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

Matthew Charles Pfau - William Blair & Co. LLC Monika Garg - KeyBanc Capital Markets, Inc. Matt S. Lemenager - Robert W. Baird & Co., Inc. Jackson E. Ader - JPMorgan Securities LLC Gal Munda - Berenberg Capital Markets LLC Shankar Subramanian - Bank of America Merrill Lynch Ahmad Khalil - Wedbush Securities, Inc.

Good afternoon. My name is Sherry and I will be your conference operator today. Welcome to the Aspen Technology Q4 2018 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there'll be a question-and-answer session. Thank you. Mr. Karl Johnsen, you may now begin your conference. Karl E. Johnsen - Aspen Technology, Inc.: Thank you. Good afternoon, everyone and thank you for joining us to review our fourth quarter fiscal 2018 results for the period ended June 30, 2018. 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 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-K for fiscal year 2018, which is now on file with the SEC. Also, please note that the following information is related to our current business conditions and our outlook as of today, August 8, 2018. 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 full-year and then I'll review our financial results and provide our guidance for fiscal year 2019. We'll then transition to a supplemental webcast slide presentation about ASC Topic 606 and its impact on our financial model. To view the presentation, please go to the Investor Relations section of the AspenTech Company website, which you can find in the About AspenTech section of our site. Click on the webcast link enter your contact information and you will be guided to the presentation. After the webcast presentation is complete, please return to the live dial-in where we will conduct the Q&A session. 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 fourth quarter results that capped an important year for AspenTech. In FY 2018, we successfully returned the company to accelerating annual spend growth, while also establishing a new market category with our APM suite. We believe our performance in FY 2018 positions the company for further improvements in FY 2019. I would like to thank everyone on the AspenTech team for their hard work and commitment to produce this strong performance and our customers for their continued support over the years. Looking at our financial highlights for the quarter; annual spend was $489 million, up 6.4% year-over-year. Total revenue was $126 million above the high-end of our guidance range of $123 million to $125 million. GAAP operating income was $50.7 million and non-GAAP operating income was $57 million, which represents a non-GAAP operating margin of 45%. GAAP EPS was $0.53 and non-GAAP EPS was $0.59, both of which outperformed our guidance. Free cash flow was $79.5 million and we returned $50 million to shareholders by repurchasing approximately 550,000 shares. For the full-year, total revenue was $499.5 million. GAAP operating income was $209.6 million, and non-GAAP operating income was $237 million, which represents a non-GAAP operating margin of 47%. GAAP EPS was $2.04 and non-GAAP EPS was $2.31. Free cash flow was $212 million, which was above the high end of our guidance range and we've returned $200 million to shareholders by repurchasing 2.8 million shares. We're pleased with our performance in the fourth quarter, which had solid contributions to growth from all three product suites and verticals. We had strong sales execution and demand in North America, Europe and Asia-Pacific. Demand trends continued to be favorable from owner-operator customers. They are increasingly embracing our asset optimization strategy and recognizing the increasing value AspenTech solutions provide in driving greater efficiency and profitability across their asset base. The resiliency of this customer segment in recent years is a testament to AspenTech's product and market leadership and the strong underlying trends in this market. A positive development in the quarter was the amount of gross growth we saw from E&C customers, an important signal in the evolution of the macro environment dynamic for that customer segment. While there are regions of this market that are still under pressure, most notably, North American E&Cs, the gross growth in the fourth quarter gives us increasing confidence that we're now beyond the cyclical bottom. This performance was supported by several E&C customers that had previously renewed during the market downturn, who increased their token capacity during the quarter. While it is too soon to say, this is a start of a trend, it is a first time in a while we have seen incremental token purchases of this significance. Turning to APM, we had a solid fourth quarter that saw a continuation of the trends we experienced throughout the year. We're pleased with the transactions we signed in the quarter, including five six-figure deals with one in the mid six-figure range with some of the largest refining and chemical companies in the world, as well as with a partner to service a public transit rail operator in the United States and with an industrial company. For the year, APM contributed 0.8% of growth to annual spend. While this is slightly below the target we set for the year, we view fiscal 2018 as a non-qualified success for APM. We entered 2018 with the newly introduced product suite in an emerging and undefined product category, a forming APM organization, a developing understanding of the competitive