Yes, let me let me take that.

So look the way the year flowed last year with with SFC.

Certainly an important transformation benefit in the Q1 fiscal 'twenty three quarter as we cleaned up <unk> and we align the recognition of.

Of the spend in those contracts to our ACB policy.

Speaker 7: A lot of the renewals happened in the Q3 fiscal 23 quarter.

A lot of the renewals happen in the Q3 fiscal 'twenty three quarter. So we expect that Q3 fiscal 'twenty four quarter to be.

Speaker 7: So we expect the Q3 fiscal 24 quarter to be a big quarter for SSE.

A big quarter for <unk>.

Speaker 7: and a quarter where we've been focused, we hope to see the result from our focus on growth.

Quarter, where we've been focused.

Hope to see the results from our focus on growing and expanding the.

Speaker 7: and expanding the SSC business. Of course, the growth is what we'll have an impact on ACV, but we're also targeting to expand the term length.

Business of course, the growth is what we will have a.

And impact on ACB, but we're also targeting to expand that.

Speaker 7: which would have a benefit on the revenue side of the equation. But look, we're excited about SSE, especially with national companies. We're seeing a lot of investment, capital investment, investment, flowing, for oil and gas.

Term lengths, which would have a benefit on the revenue side of.

Of the equation.

But look we're excited about is to see.

Especially.

With National oil companies, we're seeing a lot of investment capex investment flowing for oil and gas and its not only as I said on the call is not only to.

Speaker 7: And it's not only, as I said on the call, it's not only to increase production, but to replace the production that is naturally lost as oil fields deplete. And then is the use of SSE around carbon captions, the frustration, also geothermal energies were engaged with a couple of customers as well, starting the possibility using SSE to...

Increased production, but to replace the production that is naturally lost.

As oilfield.

And then.

Ease of use of SSE around carbon capture and sequestration also geothermal energies, we're engaged with a couple of customers as well as studying the possibility of using SSE two tools.

Speaker 7: to also store hydrogen in the subsurface as a storage resource. So we're optimistic about SSEC and the potential that we see, but all the work that we're going to run out, we expect it to see it. It's in the Q3 and Q4 quarters, as we focus on most of the renewals that we have.

<unk> also store hydrogen in the subsurface.

Sure.

Storage resource.

So so we're optimistic about assessing the potential that we see but.

All the work.

Right now we expect it to see it we expect to see it in the Q3 and Q4 quarters as we focus on most of the renewals that we have four SSP, yeah, and I think that the other one other thing I would add too is that from a model perspective.

Speaker 8: Yeah, and I think that the other one other thing I would add to is that from a model perspective, a broad we're seeing, we're pleased with the initial kind of conversations on tokenization. So you mentioned perp the term and then SSE is now doing term to token and we're pleased with how that's tokenization conversations are going. That's the only thing I would add as well is progressing the transformation agenda.

Brian We're seeing we're pleased with the initial kind of conversations on <unk>. So you mentioned perp determined than SSG is now doing term to token and we're pleased with that organization conversations are going and thats. The only thing I would add as well as far as progressing the transformation agenda.

Speaker 9: great helpful that's really helpful call it from both thank you i and then um and i was just one follow up for you appreciated your comment nothing any impact you know from what's you know going out of the milleath and i don't last quarter yet made some comments relative to to china and and and rush up and i think rush you guys the kind of move to renewals only and uh china was was was was slow i just would be curious to hear an update on those to geographies from you thank you very much

Great helpful. That's really helpful color from both thank you and then.

Antonio just one follow up for you I appreciated your comments, you're not seeing any impact from what's going on in the middle Eastern.

Last quarter, you had made some comments relative to China.

And in Russia, and I think Roger you guys kind of move to renewables only in.

China was.

I just would be curious to hear an update on those two geographies.

From you. Thank you very much.

Speaker 10: coins

Speaker 7: Yeah, look, on Russia, as you said, last quarter we announced that we're going to move to a renewal, only business, and that is a case.

Yes, yes.

On Russia as you said.

This quarter, we announced that we're going to move to a renewal also only only business.

And that is the case.

<unk>.

Speaker 7: We're working renewals, and renewals already happened in Q1, and we'll continue to happen. And look, we also continue to monitor sanctions there, just to make sure that we comply with any requirements from the U.S. government.

And we're working renewal some renewals already happened in Q1 and will continue will continue to happen.

And Luca we also continue to monitor sanctions there just to make sure that we can play with any.

The requirements from the from the U S government.

Speaker 4: On China, look, China is interesting in that our business continues to grow in China. Certainly, the Chinese government is driving an emphasis on local sourcing for technologies meaning by local companies, Chinese companies.

On China look China is interesting in that our business continues to grow in China.

Certainly.

The Chinese government is driving an emphasis on local sourcing for technologies, meaning by local companies Chinese companies.

Speaker 9: But we also see Chinese customers continue to buy our technology, which I believe speaks to the innovation and differentiation that still exists between what we do and our products and and any native locally developed capabilities in the country there. So. Appreciate that. Thank you very much.

But we also see Chinese customers continue to buy our technology, which I believe it speaks to the innovation and differentiation that is still exists between what we do on our products on any native.

<unk> developed our capabilities in the country there so.

I appreciate that thank you very much.

Please standby for the next question.

Speaker 2: The next question comes from David Ridley Lane with Bank of America. Your line is open.

