Aspen Technology Inc (AZPN) 2007 Q1 法說會逐字稿

Good afternoon. My name is Seretha and I will be your conference operator today. At this time I would like to welcome everyone to the Aspen Technology first quarter 2007 earnings conference call. [OPERATOR INSTRUCTIONS] . I would now like to turn the call over to Mr. Brad Miller, Chief Financial Officer. Please go ahead, sir.

Thank you and good afternoon, everyone. I'm Brad Miller, CFO of AspenTech, and with me today is Mark Fusco, President and CEO. I'd like to welcome you to our first quarter fiscal 2007 financial results conference call.

Before we begin, I will make the usual Safe Harbor statement that during the course of this call we may make projections or other forward-looking statements regarding future events or the financial performance of the Company that involve risks and uncertainties. The Company's actual results may differ materially from the projections described in such statements. Factors that might cause such differences include, but are not limited to those discussed in today's earnings release and in our most recent Form 10-K filed with the SEC. Also, please note that the following information is related to current business conditions and our outlook as of today, November 7, 2006. Consistent with our prior practice, we expressly disclaim any current intention to update this information prior to release of our second quarter fiscal 2007 financial results, which is scheduled for some time in February.

The structure of today's call will be as follows. I will begin with the financial details of the quarter, Mark will then provide additional color to our first quarter performances and highlights. Finally, I'll finish by providing updated guidance. From a high level perspective, total revenue came in slightly below our prior guidance for the first quarter, but our expense management remained solid and we were able to deliver bottom-line results that were both strong and showed significant year-over-year improvement. Importantly, as Mark will discuss in a moment, we have a strong pipeline and we believe the Company is well positioned to deliver solid financial results for both the second quarter and the full fiscal year.

Taking a look at the results for the quarter. Total revenues for the first quarter were $64.2 million, representing growth of 7%over a year-over-year basis. Within total revenue, software licenses came in at $28.1 million, while services revenue came in at $36.1 million. Software license revenues increased 17% year-over-year and drove most of our overall revenue growth, while services revenue increased about 1% on a year-over-year basis.

As we discussed on previous conference call, our primary top line focus is license revenue, our most profitable revenue stream. We view consulting services as a strategic business. However, its primary focus is on enabling the success of our customers and driving our license revenue. Over the past year, our services revenue growth has been modest, at margin levels that are in-line with our targets and much higher than the beginning of fiscal year 2005.

In terms of details, we closed four transactions in excess of $1 million during the first quarter of fiscal 2007 compared to two in the same quarter of fiscal 2006. In addition, we closed 18 transactions between $250,000 and $1 million during the quarter, as compared to 19 in the prior year's first quarter. Our average sales price this quarter was approximately $300,000 compared to $350,000 in the prior year's first quarter.

As a reminder, we quote our average sales price based on the transactions that are above $100,000. Gross margins on licenses for the quarter were 89%, increased from 84% in the prior year's first quarter. Services gross margins were 51%, roughly even with the prior year's first quarter and above our yearly target of 50%. GAAP total costs and expenses were $70.6 million for the fiscal first quarter, an increased from $64.4 million in the fourth quarter of last year, leading to a GAAP loss from operations of approximately $6.4 million. As further described in a moment, the current quarter included a $5.8 million loss on sale of assets related to a bank financing.

Taking a look at operating expenses, sales and marketing came in at $21.6 million or 34% of revenue. This is an increase compared to 31% in the prior year, due to the growth in our business and investments in our aspenONE sales team. R&D came in at $8.7 million or 14% of revenue. R&D remained low as a percentage of revenue due to our continued focus on careful expense management, but also due to the mix of capitalized versus expensed costs.

This was in-line with our expectations coming into the quarter, and we would expect R&D expense to increase in the second quarter, given the various stages of our R&D projects. G&A came in at $10.7 million or 17% of revenue, which is even with the year-ago period. Included within G&A in the current quarter was $1.2 million in professional fees associated with the completion of the stock option review. The two other material GAAP expenses in the quarter were a $1.4 million restructuring charge associated with severance from continued office consolidations, as originally outlined at the end of 2005.

Secondly, we incurred a $5.8 million loss on the sale of assets primarily related to the new KeyBanc financing facility that was closed and funded in the first quarter, and which we announced in an 8-K at the end of the first quarter. The KeyBanc facility provides us with a vehicle to monetize our long-time receivables for the next three years. Of note is that we would expect a majority of the $5.8 million loss on sales of assets to come back to the Company as interest income, based on the expected performance of portfolio of receivables sold.