landscape and strength of our suite and nascent business momentum. Our primary goals for fiscal 2018 was to stand up a new business and deliver on the predicted growth by investing in customer facing organizations and proving out our pricing and go-to-market strategies to capitalize on this opportunity. We finished the year having validated a market opportunity and long-term growth potential for APM as demonstrated by the business closed and the pipeline of business created. To that end, we signed more than 40 new customers during the year across every major region and verticals that we target. These included 10 six-figure annual spend transactions, of which, four are in the mid-six-figures range, which shows a strong commitment to a new product category and customer excitement about the value of our APM solutions. We have guiding great feedback from customers on prospects on the value of the APM suite that can deliver and how our solutions are superior to competitive offerings. It is increasingly clear that the APM suite is differentiated in the market and create significant value. The combination of data management capabilities, machine learning and multivariate analytics capabilities, ease-of-use and deep domain expertise has demonstrated the ability to drive substantial value for customers. Second, we generated significant growth in our pipeline, which ended the year more than four times larger than the level at our 2017 Investor Day in June last year, when we first introduced the guidance range for APM. APM is now 38% of our overall pipeline. Peer validation is important when it comes to new technology adoption and we're seeing a positive impact to our pipeline and on certain transactions sales cycles due to the endorsement of these earlier adopters, specifically on Aspen Mtell, the rollout and implementation of the solution for early adaptors is progressing well, and these customers have now become powerful reference customers for AspenTech. Third, we adjusted our pricing and go-to-market motion to accelerate market penetration. This has made customers more comfortable, making an initial purchase, while setting up a sizeable land and expand opportunity as they realize the value of the APM suite from their initial implementation. This change had a modest impact in the amount of APM business we signed in fiscal 2018, but we strongly believe this is an important step that will accelerate adoption in the short and longer term and allows us to more quickly establish ourselves as a leader in this market. Fourth, we made significant progress building out the APM organization, including bringing top talent from outside the company into customer facing and technical roles, standing up a business consulting team, building the GEI direct sales team and executing on a comprehensive marketing campaign. Our channel program continues to attract top-tier global companies interested in establishing partner relationships with AspenTech. And in some cases, in market segments that we had not envisioned as a domain for AspenTech prior to the launch of the APM business. We now have more than 70 resellers, systems implementers and OEM partners, which are contributing to our growing pipeline. We're seeing positive results in the GEIs, including an exciting commitment to a pilot by a large Latin American mining company with operations throughout the region and the U.S. As we look ahead to fiscal 2019, we're targeting annual spend growth of 7% to 9%, which represents an acceleration in our growth from 6.4% in fiscal 2018. Underlying this guidance, is an expectation that our core Engineering and MSC suites will grow in the 5.5% to 7% range and APM will contribute 1.5 points to 2.5 points of growth. We anticipate continued improvement in the performance of our Engineering business and continued strength in the MSC business. We expect increased sales in APM as we benefit from the strong momentum we have developed in this market in the last 14 months. Our guidance for FY 2019 assumes an attrition rate of 4% to 5%. Our attrition rate for fiscal year 2018 was towards the lower end of the 5% to 6% range we guided to, at the beginning of the year and an improvement from fiscal year 2017. The improvement was due to a lower entitlement reductions from E&C and upstream customers at the time of renewal, though they remain elevated compared to our historical level of 3%. These customers continue to use AspenTech solutions at or above historical levels on the projects they are engaged in, but cuts to global upstream oil CapEx budgets have materially impacted their backlog. I would now like to provide you with some additional details about our performance in fiscal year 2018. From a product perspective, for the year, our Engineering business delivered better growth than in FY 2017 under a percentage 25% of our overall annual spend growth. The MSC business represented 63% and delivered another double-digit growth figure in the year and APM business contributed the remaining 12%. We were pleased with the performance of our Engineering business, considering the challenges facing certain E&C and upstream customers. We're also pleased with the double-digit performance of our MSC business, thereby supporting the historical long-term trend of that business. Our installed base of business at the end of the year on an annual spend basis is split 63% Engineering and 36% MSC with APM rounding up to 1%. Our three core verticals of Energy, Chemicals and E&C contributed 44%, 37% and 6% of