The next question comes from David Ridley Lane with Bank of America. Your line is open.

Speaker 11: David. David Ridley Lane on for Andrew Open.

David Hi, David Hi, This is David Ridley Lane on for Andrew Ruben.

Speaker 11: Kind of wondering a little bit more about the competitive displacement you had at that Delta Z customer. Is there understood that you're sort of saying expect the ACV contributions from the Emerson channel to ramp more in the back half, but is there a way of helping...

Okay.

Wondering a little bit more about.

The competitive displacement you had at that Delta as the customer is there.

Sure understood.

You're sort of saying expect the HCV contributions from the Emerson channel to ramp more in the back half, but is there a way of helping.

Speaker 11: puts sort of the number of Emerson driven opportunities that are in the pipeline today in context. How is that, you know, versus a year ago? Just help us and investors better understand how that opportunity is building.

Uh huh.

Put sort of the number of Emerson driven opportunities that are in the pipeline today in context, how is that versus a year ago just to help us.

Hassan investors better understand how that opportunity is building.

Yes sure.

Speaker 7: Let me first say that a lot of work and a lot of goodness happened in fiscal 23. And what I would say is we synchronized the two organizations on what was possible considering the trajectories of the two companies in their own market.

I mean look.

Let me first state that.

A lot of work.

A lot of goodness happened in fiscal 'twenty three.

And we would have.

I would say.

We synchronized.

The two organizations.

On what was possible.

Considering.

The the trajectories of the two companies and they're all in their own markets.

Speaker 7: We now in fiscal 24, respect to the star scene, some of that benefit and the reference that you mentioned is an example. What excites me and excites all.

We now in fiscal 'twenty for respect to start seeing some of that benefit in the and the reference that you mentioned is as an example.

What excites me and excited for all of US is a huge installed base of <unk>.

Speaker 7: is a huge install base of systems that Emerson has in the market, not only in our core market, but in other markets, as you saw, there was a pulp and paper reference, which is typically not a market that Aspent take pursuits. So huge install base of Delta BC.

Our systems.

Mitchell has.

In the market not only in our core market, but in other markets as you saw and that was a pulp and paper referenced which is typically not our market.

Aspen Tech pursuits.

So a huge installed base of <unk> systems huge installed base of <unk>.

Speaker 7: Huge install days of Ovation Systems in power. Huge install days of maintenance systems, Emerson maintenance technology capabilities that we believe are also opportunities for our asset performance management solution and especially the EMTEL solution. Our organization, the ASP and Tech organization now has access to all that install days is engaged with the Emerson sales organization and the different account teams and from a standpoint of

Operation systems, and empower huge installed base of maintenance systems to Amazon.

Maintenance technology capabilities that we believe are also opportunities for our asset performance management solution and especially the <unk> solution.

Our organic.

Aspen Tech organization now has access to all that is still base is engaged with the Amazon.

Sales organization in the different account teams.

And.

From a standpoint of estimating the opportunity.

Speaker 7: estimating the opportunity, you need to look at the Emerson install base and then you will have to determine what is the possibility there for us Pentech, but we also know that

You need to look at the Emerson installed base.

And.

And then you would have to determine what is the possibility there for us but take but.

Speaker 7: Customers are very excited about what's possible between Aspen Tech and Emerson and this is something that we'll be talking about.

Also know that.

Close tumors are very excited about what's possible between Aspen Tech.

On Emerson and this is something that we'll be talking about during our global conference coming up at the end of April next year, so more to come but is about their installed base and then how I spent that can be accelerated into that installed base.

Speaker 7: during our global conference coming up at the end of April next year.

Speaker 7: So more to come but it's about their install base and then how usp and they can be accelerated into that is installed.

Speaker 11: Thank you. And then were there any sort of meaningful levels of digital grid management perpetual license bookings this quarter and just an update on the pipeline, how the customer receptivity is for term license proposals that you're putting across the table?

Thank you and then.

Are there any sort of meaningful levels of digital grid management perpetual license bookings this quarter.

And just an update on the pipeline and how the customer receptivity is for term license proposals that you are.

Looking across the table.

Speaker 7: Yeah, look at the fact is that we,

Yes.

Yes.

Fact is.

We.

Speaker 7: We exceeded our expectations for the quarter around perpetual licenses for the GM. That continues to be a play for us. This is a transition that will happen over many years.

We exceeded our expectations for the quarter.

Perpetual licenses for the GM that continues to be.

Play for us.

This is this is a transition that will happen over many years.

Speaker 7: Some customers are more willing to...

Some customers.

Are more willing to.

Speaker 7: to go to term than others. But what I want to emphasize is that certainly a perpetual license contributes to revenue, contributes to upfront free cash flow, but it also generates GA-CB.

To go to term than others.

But what I would want to emphasize is certainly a perpetual license.

Contributes to revenue contributes to upfront free cash flow, we drove it also generates.

Speaker 4: from the maintenance support that is in those agreements and that's normally somewhere around 19%, 19% of the licenses, the perpetual licenses. So...

Tacb from the maintenance support that is in those agreements and Thats normally.

Somewhere around.

19, 19% of the license is a perpetual licenses. So while of course eventually we will prefer to have OLED business.

Speaker 7: So, well, of course, eventually we will prefer to have all that business be term. There is an important benefit from perpetual licenses that is reflected in the growth expectations for DGM in the year.

