Karl E. Johnsen - Aspen Technology, Inc. Antonio J. Pietri - Aspen Technology, Inc.

Monika Garg - KeyBanc Capital Markets, Inc. Matthew Charles Pfau - William Blair & Co. LLC Rob Oliver - Robert W. Baird & Co., Inc. Jackson E. Ader - JPMorgan Securities LLC Steve R. Koenig - Wedbush Securities, Inc. Mark W. Schappel - The Benchmark Co. LLC

Good afternoon, ladies and gentlemen. My name is Karen, and I will be your conference operator today. At this time, I would like to welcome everyone to the Aspen Technology's Fourth Quarter 2017 Earnings Conference Call. I would now like to turn today's call over to Mr. Karl Johnsen, Chief Financial Officer. Please go ahead. Karl E. Johnsen - Aspen Technology, Inc.: Thank you. Good afternoon everyone, and thank you for joining us to review our fourth quarter and full year fiscal 2017 results for the period ending June 30, 2017. I'm Karl Johnsen, CFO of AspenTech, and with me on the call today is Antonio Pietri, President and CEO. Before we begin, I'll make the usual Safe Harbor statement that, during the course of this call, we may make projections or other forward-looking statements about the financial performance of the company that involve risks and uncertainties. The company's actual results may differ materially from such projections or statements. Factors that might cause such differences include, but are not limited to, those discussed in today's call and in our Form 10-Q for the fiscal year 2017, which is now on file with the SEC. Also, please note that the following information is related to our current business condition and our outlook as of today, August 10, 2017. Consistent with our prior practice, we expressly disclaim any obligation to update this information. The structure of today's call will be as follows. Antonio will discuss business highlights from the fourth quarter and fiscal year 2017, and then I'll review our financial results and our guidance for the first quarter and fiscal year 2018, before we open up the call for Q&A. With that, let me turn the call over to Antonio. Antonio? Antonio J. Pietri - Aspen Technology, Inc.: Thanks, Karl, and thanks to everyone for joining us today. We delivered solid results in the fourth quarter that reflected a strong execution by the AspenTech team. Looking at our financial highlights for the quarter, total revenue was $123.7 million, well above the high-end of our guidance range of $118 million to $120 million. GAAP operating income was $48.9 million and non-GAAP operating income was $57 million, which represents a non-GAAP operating margin of 46.1%. GAAP EPS was $0.73 and non-GAAP EPS was $0.79, both of which significantly outperformed our guidance ranges due to a tax reversal that Karl will discuss in more detail later in the call. Free cash flow was $76.8 million and we've returned $75 million to shareholders by repurchasing 1.3 million shares. Looking at our fiscal year 2017, we delivered total revenue of $482.9 million, GAAP EPS of $2.11 and non-GAAP EPS of $2.30 both of which were well above the high-end of our guidance ranges for the same reasons I've noted for Q4, GAAP operating margin was 43.9% and non-GAAP operating margin was 48.8%, free cash flow of $187.2 million, annual spend of $460 million that was up 4.1% year-over-year, and we returned $375 million to shareholders by repurchasing approximately 7.3 million shares. We're pleased with our fourth quarter performance, that we have seen in recent quarters, we saw a broad-based strength among our owner-operator customers in all geographies. At the same time, demand among the E&Cs and upstream energy customers remains constrained by the macro environment, although we did see a positive performance from our European E&C business and a strong performance from our SMB customers. Overall, I believe, the company executed well during the quarter. It has become apparent that the market environment we have experienced since early 2015 has become the status quo. Customers have adapted to this new market reality and have normalized it into their decision-making processes. We now understand better the business dynamics that we experienced during the past two years and the positive is that we enter fiscal year 2018 with a much better handle on what this new normal means for sales cycles, token entitlement, and customer decision making processes. Michele Triponey began her new role as our Executive Vice President of Field Operations on July 1. In Q4, she reviewed our sales execution and participated in delivering the sales outcome achieved in the quarter. Execution in this market environment also demands greater attention to product adoption amongst customers, particularly engaging and sustaining the use of entitlements customers have already purchased. We believe this will accelerate the time-to-value for our customers from their investments with AspenTech, and, over time will enhance retention rates and increase entitlement expansion during the course of a contract. As we look ahead to FY 2018, we're raising our FY 2018 annual spend growth guidance given at Investor Day to 5% to 7% from 4% to 7%. Underlying this guidance is an expectation that our core engineering and MSC suites will grow in the 4% to 5% range and will be augmented by 1 to 2 points of growth from our new APM suite. This guidance represents the expectation that our engineering and MSC business execution is a more solid footing going forward and the APM suite will gain traction in FY 2018. We also believe our asset optimization strategy and overall execution should provide a solid path to better growth beyond FY 2018, especially if the macro environment were to improve. I would like to take a moment to provide an update on our asset performance management or APM suite. During the fourth quarter, we made progress with our pipeline and generating customer