CDW Q4 Earnings Surpass Estimates on Solid Revenue Growth, Shares Up

Aspen Technology, Inc. AZPN reported second-quarter fiscal 2025 non-GAAP earnings per share (EPS) of $2.06, which surpassed the Zacks Consensus Estimate of $1.85 by 11.4%. The figure jumped 50.4% from the year-ago non-GAAP earnings of $1.37.

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The company reported revenues of $303.6 million, which beat the Zacks Consensus Estimate of $294.5 by 3.1% and jumped 18% from $257.2 million in the year-ago quarter.

Aspen Technology, Inc. Price, Consensus and EPS Surprise

Aspen Technology, Inc. price-consensus-eps-surprise-chart | Aspen Technology, Inc. Quote

AZPN’s Quarter in Detail

License’s revenues (62% of revenues) were up 23.5% year over year to $188.2 million. Maintenance’s revenues (29.8% of revenues) rose 6.5% to $90.6 million. Revenues from Services and other (8.2% of revenues) surged 25.9% to $24.7 million.

As of Dec. 31, 2024, annual contract value or ACV ( which Aspen Technology defines as the estimate of the annual value of our portfolio of term license and software maintenance and support, or SMS, contracts, the annual value of SMS agreements purchased with perpetual licenses and the annual value of standalone SMS agreements purchased with certain legacy term license agreements, which have become an immaterial part of its business) amounted to $964.9 million, up 9.2% year over year and 2.5% quarter over quarter.

Margins

Gross profit increased 29% to $209.3 million from the year-ago quarter figure of $162.2 million. As a percentage of total revenues, the figure reached 68.9% from 63.1% reported in the prior-year quarter.

Total operating expenses amounted to $200.3 million compared with the year-ago quarter figure of $211.5 million.

Non-GAAP operating income totaled $149 million compared with $88.7 million reported in the prior-year quarter.

Balance Sheet & Cash Flow

As of Dec. 31, 2024, cash and cash equivalents were $181.8 million compared with $237 million as of June 30, 2024. The decrease was due to the effects of share repurchases under the company’s fiscal 2025 buyback program in the first quarter of fiscal 2025, along with a net cash outflow of $36.5 million in the second quarter for acquiring Open Grid Systems Limited.

In October 2024, Aspen announced its agreement to acquire Open Grid Systems, which will enhance its DGM suite with advanced network model management and data infrastructure. As of Dec. 31, 2024, AZPN had no outstanding borrowings under its revolving credit facility, with $194.5 million available.

The company generated $38.1 million in cash from operations compared with $29.8 million reported in the year-ago quarter. Non-GAAP free cash flow was $36.4 million in the fiscal second quarter compared with free cash flow of $29.2 million in the prior-year quarter.

In the second quarter of fiscal 2025, Aspen repurchased $2.2 million worth of shares.

Fiscal 2025 Outlook

AZPN will not hold an earnings conference call for its second-quarter fiscal 2025 results or provide guidance due to its agreement and plan of merger with Emerson Electric Co. EMR and Emersub CXV, Inc., which was signed on Jan. 26, 2025.

Per the deal, EMR will acquire all remaining outstanding shares of Aspen’s common stock that it does not already own. The agreement, structured as an all-cash tender offer, values the minority stake at $7.2 billion, with a per-share price of $265.00.

This transaction places Aspen’s total market capitalization at $17 billion on a fully diluted basis, with an enterprise value of $16.8 billion. As previously stated, the tender offer requires a non-waivable condition that a majority of AZPN's common stock held by minority shareholders must be tendered and remain unwithdrawn. The transaction is anticipated to close in the first half of 2025, subject to customary closing conditions.

AZPN’s Zacks Rank

Aspen currently has a Zacks Rank #3 (Hold). In the past year, shares have gained 36.5% compared with the Zacks industry’s growth of 33.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Performance of Other Companies in Broader Tech Space

Plexus Corp PLXS reported first-quarter fiscal 2025 adjusted EPS of $1.73, up 40.7% year over year. The figure outpaced the Zacks Consensus Estimate of $1.59 per share.

In the past year, shares of PLXS have gained 50.1%.

Seagate Technology Holdings plc STX reported second-quarter fiscal 2025 non-GAAP earnings of $2.03 per share, beating the Zacks Consensus Estimate by 7.98%. The company reported non-GAAP earnings of 12 cents per share in the year-ago quarter.

In the past year, STX shares have gained 9.7%.

Zacks Investment Research

For the quarter ended December 2024, CDW (CDW) reported revenue of $5.19 billion, up 3.3% over the same period last year. EPS came in at $2.48, compared to $2.57 in the year-ago quarter.

The reported revenue represents a surprise of +4.34% over the Zacks Consensus Estimate of $4.97 billion. With the consensus EPS estimate being $2.33, the EPS surprise was +6.44%.

While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations to determine their next course of action, some key metrics always provide a better insight into a company's underlying performance.

Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance.

Here is how CDW performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts:

• Public- Government: $613.50 million compared to the $611.01 million average estimate based on three analysts. The reported number represents a change of -7.1% year over year.
• Public- Education: $557.40 million compared to the $608.59 million average estimate based on three analysts. The reported number represents a change of -3.8% year over year.
• Public- Healthcare: $683.10 million versus $564.70 million estimated by three analysts on average. Compared to the year-ago quarter, this number represents a +27.5% change.
• Net sales- Public: $1.85 billion versus $1.78 billion estimated by three analysts on average. Compared to the year-ago quarter, this number represents a +4.4% change.
• Net sales- Other: $607.10 million versus the three-analyst average estimate of $635.66 million. The reported number represents a year-over-year change of +3.4%.
• Net sales- Corporate: $2.34 billion versus $2.15 billion estimated by three analysts on average. Compared to the year-ago quarter, this number represents a +2.6% change.
• Net sales- Small Business: $380 million compared to the $371.93 million average estimate based on three analysts. The reported number represents a change of +2.7% year over year.

View all Key Company Metrics for CDW here>>>

Shares of CDW have returned +10.2% over the past month versus the Zacks S&P 500 composite's +1.7% change. The stock currently has a Zacks Rank #2 (Buy), indicating that it could outperform the broader market in the near term.

Zacks Investment Research