Term there is.

Important benefit from perpetual licenses that is reflected in the growth.

Expectations for CGM.

Speaker 7: but look, our pipeline is supporting both.

In the year.

But.

Look our pipeline is supporting both.

Speaker 7: perpetual licenses and term. What I'll say about term is a new license in model for customers. There's like it happened with

The peso licenses and term.

What I will tell you about term.

A new it's a new licensing model for customers.

There's like it happened with hot.

Speaker 7: was beginning in 2009, 14 years ago, customers have to get familiar with the model, have to get familiar with the terms and conditions. And therefore, that aspect of the negotiations takes a little longer. We saw good business in the quarter and we have good engagement around term deals as well. So, look, this is a transition that will happen over many years, but good benefits overall.

Yes.

Was it beginning in 2914 years ago.

Customers have to get familiar with the model has to get familiar with the terms and conditions.

And therefore that aspect of.

The negotiation takes a little longer.

We saw good business.

In the quarter and we have good engagement around term deals as well. So so they'll look digital transition that will happen over many years, but good benefits overall.

Speaker 11: Thank you, and if I could squeeze one more in. So if I understood your sustainability comments around the high velocity sales force, you're starting to sign up.

Thank you and if I could squeeze one more in so if I understood your sustainability comments around the high velocity sales force.

You are starting to sign up.

Speaker 11: engineering and construction firms for incremental tokens.

Engineering and construction firms for incremental tokens around these projects today and you expect that to build as you go through the year.

Speaker 11: around these projects today and you expect that to build as you go through

Speaker 7: Yeah, yeah, we find we find EPCs to be

Yes, yes, we find we find epc's.

To be.

Speaker 7: very bullish about how sustainability capex is flowing to them. And therefore it's driving more use of tokens. One of the customer references that we talked about while that customer is not an EPC, they've made a very strategic decision to focus on on growing green hydrogen and they double their entitlement with Aspen. This is a seven figure doubling of the entitlement.

Very bullish about.

How sustainability capex is flowing to them and therefore, it's driving more use of tokens one of the customer references that we talked about while that customer is not an EPC they've.

They've made a very strategic decision to focus on on the groin green hydrogen.

And they double their entitlement with with Aspen.

This is a seven figure a doubling of the entitlement.

Speaker 12: So that benefit is absolutely now flowing through our growth. And we expect it to continue to be more and more so going forward. Thank you very much. Mm-hmm.

So that benefit is absolutely now flowing through.

Through our growth.

And we expect it to continue to be more and more so going forward.

Alright, Thank you very much.

Mhm.

Please standby for the next question.

Yes.

Speaker 2: The next question comes from Jason Salino with Keybank. Your line is open.

The next question comes from Jason <unk> with Keybanc. Your line is open.

Speaker 13: Hey Antonio, hey, Cental, it's actually been on for Jason tonight. Thanks for taking our questions. Just want to start off.

Hi, Jason.

Oh, Hey, Antonio Hey, until it's actually Devin on for Jason Tonight.

Thanks for taking my questions.

Just wanted to start off just one killed.

Speaker 13: get a little more detail on the ACB growth and

More detail on the ACB growth.

Speaker 13: I mean, it's accelerated a little bit on a year of year basis. And when I look at kind of the balance of the air, I think you mentioned expecting SSC to have a pretty big second half, but any other commentary you can share on, you know, just what's giving you the confidence that ACV growth is really going to accelerate in the back half here.

In the quarter I mean, it decelerated a little bit on a year over year basis, and when I look at kind of the balance of the year. I think you mentioned expecting SSD you'd have a pretty big second half, but any other commentary you can share on just what's giving you the confidence that ACB growth is really going to accelerate in the back half year.

Speaker 8: Go ahead and tell them. I think to the point of adding the additional color, you know, when you take the current, the Q1 period over a year.

Okay.

All right.

Yes, I think to the point of add any additional color. When you take the current Q1 period year over year.

Speaker 8: If you look at, if you remove the one-time benefits of the SSE commercial transformation and the animation, we actually had a 1% growth. She won last year versus the 1.4. So if you look at organic growth, it's actually expansion of 1 to 1.4, which I think is really critical from a run-the-business operational perspective, and we're pleased with that underlying growth.

Look at if you remove the one time benefits of the SFC commercial transformation.

We actually had a 1% growth Q1 last year versus the one four so if you look at organic growth its actually expansion of one to one four which I think is really critical for Matt run the business operational perspective, we're pleased with that underlying growth.

Speaker 8: If you look at the remainder of the year, you know, there are several things we're confident in and I'm sure Antonio had some color, but everything from the SEC terminal, the Q3, the sales projectivity ramping that we talked about the investment Q4 last year. The benefit of the DGM pipeline growing in the sense of both the pipeline term and after market sales. And then traditionally hat has had stronger linearings I can have so we see quite a few factors. And Tony, if you want that any color for those five things.

If you look at the remainder of the year. There are several things, we're confident in and I'm sure Antonio add some color, but everything from the SEC terminals in Q3, the sales productivity ramping that we talked about the investment in Q4 last year Q1 this year.

Benefit of the DCM pipeline growing in the sense of both the pipeline term in aftermarket sales and then traditionally has had stronger linearity in the second half. So we see quite a few factors and then Tony if you wanted to add any color to those five things.

Speaker 7: Yeah, I mean, Chantilly's right. Look.