Our operating expenses in the first quarter fiscal 2007 included $3.1 million of non-cash stock-based compensation, $1.2 million in professional fees related to the completion of the stock option review, $1.5 million of non-cash amortization of intangibles associated with previous acquisitions, $1.4 million in restructuring charges, and the $5.8 million loss on assets. In the prior year, AspenTech's reported loss from operations of $4.6 million included $1.6 million of non-cash stock-based comp, $1.8 million of non-cash amortization of intangibles, $1.9 million for the settlement of litigation and $2.3 million of restructuring charges and losses on asset sales.

Net loss applicable to common shareholders was $10.6 million in the first quarter of fiscal '07, compared to a loss of $8.4 million in the same period of last year. Net loss applicable to common shareholders included the impact of $3.7 million of accretion of preferred stock dividend in the first quarter of fiscal 2007 and $3.8 million in the first quarter of the prior year. Loss per share applicable to common shareholders was $0.20 for the quarter ended September 30, 2006, compared to a loss of $0.19 in the same period last year.

Of note, the combination of stock-based comp, fees associated with the completion of the stock option review, amortization of intangibles, loss on sales of assets, restructuring charges, and accretion of preferred stock dividends had a net negative impact of $0.27 per share in September 30, 2006 and $0.22 per share in the year ago period. We note that the analyst averages on First Call back out the above mentioned expenses.

Turning now to the balance sheet, we ended Q1 with $89 million in cash, up from $86 million at the end of the prior quarter. The increase in cash was driven primarily by positive cash from operations of approximately $6 million, including the sale of receivables via the new KeyBanc relationship, partially offset by investments in capital expenditures.

In the year ago period, AspenTech's cash from operations was a negative $19.3 million. DSO for billed receivables was 71 days versus 68 in the same period last year. Including the unbilled receivables, our DSO was 83 days compared to 84 in the prior year's first quarter. On the liability side of the balance sheet, we remain virtually debt free. In addition, total deferred revenue entered the quarter at $56 million, down sequentially, which is consistent with previous seasonal trends in the first quarter and even with a year ago.

With that, let me now turn the call over to Mark so he can provide a more qualitative perspective on our September quarter. Mark?

Thanks, Brad. As Brad just covered, our overall results for the first quarter were mixed, due to revenue coming in slightly below our expectations for the quarter, but with a strong bottom line performance. It may seem routine, but on each of our calls we highlight the fact we closed sizable deals and there could be timing variances relative to when these deals close. The September quarter is typically a seasonally weaker quarter for AspenTech, as a result of the summer months combined with numerous fiscal year kickoff activities. On top of these factors, in the months of August and September this year we faced a level of internal and external distraction associated with the completion of our stock option review and related 10-K filing.

From the first time I addressed the investment community as CEO of AspenTech, I said that we were going to run a solidly profitable Company and our goal was to do so, irrespective of variances on the top line. In the first quarter, we delivered profitability that was both strong and a significant improvement on a year-over-year basis when taking into consideration our performance, exclusive of non-cash and nonrecurring charges. We do not typically compare our results to consensus estimates, but given that we were not able to provide guidance due to the timing of our fiscal '06 earnings call, it is worth pointing out that our earnings results on an apples-to-apples basis were better than analysts on average.

Our license revenue is up 17% on a year-over-year basis and is our primary area of focus on the top line. In the prior fiscal year, after a relatively light first quarter, we proceeded to deliver solid results for the remainder of the year. While there is still a lot of execution that needs to be done, we believe that AspenTech is similarly positioned to have a solid second quarter and full year in fiscal 2007.

We are off to a solid start in the second quarter, our end markets remain strong, aspenONE customer interest and pipeline are strong and building, and we have a large volume of renewable term-based contracts, which gives us confidence. We remain upbeat about our prospects, and we believe we will perform well this fiscal year, as we did last year, after a relatively slow start.

I'd like to review the highlights from the quarter from both an industry and Company perspective that provide us with confidence in our near-term and long-term outlook. The September quarter marked the fourth consecutive quarter of double-digit license revenue growth and we believe that AspenTech is in an enviable market position as we look ahead. We have a very strong market share position in each of our product categories that we compete in, the industry's broadest suite of integrated operations and a tremendous customer base in each of our target vertical markets.