interest and closed some early initial deals that are indicative of the market opportunity for these solutions. For example, a large global chemical producer expanded use of the Aspen Mtell functionality from one to three sites. We also hosted our biennial OPTIMIZE user conference in Houston, where APM was a major focus for our largest number of attendees since 2002. Improving the reliability of the physical components of a plant is the single largest untapped area of value from productivity, efficiency, and safety improvements for customers. We're getting excellent feedback on our asset optimization strategy and specifically the APM suite and the current capabilities we have with Mtell, Fidelis, ProMV, and Aspen Asset Analytics. We feel very good about the progress we have made to date executing on the APM strategy and our focus for fiscal year 2018 is to build on this momentum by turning the pipeline into transactions. As we highlighted at our Investor Day in June, we believe this market represents a TAM white space of $1.7 billion in our three core verticals and approximately $900 million in what we call the global economy industries, or GEIs, which include power, pulp and paper, wastewater treatment, transportation, and consumer packaged goods. To ensure we're properly aligned across the company to take advantage of this market opportunity, in early June, we hired Paul Rogers to serve as Senior Vice President and General Manger of our APM business. Paul joins us after 15 years at General Electric, where he held a variety of C-level positions at GE Energy, GE Digital, and GE Current. He was Senior General Manager at GE Energy's Software Solutions Group, leading over 1,200 employees for oil and gas, power, and energy management businesses, and was also Chief Development Officer for GE's Industrial Internet initiative across all divisions of GE. In his role as General Manager, Paul is responsible for executing on the APM business strategy to grow in the process industries as well as the GEIs, where we're deploying a comprehensive channels sales strategy. As I mentioned earlier, we expect the APM suite will contribute 1 to 2 points of growth [Technical Difficulty] (9:44-11:55)

Mr. Pietri, you're now back in the main conference. Antonio J. Pietri - Aspen Technology, Inc.: Yeah. Thank you, operator. I would like to apologize for the interruption to our call, significant noise came on the line for us on our side and we couldn't tell whether anyone could hear us. So, we decided to hang-up the phone and call back. So, I will pick up where I left off before the interruption. As I mentioned earlier, we expect the APM suite will contribute 1 to 2 points of growth during fiscal year 2018. We expect the positive impact to be weighted more heavily in the second half of the fiscal year, given the length of APM sales cycles and that the customers will soon begin their calendar year 2018 budget planning process, which will be the first time they will have an opportunity to plan for APM investments. Turning back to our fiscal year 2017 performance, let me provide you with some additional details. From a product perspective, for the year, our engineering business delivered better growth than in fiscal year 2016, and represented 18% of our overall annual spend growth, while the MSC business represented 80% and delivered another double-digit growth figure in the year, and the APM business contributed the other 2%. We were pleased with the performance of our engineering business, considering the challenges facing certain E&C and upstream customers. Our installed base of business at the end of the year on an annual spend basis is split 65% engineering and 35% MSC. Our three core verticals of energy, chemicals, and E&C contributed 47%, 39%, and 8% of our growth in annual spend during the year, respectively. As an update to the figures given at Investor Day, the energy vertical represents 40% of our business, chemicals 27%, and E&C is 29% at the end of fiscal year 2017. Our attrition rate for fiscal year 2017 was approximately 6% and consistent with fiscal year 2016. The attrition rate remained elevated compared to our historical level in the 3% range due to entitlement reductions from E&C and upstream customers at the time of renewal. These customers continue to use AspenTech solutions at or above historical levels on the projects that they're engaged in, but significant cuts to global CapEx budgets have materially impacted their backlog. Our guidance for fiscal year 2018 assumes an attrition rate of 5% to 6%, somewhat similar to the prior two years. Turning to the fourth quarter; energy, engineering and construction, and chemicals once again represented greater than 90% of our business. Energy was the largest vertical contributor, followed by chemicals. Looking at our 10 largest transactions in the quarter, there was again a mix of engineering and manufacturing supply chain transactions. Following is a representative sample of transactions closed in the quarter. First, a Scandinavian engineering company that has historically been a user of our competitor's products switched to AspenTech's engineering software shortly after being acquired and following an extensive process to demonstrate incremental value from the use of our software. Second, a joint venture manufacturer of high purity raw material used as feedstock to produce superior semiconducting products expanded its use of the AspenTech Engineering Suite. This customer's competitive advantage is a proprietary database of chemicals compounds, which is integrated with the AspenTech Engineering Suite chemicals properties database. The key driver for this customer is the ability to model and simulate the manufacturer of the high performance products in Aspen Plus using its proprietary database. Third, a Japanese refining company, resulting