If anyone has doubts about ASPT's earnings after the close today (Tuesday), I suggest they listen AGAIN to CEO Beatriz Infante's presentation at the MSDW Conference on January 10th (just 13 days ago):
customer.nvglb.com
There were some definite clues about this quarter's profitability if you listen carefully. Here are some random notes from the recorded presentation:
After mentioning ASPT has shown strong qtr over qtr growth with 70% license growth in Q3 00 over Q3 99, she said, "... and the consensus for our current quarter shows strong growth as well."
If, in fact, Beatriz showcases the "current consensus estimates" without denying them, one would conclude that she is comfortable with those estimates. If we are speaking of a continuance of "strong growth" qtr over year-ago-qtr, the Dec 99 Qtr had a 300% upside earnings surprise with 8 cents profit vs a -4 cents consensus. Are we to assume that we can expect MORE than 8 cents/share this quarter, representing strong qtrly growth? This is sounding pretty good.
Other comments:
Average software license deal size is now $800K and is increasing quarter over quarter. For example, in Q1 2000, average deal size for the top 80% of revenue was about $400K, in Q2 $600K and in Q3 it was well in excess of $800K.
This shows the "progress we've been making in shifting to an enterprise sales model."
Strong services business continues to grow sequentially.
*** MOST IMPORTANT QUOTE *** "we are FIRM [clear emphasis on the word "firm"] in our continuing progress toward achieving profitability and 15% operating margins at steady state." ***
[Her emphasis on the word FIRM came across so confidently that I can only interpret this to mean that there won't be negative surprises this quarter and note there was no negative preannouncement. Furthermore, the mention of "continuing progress" would imply that there will be no forward-looking statements saying the company will be unable to make "continuing progress" in Q1-Q2 as most tech companies are currently disclosing. JMHO only of course.]
In fact, Beatriz went on to say:
"The current economic climate has, if anything, strengthened our position because we have the financial resources to execute... We have a healthy balance sheet and a good cash position."
Software License margins target is 95% and they're running at about 93.5% today. "Steady state" was defined in terms of Platform/License mix and margins.
"The most significant contributor to our profitability is that software revenue line. Every 750K of SW License revs contributes a penny to the bottom line, [whereas] every 6MM of platform revenues contributes a penny to bottom line. "
The business is very sensitive to even minor shifts of a million dollars in or out of license vs platform revenues.
[So, in other words, with an average deal size of $800K or more, suppose they got 5 more license deals than expected, they'd make 5 cents/share more than expected. I think what she is saying is that there can be some large swings in revenues in some quarters, and since they didn't pre-announce this quarter... Hmmm...]
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Finally, did anybody notice on January 10th, when Beatriz spoke, ASPT shares rose from $8.21 to $9.68 on over 1 million shares? The next day, shares were at $10.31 intraday, representing a 25% rise in 2 days. ASPT's trading behavior was perhaps indicative that those who attended the MSDW Conference liked Beatriz's presentation very much! |