From an industry perspective, we believe that the process manufacturers are still in the early stages of investing in new state of the art systems to optimize their plants, and for many of these manufacturers, now is the right time to increase their level of investment in software solutions, because the return on investment is large.. AspenONE is helping customers move to an environment where they are making decisions based on realtime information from across the enterprise, as opposed to departmental information that may be days or weeks old.

Process manufacturers have many challenges in optimizing their business, from increasing output to meeting demand with existing systems to managing continued volatility in raw materials pricing. AspenONE, as the first integrated solution for the process industries, helps our customers better handle and solve their toughest problems, and creates an ability to unlock operational flexibility, which can increase capacity, reduce manufacturing costs and improve profits. Volatility of energy costs is one area that AspenTech has been focused on to help our customers make better decisions on feed, stock, selection and scheduling. Access to better realtime data gives them the tools to manage risk, make better decisions and meet their corporate objectives.

Looking at our target vertical markets, in the quarter, our top ten deals included contributions from energy, engineering and construction, chemicals, pharma, and CPG. This was probably the broadest representation in our top ten deals of any quarter that I can remember since I joined the company as CEO. This was the third quarter in a row that we delivered strong results from the energy sector. During the September quarter, the energy sector was the largest contributor to our overall results and it included our top three license deals.

The building of new plants abroad is also continuing to drive demand for our solutions in the engineering and construction vertical, and during the quarter, we saw another strong performance from this sector. Our engineering solutions are the standard for 17 of the top 20 worldwide ENC firms, and during the September quarter, three of our top ten deals came from the ENC sector. We are the clear choice for ENC firms and we believe we'll be well positioned to sell aspenONE solutions to the process companies that ultimately operate the plants currently under construction. From an overall perspective, ENC represented the second largest contributor to our license revenue during the September quarter, flipping spots with chemicals, which also made a solid contribution.

In addition to customers expanding their use of our point products, we also saw strong adoption of our aspenONE solutions. During the September quarter, aspenONE solutions were part of six of our top ten deals, and they represented roughly 20% of our license sales. We would expect variability in this metric on a quarter-to-quarter basis, given the impact of large deals on detailed metrics. However, we are making very good progress in bringing these integrated solutions to the market, and we have just begun to scratch the surface. From a long-term perspective, that is major opportunity, on top of the ability to expand our recurring engineering plant operations and supply chain businesses.

In summary, the September quarter can be seasonally challenging, and we had additional factors that we needed to manage around in the last month of the quarter in September. We were still able to deliver profitability that was strong and a significant year-over-year improvement. Our solid business momentum and market opportunity remains intact, and we believe that AspenTech is well positioned to deliver solid second quarter and full fiscal 2007 financial results.

With that, I'll turn it back to Brad to give you some updated guidance.

Thanks, Mark. Let me begin -- let me finish by providing fiscal 2007 second quarter guidance. As we began on our Q1 earnings call, our guidance will be on a GAAP basis and we will identify expected non-cash or nonrecurring expense items. We expect to see total revenue in the range of $79 to $83 million in the second quarter. Within our total revenue, due to typical seasonality in the consulting services business, we would expect our services revenue to decline slightly on a sequential basis, similar to the prior fiscal year, due to the lower number of billable days in our consulting business during the holiday season. This would lead to modest growth in services revenue on a year-over-year basis, with the total revenue growth being driven by growth in our license revenue. As we have indicated, the timing of closing large multi-million dollar deals can impact quarterly results and we continue to have large deals in our pipeline.

Taking a look at the seasonality of our license business, as a reminder, the December and June quarters are typically the seasonally strongest license revenue quarters for AspenTech while the March and September quarters are seasonally weaker for licenses. In fiscal 2006, we had an unusually strong March quarter, due to the positive impact of large deals.

However, for planning purposes, we would currently anticipate the March 2007 quarter to follow a more typical seasonal patterns in which it would be weaker from the December quarter followed by a stronger license revenue performance in the June quarter. On the services revenue side, we would expect low to mid single-digit growth on a year-over-year basis for the full year. In percentage terms, services revenues are less affected by seasonality than by license revenue. We currently anticipate total GAAP operating expenses of between $67 and $69 million in the fiscal second quarter, down when compared to the first quarter. In the second quarter of the year-ago period, total GAAP expenses were approximately $67.6 million.