from the merger of the two largest refining companies in Japan, needed to develop a model for all the newly combined refineries in one single planning tool, to optimize operations across all sites. The customer's decision to develop the planning model in PIMS-AO was based on the conviction that PIMS-AO can achieve better simulation runtimes and make better decision that lead to higher refinery margins. In addition, this customer piloted our DMC3 product in one unit at one refinery and was so satisfied with the results that he decided to supersede its DMCplus contract to access DMC3 across all the refineries for a broader rollout. Fourth, a Middle East refinery customer in Kuwait, who has been our user of our engineering and MSC products since the early 1990s of the first implementer of our supply chain of products in the region, decided to sign a new agreement with AspenTech for access to our MSC suite of products. With this new agreement, the customer will have access to our latest technologies, including PIMS-AO, which he plans to leverage to achieve better optimization results, including in the large-size refinery currently under construction. And last, a long-term customer in Southeast Asia for our engineering and MSC products consolidated all its existing contracts into one and purchase additional token entitlement for both suites to deploy at its refinery under construction. During the quarter, we had a significant product launch with introduction of aspenONE Version 10, which builds off the very successful introduction of Version 9 in May 2016, in fiscal year 2016. Highlights of the latest release include an updated version of Aspen Plus that extends our modeling capabilities from continuous to batch and semi-batch processes that will enable specialty chemical and pharmaceutical companies to accelerate new product development and more quickly optimize production. A new version of Aspen Basic Engineering that streamlines data integration in FEED preparation and enhances collaboration among globally distributed teams, which will enhance productivity and reduce risk for E&C customers. And a new version of PIMS called Aspen Unified PIMS that features a modern web-based architecture with scalable high performance computing that enables better collaboration and improved insights into model performance. This is the first of a family of Unified products envisioned to unify the production workflow from planning to scheduling and performance monitoring that will be introduced in future releases. We have introduced a significant amount of innovation to market in recent years and customers' interest and adoption demonstrates our investments are delivering significant value to customers. In V9, we introduced column hydraulics analysis functionality in Aspen Plus and Aspen HYSYS. This has become the fastest adopted single new functionality since we began tracking a specific functionality usage. We have an extensive product roadmap across all three of our suites that we are investing in that will extend AspenTech's value to customers even further. At the same time, we will continue to generate significant profitability and free cash flow, which we deploy to generate shareholder value via our M&A activities and through share repurchases. At our Investor Day, we updated our long-term target model to non-GAAP operating margins of 47% to 50%, which we intend to achieve, while making continued investments in our products and in building out our APM go-to-market capability. During the fourth quarter, we repurchased 1.3 million shares for $75 million, which brought the total amount of capital return to shareholders during fiscal year 2017 to $375 million to repurchase 7.3 million shares. Since we started our buyback program in fiscal year 2011, we have repurchased 29.2 million shares and reduced our net diluted share count by 19%. We intend to repurchase an additional $200 million of stock during fiscal year 2018 as part of our capital allocation strategy. To summarize, AspenTech ended fiscal 2017 on a strong note. We delivered another year of solid growth in a difficult market environment. Our performance demonstrates a significant value we generate for customers every day. We believe that we entered 2018 well-positioned to deliver improving growth and continued strong levels of profitability and cash flow. With that, let me turn the call over to Karl. Karl? Karl E. Johnsen - Aspen Technology, Inc.: Thanks, Antonio. I will now review our financial results for the fourth quarter and full fiscal year 2017, beginning with annual spend. Annual spend, which is a proxy to the annualized value of our recurrent term license and maintenance business at the end of each period, was approximately $460 million at the end of the fourth quarter. This represented an increase of approximately 4.1% on a year-over-year basis and 1.8% sequentially. Now, let me turn to additional financial results beginning on a GAAP basis. Total revenue was $123.7 million for the fourth quarter, well above the high-end of our guidance range, and an increase of 8.8% compared to the prior year period. The revenue outperformance in the quarter was driven by greater than anticipated professional services revenue, as well as some cash-based subscription revenue where collections came in ahead of forecast. Looking at revenue by line item, subscription software revenue was $115.4 million for the fourth quarter, an increase from $106.7 million in the prior year period, and $111.7 million last quarter. Services and other revenue was $8.2 million compared to $7 million in the year ago period, and $7.6 million last quarter. Turning to profitability; beginning on a GAAP basis, gross profit was $111.6 million in the quarter, with a gross margin of 90.2% which compares to $101.9 million, and gross margin of 89.7% in the prior year