Yes, I mean sure until it's right Luca.

Speaker 7: I'm very excited about what's happening here. Of course, there's a lot of foundation building and now expansion because in a way, Aspen take accelerated from $700 million to $1.1 billion in revenue and the related ACB overnight. So now it's expansion.

We're excited.

I'm very excited.

But what's happening here of course Theres a lot of.

The foundation building and now expansion because in a way that's been taken accelerated from $700 million to $1 1 billion.

In revenue and the related ACB.

Overnight. So now its expansion if you look at Q1 as Jens <unk> said look in.

Speaker 7: If you look at Q1, as Chantal said, look, in Q1, 23, there were benefits from transformation, now, VSSC, significant benefits, and then the emission in organic benefit. On an apples to apples basis, it's a 40% improvement in the performance in the Q1 quarter versus last year.

In Q1, 'twenty three there were benefits from transformation nervosa see significant benefits and then they mention inorganic benefit on an apples to apples basis, it's a 40% improvement in the performance in the Q1 quarter versus.

Versus last year, but.

Speaker 7: But look, what excites me is, okay, we're starting to see the flow of suit and ability benefit through our SSC, through our high velocity sales organization.

But luca.

What excites me is okay, we're starting to see the floor.

With an ability benefit through our SFC it through our high velocity sales organization, but if you go to Europe. For example, our installed base of customers. There are incredibly focused on sustainability.

Speaker 7: But if you go to Europe , for example, our install base of customers there are incredibly focused on sustainability. Today we announced that press release for...

Dave we announce that.

The press release.

Speaker 7: related to our partnership with OMV in Austria and where they're doing our own biofuels and synthetic fuels, but you also have many of the customers working on this type of use case.

Four.

Related to our partnership with <unk> in Australia, where they are doing around biofuels and synthetic fuels, but but you also have many of the customers working on these type of use cases. So they will believe ultimately there will be an important benefit to had an Iranian engineering MSC as well and I believe also in APM SSC significant sustainable.

Speaker 7: So there will be an important benefit to have, not only an engineering, but MSC as well, and I believe also in APM, SSE, significant sustainability benefits. If you look at DBM and as I travel around the world and I have over the last 18 months talking to the GM customers, the opportunity is incredible. Look, we manage our technology, manages the largest transportation grade in Latin America.

The benefits if you look at DPM and as I travel around the world and I have over the last 18 months talking to PJM customers the opportunity is incredible.

Luca we manage our technology managers, the largest transportation grid in Latin America.

Speaker 7: We are technology is responsible for managing the entire gas distribution network of Spain. The entire

Our technology is responsible for managing the entire gas distribution network of Spain.

Entire India greed is managed by monarch.

Speaker 7: Great is managed by the Monarch Technology Vain Tard in the agree this is the largest.

The monarch technology the entire India agreed this is the largest synchronous.

Speaker 7: synchronous electrical network in the world in one country.

The electrical network in the world in one country.

Speaker 7: and the opportunity in India as I meet with customers and the success that we've had over the last 12 months in Europe .

And the opportunity in India.

I meet with customers and the success that we've had over the last 12 months in Europe.

Speaker 7: around transportation, but also distribution. They 40% plus market share that we have for DGM in North America as well.

Around transportation, but also distribution, the 40%, 40% plus market share that we have.

For the GM in North America, as well and we're only getting started outside of outside of North America, we're doubling our sales organization.

Speaker 7: And we're only getting started, outside of North America, we're doubling ourselves organization in the field, outside of North America to pursue opportunities. And that will continue to happen in future years as well. And the expansion of HVS is about sustainability. So.

In the field outside of North America to pursue opportunities and that will continue to happen in future in future years as well.

And the expansion of HVA is about sustainability. So so.

Speaker 7: As we look at all the macro indicators, the quality of the technology that we have, and the opportunity and the graphics that are starting to flow around global electrification and sustainability is very exciting, very exciting. So the point that Chantal made, look, this is a year is 12 months and four quarters. We just completed our first quarter and now we're excited about Q2Q2.

As we look at all the.

The macro indicators.

The quality of the technology that we have.

And the opportunity on the Capex that are starting to flow around global electrification in sustainability is very excited very exciting. So the point that Chantal made Luca. This is a year is 12 months four quarters.

We just completed our first quarter are now.

We're excited about Q2 Q3 and Q4.

Speaker 13: Got it. Got it. No, I really appreciate the clarity here. I just one quick follow up. I think last quarter you also mentioned.

Got it got it.

Really appreciate the clarity here.

Just one quick follow up I think last quarter. You also mentioned seeing some good cross sell interest premier chemical and refining customers and looking and saying with some of the micro grid management capabilities I'm, just kind of curious of those cross sell interest crystallized in the quarter are showing up more in the pipeline in the near term here. Thanks.

Speaker 13: seeing some good cross-out interest from your chemicals and refining customers and looking into some of your micro-grid management capabilities. I'm just kind of curious if those cross-out interest, you know, crystallize in the quarter or showing up more in the pipeline in the near-term year.

Speaker 4: Yeah, no, look, it will, it is shown up in the bubble and it will be down the road and because the conversation started to happen really in the last six to nine months around microgrid.

Yeah, No look at which it is showing up in the pipeline and it will be down the road because the conversation started to happen really in the last six to nine months around micro grids.