We appreciate that many analysts still wish to back out non-cash charges and other expenses that are nonrecurring in nature in order to evaluate the ongoing performance of AspenTech. The second quarter of this fiscal year, we expect to incur non-cash stock-based compensation expense of approximately $2.2 million, non-cash amortization of intangibles of $1.2 million and restructuring charges and losses on sales of assets of $1.1 million.

Below the line, we also anticipate $3.8 million in accretion of preferred dividends. Inclusive of these expenses, we currently anticipate fiscal second quarter diluted GAAP EPS of $0.09 to $0.11, with the previously mentioned items having a net negative impact of $0.05 per share. So in summary, we are optimistic about our outlook for the second quarter and we believe the Company is well positioned to deliver solid growth and strong profitability for the full fiscal year.

With that, I'll turn it back to the operator to begin the Q&A session. Operator?

[OPERATOR INSTRUCTIONS] Your first question comes from the line of Jon Maietta with Needham and Company.

Hi, thanks very much. A question for Mark. I was wondering if you could talk about the level of demand that you're seeing in the business today as compared to six months ago and a year ago?

Jon, the level of demand we're seeing is consistent and has been building over the past year, really since we started to perform the way we expect to perform. We have a very strong pipeline as we turn the corner into the -- into our second fiscal quarter, which gives us the ability to give what we think is very strong guidance going forward for the quarter. Although we don't normally give full-year guidance and we're not planning to do that tonight, we feel the same way as we did a year ago at this time that we have very good traction in the core parts of our business.

Our aspenONE pipeline in demand is growing and we're seeing opportunities in all parts of the world in the core markets that is we serve. And we're very pleased with where we're at, albeit in a bit of a similar situation as to where we were a year ago, a little bit light on the license line in the first quarter. But we feel very comfortable with where we are at from a demand perspective. And now it's an execution issue in the second quarter and for the rest of the financial year.

Thanks very much.

Your next question comes from the line of Phillip Rueppel with Wachovia Securities.

Great. Thanks and good afternoon, guys. A couple things. Mark, you had mentioned -- you had intimated that some large deals -- large deals always affect your quarterly outcome. Were there any in particular that slipped into your second quarter or anything that -- any particular losses that you had to competitors or -- and do you see this kind of same outlook for large deals that you did kind of going into the quarter?

We have a very strong pipeline of large deals and smaller deals in all parts of the world in the core legacy parts of the business and on some of the newer solutions in the aspenONE space, as well. Timing of deals and how revenue closes can be variable from quarter to quarter. I think we were clearly impacted a little bit over the summer in getting through our stock option review, but in general, the pipeline is strong and there may have been some deals that slipped into the second quarter. We didn't lose any and we fully expect that those will be monetized in the coming quarters as time goes along.

Great. And then secondly, on aspenONE, could you tell us how that kind of contributed to the quarter? And it sounds like from an R&D perspective you are in the process of adding modules. Can you give us a general perspective on what to expect from aspenONE as we look out over the course of the next six to 12 months?

Yes, aspenONE, as we've announced on the calls over the past year or so, has come from relatively nothing, from a license perspective maybe five or six quarters ago to being 20% or more for the last three of four quarters that we've announced. It's been strong and continues to be strong. There are a number of different and new modules that have been developed over the past year or so.

You may have seen or noticed an announcement that our new software suite came available for sale in the first week of October. There's lots of new functionality in the modules that we have and there's lots of also integration across the entire suite. So we think that we are doing the right things from a product development perspective. We're spending, and as we're increasing our investment in our sales and marketing in all of our products, but specifically around aspenONE, and we believe that the opportunity to sell these products and the utility of them for the customers is why the uptake has been strong. And we expect that momentum will continue to build and adoption will continue to accelerate.

Great. Thanks very much.

Your next question comes from the line of Robert Schwartz with Jefferies & Company.

I apologize for any background noise. Can you hear me?

Yes, no problem, Rob.

Thanks, great. Why haven't you converted the preferred to common, which you have a right to do at this point?

As we've said in the past about the conversion of the preferred stock, the Company today has no difference of opinion or anything to announce about why we would convert the common today versus several months ago when in August when it was the first time around that we would the option to do it. There can be any number of different reasons we would have for converting it or not converting it. And when we have a change of opinion about why and when we'll decide to convert it, we'll certainly let everybody know.