period. Operating expenses for the quarter were $62.6 million compared to $53 million in the year-ago period. Total expenses including cost of revenue were $74.7 million, which was up from $64.7 million in the year ago period, and $67 million last quarter. Operating income was $48.9 million for the fourth quarter of fiscal 2017 compared to $49 million in the year ago period. Net income for the quarter was $54.4 million or $0.73 per share compared to net income of $33.3 million or $0.41 per share in the fourth quarter of fiscal 2016. The outperformance on the bottom line was largely driven by a FIN 48 tax reversal that resulted in a $19 million or a $0.26 per share credit to earnings. Taking that into account, our earnings per share in the quarter still came in well above the high end of our guidance of $0.40 per share. Turning to non-GAAP results, excluding the impact of stock-based compensation expense, restructuring charges, amortization of intangibles associated with acquisition, acquisition-related expenses and non-capitalized acquired technology, we reported non-GAAP operating income for the fourth quarter of $57 million, representing 46.1% non-GAAP operating margin, compared to non-GAAP operating income and margin of $52.4 million or 46.1% respectively in the year-ago period. Non-GAAP net income was $59.1 million or $0.79 per share in the fourth quarter of fiscal 2017 based on 74.8 million shares outstanding and was significantly above the high end of our guidance range of $0.44. This compares to non-GAAP net income of $35.5 million or $0.44 per share in the fourth quarter of fiscal 2016, based on 81.6 million shares outstanding. Our non-GAAP net income and earnings per share benefited from the same tax reversal I mentioned earlier. Looking at our results for the full fiscal year, revenue was $482.9 million which increased 2.2% compared to fiscal year 2016. GAAP operating income of $212 million was up slightly from $211.4 million in fiscal 2016, while non-GAAP operating income of $235.8 million improved from $232.7 million in fiscal 2016. 2017 GAAP income per share was $2.11 and non-GAAP income per share was $2.30 per share compared to $1.68 and $1.87 in fiscal 2016 respectively. Turning to the balance sheet and cash flow. The company ended the year with $102 million in cash and marketable securities compared to $101.7 million at the end of last quarter. Following the end of the quarter, we expanded our credit agreement by $100 million to $350 million. We currently have $140 million drawn against this agreement and the expanded capacity provides the company with additional financial flexibility. During the fourth quarter, we repurchased 1.3 million shares of our stock for $75 million, bringing us to a total of $375 million in buybacks for fiscal 2017. Looking at our deferred revenue balance, it was $300.4 million at the end of the fourth quarter, representing a 6.5% increase compared to the end of the year-ago period. On a sequential basis, deferred revenue increased $31.9 million. From a cash flow perspective, the company generated $73.3 million of cash from operations during the fourth quarter and $182.4 million for the full fiscal year. Free cash flow in the fourth quarter was $76.8 million and $187.2 million for full fiscal year 2017, after taking into consideration the net impact of capital expenditures, capitalized software, non-capitalized acquired technology, excess tax benefits from stock-based compensation, and acquisition-related expenses. A reconciliation of GAAP to non-GAAP results is provided in the tables within our press release, which is also available on our website. I'd now like to close with our financial outlook for the first quarter and full fiscal year 2018. With respect to annual spend growth in fiscal 2018, as Antonio has already indicated, we're increasing our guidance to 5% to 7% annual spend growth. We continue to expect revenue to be in the range of $487 million to $494 million, and continue to expect subscription and software to comprise greater than 90% of revenue with our services and other revenue representing the remainder. From an expense perspective, we expect total GAAP expenses of $282 million to $287 million. Taken together, we continue to target GAAP operating income in the range of $202 million to $209 million for fiscal 2018 with GAAP net income of approximately $127 million to $131 million. We expect GAAP net income per share of $1.67 to $1.72. From a non-GAAP perspective, we are reiterating our non-GAAP operating income guidance of $226 million to $233 million, and expect non-GAAP income per share in the range of $1.88 to $1.93. From a free cash flow perspective, we are reiterating our fiscal year guidance of $180 million to $185 million that was initially provided at our Investor Day. Our fiscal 2018 free cash flow guidance assumes cash tax payments of approximately $65 million to $70 million. From a timing perspective, we expect to pay 50% of our cash taxes in the second quarter, with the remaining 50% paid equally in the third quarter and fourth quarters. As it relates to the first quarter, we expect revenue in the range of $120 million to $122 million, non-GAAP operating income of $55 million to $57 million and non-GAAP EPS of $0.46 to $0.48 per share. On a GAAP basis, we expect operating income of $49 million to $51 million, and income per share of $0.40 to $0.42. In summary, we are pleased with our fourth quarter and full year 2017 performance from both a financial and operational perspective. We continue to execute well in a challenging environment and believe the investments we're making in our business will position us well for revenue, reacceleration, increasing profitability, and greater free cash flow generation going forward. With that, we're now happy to take your question. Operator, let's begin the Q&A.