Speaker 7: I had a meeting with a customer in India last week that has been a customer of hat.

I had a meeting with a customer in India last week that he has been a customer of heart for 30 years and.

Speaker 7: for 30 years. And when they found out that our capabilities around microgrid, but more importantly, the fact that we are now, our technology is responsible for maintaining the India electrical grid in balance. And in operations, I mean, our technology keeps the light on in India. It was very exciting for that customer. Also the fact that...

And when they found out that.

Our capabilities around micro grids, but more I think more importantly, the fact that we are now our technology is responsible for maintaining the EMEA electrical grid imbalance and in operations I made in our technology keeps the lights on in India.

Yes.

It was very exciting for that customer also the fact that.

Speaker 7: We actually managed to transmit the distribution of electricity in some of the major cities in India. And therefore, that gives credence, gives credit-

We actually manage the transmission and distribution of electricity and some of the major cities in India.

And therefore that gives credence gives credibility to them the capabilities that we can bring to bear.

Speaker 7: to then the capabilities that we can bring to bear around their own macro grid and their own utilities as they start incorporating renewables, as they start generating power from renewables because this customer is making a huge investment in solar power as well, even though there have historically been chemical, the petrochemical company. So...

Their own micro grid and their own utilities as they start incorporating renewables as they start generating power from from renewables because this customer is making a huge investment in solar.

Power as well, even though there are if you historically been.

Chemicals are petrochemical company. So so this is this is also going to be an opportunity, but again customers are only starting to learn about all of these.

Speaker 7: So this is also going to be an opportunity, but again, customers are only starting to learn about all of these and those opportunities will be in the pipeline down the road. Great, that's great.

And those opportunities will be in the pipeline down the road.

Great that's great to hear thanks for taking my question.

Speaker 2: Yeah, you're welcome. As a reminder to ask a question, please press store 1-1 on your telephone and wait for your name to be announced. Please stand by for the next question.

Yes, you're welcome.

A reminder to ask a question. Please press star one on your Tele town and wait for your name to be announced please standby for the next question.

Speaker 2: The next question comes from Josh Tilton with Wolf Research. Your line is out.

The next question comes from Josh Tilton with Wolfe Research Your line is open.

Speaker 9: Josh? Hi, Tony and Shantel. This is our standing on for Josh. Thanks for taking my question. Looking at the seasonality of reiterated with the 60% range of net new ACV in the second half, that implies significant step up in two Q. Can you elaborate on what provides confidence in that outlook, especially as a higher concentration of attrition is expected because I think it would be the largest two Q quarterly net new ACV step up and the second largest quarterly increase ever realized. And then just a brief follow-up, thanks.

Hi, Josh.

Hi, Antonio and Sean This is <unk> on for Josh. Thanks for taking my question looking at the seasonality of reiterated with the 60% range of net new HCV in the second half that implies a significant step up into Q can you elaborate on what provides confidence in that outlook, especially as a higher concentration of attrition as expected because I think.

It would be the largest <unk> quarterly net new HCV step up in the second largest quarterly increase ever realized and then just a brief follow up thanks.

Speaker 7: All right, well, I think, until Ray to Ray did some of the reasons why we think...

Alright.

Luca I think gentle.

The rates eroded some of the reasons why we think.

Speaker 7: not only Q2, but they were, yes, and now we talk about the linearity of the year and what it means for Q2, but there's also Q3 and Q4 here. Look, I think more immediately it's...

<unk>.

Not only Q2.

And by the way I.

I know, we talked about the linearity of the year and what it means for Q2.

But their social Q3.

In Q4 here.

Look I think.

More immediately.

Speaker 7: starting to see the impact from the hiring, the incremental head count that we've been putting into sale since the beginning of Q4. We made also significant progress in that area in Q1. Then our pipeline of business, this is something that our pipeline is continuing to grow across all three historical businesses had.

As you're starting to see the impact from the hiring incremental head count.

We've been putting into sales since the beginning of Q4.

We made also significant progress in that area in Q1.

And then.

Our pipeline of business.

It is something that is our pipeline has continued to grow.

Across all three all three.

Sort of historical businesses are hot.

OSI and SFC.

Speaker 7: And then, you know, okay, Q3, we talked about the SSC renewals and in general, but look, historically,

And then.

Okay.

Okay Q3, we've talked about the SSE renewables in general, but look at historically.

Speaker 7: Q2 is the end of fiscal year for most of our customers in HAD, also customers in SSV.

Q2 is the end of a fiscal year for most of our customers who had also customers in SFC.

The GM.

Frankly, we haven't seen any seasonality to the GM because because of the way those opportunities flow, mostly rfps in the initial projects and then aftermarket sales.

Speaker 7: And by the way, something that I want to say about the DGM business, the cell cycle for new customers in DGM is very long. We talked about it, you know, 12, 24 months.

And by the way, it's something that I want to say about that.

<unk> business.

The sales cycle the sales cycle for.

New customers in PJM is very long, we talked about it.

Speaker 7: But there is a business once you're installed that is much more accelerated. The name of that cell steam is at Aspen Take, is aftermarket.

24 months.

But there is there is a business once you install that is much more accelerated.

The name of that sales team inside us been take is after market.

Speaker 7: I'm sure we'll change that name at some point. But that business is a shorter sales cycle business. It's at once your install is adding new applications or new capabilities to what's already installed. And that's an area where we're significantly increasing headwinds.