Yes, but you're paying -- you continue to pay a dividend by not converting it, correct?

That's correct.

And what could possibly offset -- help me understand just an array of possibilities that could make it an advantage not to convert today?

As you know, the convert has a feature which is picked at our discretion as to whether we pay the interest associated with that convert, which we accrue on our balance sheet and is roughly about $30 million at the moment in either common stock or in cash. We model out on our pro forma earnings per share numbers for you, a fully diluted share count of roughly 93 or so million shares. The Company hasn't decided at the moment whether it's going to pay that in cash or pay that in stock. When we do we'll let everybody know.

Okay. Have you seen any change in demand with the lowering energy prices? I know that's been a concern. I haven't been worried about it, but I'm wondering if you've seen any cooling for your products?

We haven't seen any change in the environment. We're still dealing with energy costs that are high in historical terms. And as we've said in the past, we don't think it's a one-to-one ratio between price of energy and demand for our software products. We have not seen any change in demand from the engineering and construction companies, the energy companies, or the chemical companies as it relates to our products. And I fully expect because of the type of product that is we have, we help them optimize our business, which helps them save a lot of money and, typically, their return on their investment, as it relates our projects is quite large. We really haven't seen any change in demand or interest in any of our point products or any of our integrated solutions.

And my last question is, you've just entered a new sales year, can you tell me how you've changed your comp plan and territories for this '07? And if you had any turnover maybe talk about the number of feet on the street you started with and how you ended the quarter?

We manage the business the same today as we did a year ago. We have three segments of the world and a sales group that's focused on our global accounts. That hasn't changed. The leadership in those segments hasn't changed either, so we feel very comfortable with our sales team and their ability to execute. This is the group that brought us a very nice fiscal year last year, and we believe will be the same this year.

As far as investment goes, the head count from a sales and marketing perspective, both in direct sales and in technical sales support, as we told you here on this will call has ticked up a little bit, with added investment around our aspenONE solutions and our ability to bring those to market. So we're actually investing a little bit more in the sales channel than we were. And if you recall, although we've lowered the expenses of the Company materially since I've been here, we maintain our investment in our sales channel and our technical support channel along the way. This is the first uptick in our investment and I think it matches what we see as opportunity and demand in the marketplace to service all the pipeline that we have.

Thanks. I'll let others ask questions.

No problem.

Your next question comes from the line of Philip Alling with Bear, Stearns.

Thanks very much. I was just hoping to get a little more color on large deals and the degree to which that has impacted your fiscal 2Q guidance?

Clearly, when you have -- I apologize, I'm getting a little feedback here. I hope it's not on your phone. Clearly with a Company our size and when you're closing in any given quarter deals that are quite large that can be seven and eight figures, they could skew the results one way or the other, one deal. Typically, it's not one deal that slips that causes a shortfall or an overperformance in the quarter.

As I look at the quarter and the -- it's robustness in the coverage ratios that we look for in all parts of our business all over the world, I see a strong pipeline. I see lots of large deals with blue chip customers that have bought material amounts of our software in the past. We see lots of interest in our point solutions and in our aspenONE solutions, and we feel very comfortable with where we're at in the sales process and our ability to close those deals in the coming quarters.

So you haven't made any changes in assumptions with respect to closure rates on those deals?

We have not. We're running the business the same. We're forecasting the same way, and although from time to time it may not come in exactly as we expect, in general we've been relatively right and believe that we're going to be right going forward.

So the service gross margins came in higher than we were modeling in the quarter. Would you expect a similar sequential decline in service gross margins as you experienced last year?

I would expect that it would tick down in the second fiscal quarter, and it would also tick down or be relatively flat from Q2 to Q3 because of the amount of billable days that you have. And as you recall, you get in the beginning of any calendar year, extra expenses around benefits costs for state and local taxes and FICA and these sorts of things. We would expect that the gross -- would be the high point in the gross margins for the fiscal year. It's possible that, as our aspenONE business grows and as our ability to sell higher margin business increases, that those could tick up a little bit, but we're not modeling it out for you.

You made some comments with respect to operating cash flow in the quarter. Could you give a sense about what the impact of [sale and installed[ receivables we on the operating cash flow figure?