Your first question comes from the line of Monika Garg of KeyBanc Capital. Monika Garg - KeyBanc Capital Markets, Inc.: Hi. Thanks for taking my question. Antonio, you have raised annual spend guidance strength on your basically core industries. Oil prices remain in the similar range. Can you talk about what you saw from the demand side from your customers that has led to raise? Antonio J. Pietri - Aspen Technology, Inc.: Well, let me look at – like I said in my comments, we saw broad-based demand from owner-operators across all regions of the world. We also saw a lot of strength with our engineering and SMB business. I also stated that our European E&C business had a positive outcome for the year. In general, we feel better about the pickup in our execution in Q4 and the understanding that we have about how we need to execute in FY 2018 and beyond against this environment. I also think this environment has become the new normal for our customers, and in a way, the fluctuation of oil prices between $45 and $55 has also introduced certainty, which I think has been one of the biggest issues over the last two years uncertainty, I mean by that. So, with all in this range, and now into the fourth year of the downturn in oil prices, you can see a nice – what we noticed that customers have factored this environment into their execution, into their investments, and our expectation is that while on the engineering side of the business, because of E&Cs and upstream, the environment will be – the investment will be constrained. We also see that our owner-operators have continued to drive demand. We are also seeing a lot of interest in our APM business suite. We're confident about our sales execution, the APM business outlook. In general, we've seen our pipeline pick-up over the last 12 months and especially over the last three months to six months. And overall, in June, we were still being cautious in a way, we were still working to complete our fiscal year and it was early to make a concrete statement about fiscal year's 2018 performance. So, that guidance used to reflect our confidence. We'll still continue to deliver a similar performance on the MSC and engineering side of the business and that APM will become a contributor in fiscal year 2018. Monika Garg - KeyBanc Capital Markets, Inc.: Thanks a lot for the color. Second question, if we look your annual spend last year about 4.3%, you're guiding 5% to 7% for fiscal 2018, but the revenue guidance is still somewhere 2% to 3%. So why are we seeing the delta between annual spend growth and revenue growth? Antonio J. Pietri - Aspen Technology, Inc.: Well, I mean, I'll let Karl answer that question, but before he does, I'll make a statement. One of the things that I stated during the Investor Day in June was with regards to the fact that most of our growth in 2018 will come into the second half of the fiscal year Q3 and Q4, and from a revenue – from a subscription revenue recognition standpoint, then the felt impact on revenue growth is mitigated as a result of that. But, Karl, I don't know if you want to add anything else. Karl E. Johnsen - Aspen Technology, Inc.: Yeah, that's pretty much it. I mean, Monika, if you take the 2017 revenue and you back out with $3 million that we've talked about of kind of accelerated cash basis, you kind of still get that, you get that growth, but what you're not getting is, like Antonio alluded to, is the growth of annual spend turning to revenue in fiscal year 2018. So if you would have rolled the annual spend from 2017 into 2018, based on what we didn't get into the base, you would come right in line with what we're forecasting or guiding to. Then there's a little bit of fluctuation with the professional services. Monika Garg - KeyBanc Capital Markets, Inc.: Got it. Then one on your non-GAAP – last one here on non-GAAP operating margin guidance, you did excellent margins, 48.8% in 2017, you are guiding 46% to 47% in 2018, so maybe could you walk us through the reasons. Thank you. Karl E. Johnsen - Aspen Technology, Inc.: Yeah, sure, Monika. So, the biggest reason there as you – we talk about the revenue side, we're making an investment in the APM business and most of that was made in fiscal year 2017. And what you're seeing is you're seeing that carryover of those investments in people into 2018, but you're going to get a full year in 2018 now. That's the majority of that expense expansion. But we fully expect that that's the investment that we're making, it will be fully reflected into 2018. We'll make small investments going forward on it as appropriate, but then the revenue will start to come in from that and then you'll start seeing the margins expand back to where they were to meet our operating margin targets. Antonio J. Pietri - Aspen Technology, Inc.: Yeah. Monika Garg - KeyBanc Capital Markets, Inc.: Thank you so much. Antonio J. Pietri - Aspen Technology, Inc.: Monika, what I would add to Karl's comment is really that when Karl says that the investment was made in fiscal year 2017, it's really the second half of 2017. So it's really not fully reflected into our expense line for 2017. So you see that in 2018 now – you will see it in 2018. Monika Garg - KeyBanc Capital Markets, Inc.: Got it. Thank you so much. Antonio J. Pietri - Aspen Technology, Inc.: Yeah, thank you.