Sure will change that name at some point.

But that business is a shorter sales cycle business is add ons to once you install is adding new applications or new capabilities.

What's already installed.

And that's an area where.

We're significantly increasing head count sales cycle, there it can even be three months, but.

Speaker 7: Cell cycle there, it can even be three months, but more normally six to twelve months

More normally six to 12 months. So so this is an area where we.

Speaker 7: So this is an area where we see the opportunity to accelerate growth because of the difficulty and then the focus and the incremental head count that we're seeing there. And we expect to see some of that benefit in Q2 as well. But I don't, you know, linearity is important of course, because you have to be building the business in the year to eventually deliver a final outcome. But we still have three quarters. Q2 is an important one, but both Q3 and Q4 are all.

We see the opportunity to accelerate.

Growth because of the cyclicality and the focus on the incremental head count that we're seeing there.

We expect to see some of that benefit in Q to us well, but I don't.

The linearity is important of course, because you have to be building the business in the year to eventually deliver a final outcome.

But we still have three quarters Q2 is an important one but both Q3 and Q4 are also very important.

Speaker 14: God it, thanks for that. And on DGM, you mentioned strength and perpetual license. Also, I thank last year because it was still bond old. You mentioned there would have been 16.9 million in DGM ACV in fiscal 23Q1. When I'm thinking about kind of the strength and the perpetual license of this quarter, could you provide color into how strong VGM ACV was this quarter, assuming that there was probably some perpetual SMS talent given that strength and perpetual license? Thank you.

Got it thanks for that and on <unk>, you mentioned strength in a perpetual license.

So I think last year, because it was still bundled you mentioned there would've been $16 9 million Indeed, Jim Gray television.

In fiscal 'twenty, three Q1, when I'm thinking about kind of the strength in the perpetual license. This quarter could you provide color on to how strong the gem HCV was this quarter assuming that there was probably some perpetual SMS tailwind given that strength of perpetual license. Thank you.

Speaker 7: Yeah, I mean, normally we don't like to disclose outcomes in quarters because

Yes look I mean normally we don't like to disclose.

Outcomes in quarters because.

Speaker 7: quarter performance can be given by many reasons. We had a solid quarter in some areas of the GM and we're tracking in other areas. We're still believe that we'll meet our exit our number for the fiscal year for the GM and that's what we're focused on. But the business continues to be very successful and as I said, from my interactions with customers.

Sure.

A.

Quarter performance, which can be given by many reasons.

We had a solid quarter in some areas of the GM and we're tracking the areas.

We're still believe that we will meet or exceed our number for the fiscal year for the GM and that's that's what we're focused on.

But the business continues to be very successful and as I said from my interactions with customers.

Speaker 15: I think this is a business that as we expand globally through headcount and engagement with customers, engagement with our own historical customers in HAT, this is going to be very exciting and interesting. Thank you, Antonio. Yeah, you're welcome.

I think this is a business that.

As we expand globally through through head count on engagement with customers engagement with our own historical customers.

<unk>.

This is going to be very exciting and interesting.

Thank you Antonio.

Youre welcome.

Please standby for the next question.

Speaker 2: The next question comes from Mark Shappel with Loop Capital Markets. Your line is open.

The next question comes from March Chappell with loop capital markets. Your line is open.

Speaker 16: Hi Antonio, thanks, and tell. Antonio, I want to turn to your chemical business. So, what if you just talk or speak to the parts of the overall chemical market that you're seeing in the most pressure, like say bulk chemicals, egg chemicals, specialty chemicals. And then also maybe if you could also address what you're hearing from your chemical customers with respect to the potential likelihood of their business is snapping back, snapping back next year.

Hi, Mark Hi.

Hi Antonio.

Hum.

I'm, sorry, I wanted to in terms of your chemical business wondering if could just talk or speak to the parts of the overall chemical market that youre seeing the most pressure like let's say bulk chemicals I'd chemicals specialty chemicals and then also maybe if you could also address what youre hearing from your chemical customers with respect to that.

Potential likelihood of their businesses snapping back stepping back next year.

Speaker 7: Yeah, look, I do think if you listen to the earnings calls from chemical customers over the last couple of weeks, two, three weeks, there's a little bit of a more positive narrative from these customers.

Yes Luke.

I do think if you listen to.

The earnings calls from chemical customers over the last couple of weeks to three weeks.

There is a little bit of a more positive.

The narrative from these customers.

Speaker 7: If I think back of the last 12 months, there's no doubt that...

If I if I think back over the last 12 months there is no doubt that.

Speaker 7: spec came, remained sort of a positive area for chemical customers. Ball chemicals, let's so. And that's where I think a lot of the hurt was, depending on the region, it was destocking or demand in Europe had to do with cost and implications of the Russia, show you crane war and so on. Now.

Spec came remain sort of a positive area for chemical customers bulk chemicals less so.

And that's where I think a lot of the hurt was depending on the region.

Destocking or demand.

In Europe had to do with cost and the implications of the Russia, Ukraine War.

Speaker 7: What we're starting to see and hear from customers is improving demand, sort of the green shoots of improving demand around bulk chemicals. I think SPAC-KEM is continue to remain solid and they've also differentiated between.

And so on now.

But we're starting to see.

Hear from customers is improving improving demand.

The.

The green shoots of improving demand around bulk chemicals, I think spec Chem has continued to remain solid.