Sure, Phil. We've sold $20 million relative to the KeyBanc transaction and a couple other drivers there that we had expenses -- some accrued expenses related to things like bonus and collections on behalf of the banks that was offsetting that. But the impact was about $5 or $6 million on the operating cash flow line.

$5 or $6 million, okay. And just final, I just wanted a clarification on the comments you made with respect to an earlier question on the preferred shares. So you are in a position to force conversion of those if you want to, is that correct?

That is correct.

So you're not for some reason or other prevented from converting those preferred shares into common?

No, we're not prevented from converting them if we want to. .And as I mentioned earlier, there could be a number of reasons why we wouldn't or we would at any given time. And if we have a change of opinion about when we're going to do it or why we're going to do it, we'll let everyone know.

Has there been any input from Advent since the demand letter they sent you in May regarding the request to register those shares?

As you know, Advent is a large owner of the common -- or actually the preferred stock of the Company and they also have several board seats on the Company's board, so we have ongoing discussion with them about lots of things, but nothing in the way about movement around their demand letter.

Thanks for the update. That's what I have for now.

Your next question comes from the line of Dennis Wassung with Canaccord Adams.

Thank you. A couple of questions, I guess. First on the aspenONE side. You had another strong quarter here, with aspenONE being in a number of the big deals. I'm just curious if the aspenONE products are having an impact on perhaps early renewals from your customers or are typically people renewing as expected or on time?

They're having, I would say, a little impact. I think as we look at our term-based engineering business, customers renew those contracts for any number of different reasons, and as we've stated in the past, we know when those renewals are coming up on a natural basis. They typically don't go to natural renewal. We renew them early.

The reason being they have added need of software or they want to change the number of seats they have or there could be any number of different reasons. But there's clearly some new functionality that we have included in the engineering suite that's aspenONE related, and we're seeing a definite interest in the number of those different applications.

Okay. And a follow-on there, on the renewal side in general -- I know you guys had a long history with renewals and long-term deals here -- is there any relative strength or weakness with fiscal '07 in terms of last year in terms of the renewal calendar, or is it pretty much all washed out at this point?

As you know, the renewals are not exactly even on a fiscal year basis. They can be a little variability up or down in any particular fiscal year. What we are seeing in the renewal business is interest in renewing and interest in growing the number of seats or the number of products or the number of modules that people are using. And I think that matches the overall growth in the business for our core customers. They're all growing. The business is doing well on a macro basis, and they have demand and need for our services and for our products, term based renewals and plan option supply chain software as well. So I think it closely tracks what's going on in the macro environment. But the engineering business remains strong, the renewal rates are very high and the growth off of the natural and renewed early contracts is good.

Great, and last question for me. You talked about in the quarter having a very broad strength across your end markets, whether it's chemicals, pharma, CPG, as well as the energy and C side. Was that a surprise for you? And when you look at your pipeline going forward, do you see that same kind of broad strength, or was this just kind of a unique quarter?

We are seeing broad strength and interest this all of the different products that we have. This was a little more broad than we had seen in the past. Whether it will continue in this way, I don't know. But what we do know is that the core markets that is we serve, the energy business, the chemical business, and the engineering and construction companies, that's typically somewhere between 805 and 85% of our license revenue on any given quarter, continue to be strong.

Therein, businesses continue to be strong and we're seeing solid demand across all of our product lines. I would expect we'll see other growth in pharmaceuticals and CPG, as well, but clearly the drivers of the business are the core markets we serve.

Great. Thanks, guys.

Sure.

Your next question comes from the line of Richard Williams with ICAP.

Thank you. Can you hear me okay?

Yes.

Okay, good. Just wondered if you could give me some color on the closing rates and also on competitive win rates?

The business is relatively consistent in that respect, and we haven't in the past broken out how many deals we win versus how many we bid and we're not going to do that today. What I will say is that we're not losing business.

There maybe some things that slip from time to time, but the business remains fundamentally strong. And our term license business is strong and continues to grow, and we see continued interest in adoption of our point products and our aspenONE solutions. We're not seeing any particular change in the competitive landscape from what we would have talked about several quarters ago.

Okay, thank you.

At this time, there no further questions.

All right. Thank you all for joining us today and we look forward to updating you in a quarter.

Thank you. Have a nice night.

This concludes today's Aspen Technology first quarter 2007 earnings conference call. You may now disconnect.