Your next question comes from the line of Matt Pfau of William Blair. Antonio J. Pietri - Aspen Technology, Inc.: Hi, Matt. Matthew Charles Pfau - William Blair & Co. LLC: Hey, guys. Thanks for taking my questions. First one, to dig in a little bit more on the interest you're seeing on the APM suite. Are there any specific verticals there that you're seeing the strength come from, whether it be energy, chemicals or outside of those? And then also, as you're, I guess – are getting a little bit more information in terms of the opportunity with APM, have you guys found that the budget that's been allocated towards APM and the buyer for APM is the same as for your Engineering and Manufacturing Suites or is it a different buyer and coming from a different budget? Antonio J. Pietri - Aspen Technology, Inc.: Yeah. So to answer the first part of your question, as you would expect, we have an entire sales organization that is focused on the process industries and that's really energy and chemical. So a lot of the interest that we're seeing at the moment is coming from those customers. There's some interest from the global economy industries because that's where, especially, Mtell had an installed base, but the bulk of the pipeline is that of refining and chemical customers. With regards to the buyer and the budget, and is what I've told investors in the past, it's one of the pleasant surprises that I've had, I thought that initially we would be dealing with the maintenance departments of these organizations and it turns out that the same users and experts of our MSC and Engineering Suites are being tasked to look at APM and make decisions on that. So we're dealing with the same organizations that have known AspenTech for 20, 25 years. So that provides familiarity and opportunity to test and pilot our technology. With regards to the budget, look, it's early to say that. We did close a few transactions in Q4. My expectation is that we learned that as the budgeting cycle that's starting here soon in September comes to an end in the next year. But I would expect it to be different budgets since it is addressing different areas of our refinery and specifically equipment. Matthew Charles Pfau - William Blair & Co. LLC: Okay. And then on those initial deals that you signed, in terms of size, how is it compared to the deals with the engineering or MSC suite for those customers that have closed the transaction? Antonio J. Pietri - Aspen Technology, Inc.: Yeah, well, let me look at – there's no comparison at the moment, because, I think the one thing we need to understand is that we launched our APM suite at the end of November last year with only two products and it was only in May when we released Version 10 that the full suite came to fruition. And the opportunity to budget for these type of deals wasn't available due to the timing of the release of our suite. So, I think we're dealing with discretionary budgets that are being deployed against the purchase of some of these technologies. My expectation is that we will see a different dynamic once we get through the budgeting cycle and then the spend picks up in the calendar year. And this is why we've also stated that most of the APM growth should come in into the Q3 and Q4 quarters. Now, we also expect that some of these deals will be enterprise or site type deals which could provide some deals of important size. Matthew Charles Pfau - William Blair & Co. LLC: Got it. And last one from me. Just wondering if you've seen any impact from the situation in Venezuela on your business. Antonio J. Pietri - Aspen Technology, Inc.: Yeah. No, we haven't in the sense that, our Venezuela business, as investors know, didn't renew for the most part or entirely already a year, year and a half ago. The situation has certainly put on hold any activities down there. So we're no longer making any commentary about any potential business from Venezuela. Matthew Charles Pfau - William Blair & Co. LLC: Got it. That's it for me, guys. Thanks for taking my questions. Antonio J. Pietri - Aspen Technology, Inc.: Thank you, Matt.

And your next question comes from Rob Oliver of Baird. Please as a reminder, please hold yourself to one question and one follow-up. Rob Oliver - Robert W. Baird & Co., Inc.: Okay. Antonio J. Pietri - Aspen Technology, Inc.: Thank you. Hi, Oliver. Rob Oliver - Robert W. Baird & Co., Inc.: That's just helping, you guys have one question. Thanks guys. Congratulations on the hire of Paul Rogers. My question is, just Antonio in the hiring process on Paul, can you talk a little bit about how he thinks about APM? And I'm wondering if you guys could give any details on, more details to follow-up on Matt's question on maybe how some of those deals are priced right now. And are you actually selling suites yet? Or I know you said that there was a couple of expansions on the Mtell side. Are there any actual suites of Mtell, Fidelis kind of combined being sold or are these still kind of point products that you guys have acquired or developed internally? And then I have one follow-up. Thanks. Antonio J. Pietri - Aspen Technology, Inc.: Yeah. Okay. Well, let me, first of all, we're licensing this suite, so when a customer wants Mtell or any other products, they buy the suite like they do with our two other suites, the Engineering and MSC suite. So we're licensing the APM suite for any product. With regards to Paul's view of the business, well look, Paul is very familiar with this whole area of IoT, analytics. He certainly brings a wealth of experience from his years at GE. I know Paul did a thorough analysis of the market and employment opportunities before deciding on AspenTech. And since he joined, he is now responsible for the overall APM business, the strategy, execution and the staff in that area. And look, I will not comment on his views and outlook for the business, but the proof will be in the results and I know his all energy driving the business forward. Rob Oliver - Robert W. Baird & Co., Inc.: That's great. And I apologize, because we got cut off and I'm not sure if you gave this number, but I know previously you guys had said that APM was 15% of pipeline, did you update that? And sorry if I missed that and thanks again, guys. Antonio J. Pietri - Aspen Technology, Inc.: No, I didn't update it, but our APM pipeline has continued to grow and is now almost 19% of total pipeline. To dispel, some of the commentary that I've received from some investors about whether APM is actually growing, because our overall engineering and MSC pipeline isn't growing. Well, I can tell you that in the last six months, our total pipeline has grown by 25%, and in that same period our APM pipeline is now 19% of that total pipeline, and is really represented about half of the growth of our overall pipeline. Our engineering and MSC pipelines both continued to grow, which bodes well, in my opinion, for the future. Rob Oliver - Robert W. Baird & Co., Inc.: It's great color. Thanks, Antonio. Antonio J. Pietri - Aspen Technology, Inc.: Yeah. You're welcome.