And then also the differentiated between.

Speaker 7: their commitment and ability to again.

Their commitment and ability to again.

Speaker 7: sustain their TAPEX investments even through this down cycle because that's a longer term investment versus OPEX and that's what that's what we benefit from. So I know that's been a question for investors between Emerson and Aspen Tech. I believe Emerson benefits tremendously from TAPEX. We benefit from from OPEX.

Sustain their capex investments even through this down cycle, because that's a longer term investment versus opex and thats, what thats, what we benefit from so I know thats been.

A question for investors between Emerson on Aspen Tech.

I believe Emerson benefits tremendously from topics, we benefit from from Opex.

Speaker 7: Now we're here in budget in season. And I'm not so sure that the outlook for these chemical companies is

Now, we're here and budgeting season.

And.

I am not so sure that.

The outlook for these chemical companies.

Speaker 7: will change dramatically, therefore their budgets might be equal to do for next calendar year, their next fiscal year, but we'll see. But clearly, you're starting to hear a little bit of more positive remarks around their macro demand environment than we've heard over the last six nine months.

Will change dramatically therefore, their budgets might be equally.

Equally subdue for next calendar year their next fiscal year, but we'll see but clearly there is youre starting to hear a little bit more.

Positive remarks around their macro demand environment than we've heard over the last six to nine months.

Speaker 16: Thank you. And then Shantel, real quick, last quarter, I think it was noted that there were a few customers of particularly in Latin America, Asia that were just taking a little bit longer to pay. And I just wanted you to spare to assume, based from the good cash flow front of this quarter, whether that trend is kind of correct to itself.

That's helpful. Thank you and then check out real quick.

Quarter I think it was noted that there were a few customers, particularly in Latin America, and Asia that we're just taking a little bit longer to pay.

I was just wondering if it's fair to assume based from.

Cash flow crackers quarter, whether that trend is kind of corrected itself. This quarter I think I think that we've seen the amount we expected to see in Q1 as the Airbus. If you remember I said it would kind of come in over a few quarters and the Q1 met what we expected for Q4 from those countries late so I think it was absolutely in line.

Speaker 8: I think that we've seen the amount we expected to see in Q1 if you remember, I said it would kind of come in over a few quarters and the Q1 met what we expected from the Q4 from the countries that paid late. So I think it was absolutely in line and we're definitely pleased with our Q1 pre-catchable performance. Thank you. Great.

Definitely pleased with our Q1 free cash flow performance.

Thank you Graeme.

Please standby for the next question.

Speaker 2: The next question comes from Neso Nane with Baron Berg, your line is out.

The next question comes from Nathan <unk> with Bahrenburg. Your line is open.

Speaker 17: Hi both. Hi hello, thank you for your questions. What's here if I may? If I could start with the strategic investments that you've mentioned, please. I was wondering if you could share a bit more color on which parts of the business value you're investing into and also the high velocity sales was any particular opportunities that the sales organisation is pursuing. And then my second question is on

And is it.

Hi Ali.

Thank you for taking my question.

Hey, if I may if I could start with the strategic investments that you've mentioned plays I was wondering if you could share.

A bit more color on which parts of the business that youre investing into and also at the high velocity sales force.

Particular opportunities that the sales organization pursuing and then my second question is on.

Speaker 17: The divisional or segmental performance of the business, I think if I heard you correctly, I think as you mentioned, the engineering was at a really strong quarter, up about 13% year and year. So drink bucket get as a high level segmental update for the rest of the business, please. Thank you.

At the divisional our segmental performance of the business I think it's all anti <unk>.

Correct Lee I think you mentioned the engineering was sounded really strong quarter up about 13% year on year, So trying to if I could get some high level.

Segmental uptick for the rest of that business. Please thank you.

Speaker 8: Go ahead, Chintel, do you want to love her? Yeah, I just didn't want to. So I think from an investment perspective, we're pleased with a few very specific areas of investment. The first one you mentioned is the high velocity sales. And there, as we ramped that head count through the year, we're very much seeing those kind of new logos that we mentioned, some of the startups, new ventures, which are very exciting for us as new growth. And the land and expand opportunities for some of the other place that we're seeing. So definitely high velocity sales for those two factors.

Go ahead, John told you want to leverage yes, I just didn't want it so I think from a investment perspective.

With a few very specific areas of investment. The first one you mentioned is the high velocity sales that are there as we ramp that head count through the year, we're very much seeing those kind of new logos that we mentioned some of the startups new ventures, which are very exciting for us is new growth and the land and expand opportunities for some of the other place that we're seeing so definitely high velocity sales for those two.

Speaker 8: The other investment area that we continue to ever since Q4 is the DGM business mostly rest of world with an intent on Europe .

Two factors, yes, the investment area that we continue to ever since Q4 is the PGM business, mostly rest of world with an intent on Europe. So we're pleased on the sense of the investments we've made for sales going into Europe and the team that's been built out there and continues to work in close pipeline.

Speaker 8: So we're pleased on the sense of the investments we've made for sales going into Europe and the team that's been built out there and continues to work in close pipeline.

Speaker 8: And then the third investment that's related to sales is the setting up the services.

And then the third investment that's related to sales of setting up the services ecosystem for D. Jim and so thats related to sales to delivering the sales and those are the three specific ones.