And your next question comes from the line of Sterling Auty of JPMorgan. Jackson E. Ader - JPMorgan Securities LLC: Great. Thanks. Hi, guys. It's Jackson Ader on for Sterling tonight. Antonio J. Pietri - Aspen Technology, Inc.: Hi. How are you? Jackson E. Ader - JPMorgan Securities LLC: Doing well. Question from us, the new normal, Antonio, that you spoke about early in the call, does that also apply to the elevated attrition rate, that 5% to 6%. And the new normal, how long do we expect that to last or is this a new normal into perpetuity? Antonio J. Pietri - Aspen Technology, Inc.: Well, let me look at. There's two oil company CEOs out there with variances of statement. One, the BP CEO talked about lower for longer and Shell CEO more recently talked about lower forever. That doesn't mean that the new normal implies a attrition rate of 6% forever because one of the things that we're seeing is that for those E&C customers that have already been, whose contracts have come up for renewal in the last two years and their entitlement has been readjusted, some of those customers are now coming back and interested in more tokens because they are seeing new business now coming their way. So we would expect, certainly, attrition to improve. Going forward, we stated that we expect attrition in fiscal year 2018 to be somewhere between 5% and 6% and time will tell, but that's the expectation. So, the other thing, though, is that it is three years now into this downturn. The downturn has started in July of 2014. And, at some point, even at oil at $50, there's a need to spend on new oil fields, new facilities in order to just even stay in place with oil production. So that's also important to understand. And then the last piece that I would say is, if you read the commentary from oil company CEOs, the last one being the BP CEO, where he stated that they can be profitable when oil is at $50, because they can – their operating costs are $47. So this new normal has forced different execution and focus on everyone. These oil companies have gotten very disciplined about how they spend money on these projects and the complexity, meaning less complex projects, which then leads to a lower requirement for the price of oil. So I wouldn't – please don't take new normal as, wow, this is going to be bad now for a long time, it's just that the new normal means a lot of different things, and I think, over time, will mean that people will be profitable at these oil prices and they'll be spending money and things will move forward. Jackson E. Ader - JPMorgan Securities LLC: Okay. Great. That's helpful. And a quick follow-up for you, Karl, the $19 million tax reversal. Was that expected? Did that just come out of the blue? And if it was expected, did you have any kind of sense as to the timing of when that would come in? Karl E. Johnsen - Aspen Technology, Inc.: So, it was a reversal for a uncertain tax position under Fin 48 and we had a – we were under audit for that period and then the audit got resolved. So the answer is we didn't know where we'd come out on that one until the audit was complete, and then audit got completed on June 30. So we had insight into, it could go either way. We didn't have insight as to whether it would close, when it would close or if they would leave that period open, but we notify that it's now closed. Jackson E. Ader - JPMorgan Securities LLC: Okay. Yeah, the reason I ask is it doesn't look like any profitability at least on the bottom line for GAAP or non-GAAP EPS was pulled forward at all. So, great. That's helpful. That's all from us. Karl E. Johnsen - Aspen Technology, Inc.: Thank you. Antonio J. Pietri - Aspen Technology, Inc.: Thank you, Oliver.

And your next question comes from the line of Steven Koenig of Wedbush Securities. Antonio J. Pietri - Aspen Technology, Inc.: Hi, Steve. Steve R. Koenig - Wedbush Securities, Inc.: Thanks a lot gentlemen for taking my questions. They even pronounced my name right, which is impressive when they do. Hey, I wanted to ask you, first question for – maybe some qualitative and commentary – and quantitative commentary on how did MSC contribute to grow in the quarter, specifically. And maybe I don't recall, if you gave the growth contributions at the end of Q3 or maybe you could talk about the sequential contribution in Q4, I'm just – and qualitatively, I'm interested in how did MSC do in the quarter? Are you seeing that pick back up or customers have they digested your new technology and they're ready to spend again? Antonio J. Pietri - Aspen Technology, Inc.: Yeah, the growth contribution by the different suites, we only give once a year at the end of the fiscal year. So we don't give them... Steve R. Koenig - Wedbush Securities, Inc.: Okay. Antonio J. Pietri - Aspen Technology, Inc.: ...give it at the end of every quarter. But I'll give you some commentary on our MSC business. I stated in my comments that the MSC business delivered double-digit performance in the year and that really reflects a strong performance by the MSC business in Q4, which drove it into a double-digit area. I had told investors throughout the different conferences and NDRs that we expected a lower performance for MSC in the fiscal year, but the MSC business closed out very strong and certainly supported the performance in Q4 and the fiscal year. Steve R. Koenig - Wedbush Securities, Inc.: Great. Thanks. And then my follow-up, are you – let's see, at the Investor Day, I think you talked about cadence of the annual spend growth in fiscal 2018, are you still expecting the annual spend growth to be lower than the full year amount in Q1 because of the concentration of energy renewals? Antonio J. Pietri - Aspen Technology, Inc.: Yeah, well, look, normally we don't comment about the quarter, we're in the middle of Q1. We're already – we're looking forward to our Q1 earnings call at the end of October, but I'll stay away from making any comments about Q1. Steve R. Koenig - Wedbush Securities, Inc.: Okay. So just to clarify, though, there's been no change in terms of the concentration of where your renewals fall in the year? Antonio J. Pietri - Aspen Technology, Inc.: Yeah, no, that's right. The renewals fall when they fall and they are in Q1, so we're working them. Steve R. Koenig - Wedbush Securities, Inc.: Yes. Antonio J. Pietri - Aspen Technology, Inc.: And, we'll inform you about the outcome at the end of October. Steve R. Koenig - Wedbush Securities, Inc.: Got it. Okay. I'll wait patiently for that. Thank you very much. I appreciate the answer to that question. Antonio J. Pietri - Aspen Technology, Inc.: Thank you, Steven. Steve R. Koenig - Wedbush Securities, Inc.: Bye, bye. Antonio J. Pietri - Aspen Technology, Inc.: Bye.

And your next question comes from the line of Mark Schappel of Benchmark. Antonio J. Pietri - Aspen Technology, Inc.: Hi, Mark. Mark W. Schappel - The Benchmark Co. LLC: Hi, Hi. Thanks for taking my question. Antonio, given that you're going into the new fiscal year here with the new Head of Sales, are there any big changes that you're making to the sales organization with respect to, say, territory assignments or anything else for that matter? Antonio J. Pietri - Aspen Technology, Inc.: No, no, look, of course, you would expect a new head of sales to come in and do an evaluation, which is what I commented on my script. Michele has done that. Any changes to speak of are just on the margin, nothing out-of-the-ordinary, and Michele is full engaged in working with the leadership in sales to drive the execution that we need to deliver the result in this environment. Mark W. Schappel - The Benchmark Co. LLC: Great. Thank you. And then, building on an earlier question on APM, one of your initiatives of late has just been to build out a dedicated business development group to drive and support that, to drive and support the APM Group. Could you just give us a few details of where you're at in this initiative, obviously hiring a Senior VP for the organization is a big help or a big step. Antonio J. Pietri - Aspen Technology, Inc.: Yeah. Mark W. Schappel - The Benchmark Co. LLC: Maybe you give us a few other details? Antonio J. Pietri - Aspen Technology, Inc.: Yeah. No, look, certainly the – when you say business development, it's business consultants, our technical sales support personnel. We've made good progress in hiring for that team across the different regions, namely North America, Europe, and Asia. We've also trained some of our existing MSC and engineering business consultants to support APM sales, since they're also familiar with these customers and in order to make sure we support the growth that we want to deliver this year. So – but, eventually, the expectation is that Paul will have a dedicated business consulting team that he deploys into the process industries and GEIs to close on deals, develop them and then close them. Mark W. Schappel - The Benchmark Co. LLC: Very good. Thank you. Antonio J. Pietri - Aspen Technology, Inc.: Thanks. All right. It looks like – sorry, go ahead, operator.

And there are no further questions at this time. I would like to turn the call back over to Mr. Pietri for closing remarks. Antonio J. Pietri - Aspen Technology, Inc.: Thank you. Well, again, thank you, everyone for joining the call in the middle of the summer, and look forward to seeing you during investor conferences or NDRs. Thank you.

This does conclude today's conference call. All participants may now disconnect.