Speaker 8: ecosystem pretty jam and so that's related to sales to delivering the sales and those are the three specific ones and We're pleased with with the growth we can get with those things being amazing

We're pleased with the with the growth we can get with those things being in Naples.

Speaker 8: I think for that from the segment perspective, I understood your question correctly. So we commented that this quarter was the highest growth for engineering over the last 13, not specifically giving the amount that you quoted, but generally the concept there is we're very pleased that the engineering growth, we don't usually disclose segments on a quarterly basis, but Antonio maybe it could provide some semantic total commentary.

I think for the from this segment perspective, if I understood. Your question correctly. So we commented that this quarter was the highest growth for engineering over the last 13, not specifically, giving the amount that you quoted but generally the concept. There is we're very pleased with the engineering growth, we don't usually disclose segments on a quarterly basis, but Antonio maybe you could provide some some anecdotal.

<unk>.

Speaker 7: Yeah, well, I mean, like, I just I just stay at a high level. But certainly, a significant increase in headcount is going into into DGM, both field sales as we expand internationally, into Europe , but we're also adding some headcount in other parts as well, Latin America.

Yes.

I'll just I'll just stay at a high level.

But certainly.

Significantly.

Increasing head count has gone into into the GM, both field sales as we expand internationally into Europe, but we're also adding some head count and other parts as well Latin America.

Speaker 7: the Middle East, South Asia.

The middle East.

Speaker 7: After market sales, which in a way, it's mostly an inside sales organization as well for the GM, we're making a significant investment in that area.

South Asia.

After market sales, which in a way, it's mostly an inside sales organization as well for the gym, we're making a significant investment in that area.

Speaker 7: Like we're increasing the number of enterprise sales consultants for HAD because we believe there's a bigger opportunity that will start flowing through for HAD as a result of also sustainability and the combination of sustainability use cases with our traditional technology.

We are increasing the number of enterprise sales consultants.

<unk> had because because we believe theres a bigger opportunity that will start flowing through.

As a result also sustainability and the combination of sustained mobility use cases with with our traditional technology.

Speaker 7: And then I'm a material increase in the overall number of headcount in the company. And it takes a while to make all these people productive. But that's also something that we focused on, the self-enabled woman, and how do we accelerate that, and as a matter of fact, that...

And then.

A material increase in the overall number of head count in the company.

It takes a while to make all these people productive.

But.

That's also something that we focused on the sales enablement and how do we accelerate that and that's a matter of fact.

Speaker 7: I'll also say that we've learned from Emerson since they have a much bigger sales organization, how they've scaled sales enablement and that's sort of a best practice that we've been able to take from our relationship with Emerson.

I'll also say that.

We've learned.

From Emerson since they have a much bigger sales organization.

How how they've scaled sales enablement in that.

That's sort of a best practice that we have been able to take from from from our relationship with Emerson. So so I'm very encouraged and it is an exciting time in Aspen take at the moment.

Speaker 7: So I'm very encouraged and I'm excited in asking at the moment.

Understood. Thank you very much.

Speaker 2: I show no further questions at this time. I would now like to turn the call back to Antonio for closing remarks.

Yes.

I show no further questions at this time I would now like to turn the call back to Antonio for closing remarks.

Speaker 7: Thank you, operator. Look, I'd like to highlight here to close. Again, we believe in our ability to deliver on our guidance for the year, ability to grow double digit ACP growth and at least 11.5%. We're very encouraged by the macro indicators in across most of our industries. And as I said,

Yes. Thank you.

Operator.

I'd like to highlight here to close.

Again.

We believe in our ability to deliver.

On our guidance for the year, our ability to grow double digit ACB growth and at least 11, 5%.

We're encouraged by the macro indicators and across most of our industries and as I said.

Speaker 7: Chemicals looks like it's improving the macro demand for bulk chemical producers, so that's good

Chemicals looks like its improving the macro demand for bulk chemical producers. So that's good.

Speaker 7: As I travel around the world to talk to a DGM customer, so as I customers, I just marvel at how now relevant as spend technologies for global electrification and the role we are playing and we will be increasingly playing in that area.

As I travel around the world to talk to the GM customers OSI customers I.

I just Marvel at how now relevant Aspen technologies for global electrification and the role we are playing and we will be.

Creasing the plane in that area.

Speaker 7: I think sustainability is real. Certainly some regions of the world are making bigger investments at this moment than others, but overall the sustainability gap is starting to flow. And eventually there will be all picks with that, which will benefit our business, our MSC, APM, and Switz.

I think sustainability Israel.

Certainly some regions of the World R. R.

Making bigger investments at this moment than others, but overall the sustainability tab.

Capex is starting to flow and eventually there will be opex with that which will will benefit.

Our business, our MSC and APM suites.

Speaker 7: And then overall look very confident.

And then overall look very confident.

Speaker 7: There's a lot of work happening here. Now it's about execution and expansion. And then, you know,

There's a lot a lot of work happening here now it's about execution and expansion.

And then.

Speaker 7: focusing in the remaining time that we have in the fiscal year to exceed your expectation. So with that, I want to thank you all and look forward to talking.

Focusing in the remaining time that we have in the fiscal year to exceed our.

Expectation, so with that I want to thank you all and look forward to to talk in at some point in the future.

Speaker 2: This concludes today's conference call. Thank you for participating. You may now disconnect.

This concludes today's conference call. Thank you for participating you may now disconnect.

Okay.

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