our growth in annual spend during the year, respectively. At the end of FY 2018, the Energy vertical represents 40% of our business, Chemicals 28% and E&Cs 27%. Turning back to our fourth quarter results Energy, Engineering & Construction and Chemicals, represented 89% of our business. The change versus our historical levels is a result of the growth contribution from the GEI market. Chemicals was the largest vertical contributor followed by Energy and E&C. Looking at our 10 largest transactions in the quarter, we had a healthy mix of Engineering, Manufacturing & Supply Chain and APM transactions. Once again, several of our largest transactions signed in the quarter were in the APM suite. While there will be variability quarter-to-quarter, we anticipate that all three product suites will be represented in our largest quarterly transactions going forward. Following is a representative sample of transactions closed in the quarter. First, our U.S.-based global chemical company expanded its use of the Aspen Fidelis products early in the quarter and subsequently expanded its use of the APM suite by acquiring the Aspen Mtell product for the first deployment of the solution at one of its chemical facilities. The company is working on a digitalization initiative across organization. Its purchase of Aspen Mtell for one location is a significant first step in support of this project. The company experiences losses tied to reliability issues every year and believes Mtell will help alleviate downtime through early notification of anomalies in the process. The company bypassed the pilot phase of our sales process and relied on the reference from another chemical company already using and deploying Mtell for their decision to acquire the product. Second, one of AspenTech's largest E&C customers in the United States renewed its engineering software agreement in early fiscal year 2018 and subsequently increased the number of tokens licensed by more than 10% in the fourth quarter. The main driver for the additional tokens was the company's global standardization on Aspen Capital Cost Estimator, ACCE, to serve the increasing backlog from new projects worldwide. The company has improved bid cycle time by 20% with ACCE standardization. Third, one of the oldest public transit systems in the United States that has a commuter rail system in the top 10 in number of passengers served is putting plans in place to modernize and improve performance. An Mtell pilot performed by a partner organization showed specifically how the rail line could improve fleet reliability, reduce overall maintenance costs and transition to a more proactive reliability model. Additional benefits not in the scope of the original pilot were also realized through improved operational workflows and protocols and immediate costs savings from preventing failures on five locomotives at $250,000 each. This impressive pilot results led to the signing of a multiyear license agreement with this partner, who will provide monitoring and services for the locomotives of the rail system operator using Aspen Mtell. And finally, a refining customer in Northeast Asia is a user of the aspenONE Engineering and MSC suite. The business environment for this customer is very competitive because of declining gasoline consumption in the country. In support of its operational objectives and because the equipment in its refineries tends to be over-maintained, the company chose Aspen Mtell to improve maintenance and reliability. Aspen Mtell was selected for installation in one refinery after a pilot and successful reference visit. The customer plans to deploy Aspen Mtell in over 100 pieces of equipment in this refinery. The successful implementation of the technology will lead to the rollout to additional refineries and plants. Shifting to our financial performance, we continued to deliver high levels of profitability and cash flow in the fourth quarter and fiscal 2018 with a 47.4% non-GAAP operating margin for the year. We maintained good expense discipline throughout the year, while funding significant investments in APM. We have been very pleased with the returns we're realizing and we intend to make further investments in product and go-to-market resources for APM. We also plan to continue to use that cash flow to invest back into the business as well as to continue our share repurchase program. We repurchased $200 million of stock in fiscal 2018 and we expect to repurchase another $200 million in fiscal 2019, subject to market conditions. Our strong balance sheet and cash generating capabilities are core attributes of AspenTech and we will continue to deploy them in ways that create value for shareholders. Before I wrap up, I want to announce a new addition to the AspenTech executive team. I'm pleased to announce that Gary Weiss has joined the company as Chief Operating Officer. In this new role, Gary will be responsible for customer facing operations and product leadership across AspenTech's portfolio of asset optimization solutions in the engineering, design and Manufacturing & Supply Chain areas. Gary joins AspenTech from OpenText, where he was most recently the Senior Vice President and General Manager for its $250 million security, discovery and analytics business units. He has more than 25 years of experience in the technology industry and has successfully scaled several go-to-market organizations. We have been evaluating our organizational structure to ensure that we're best aligned to capitalize on the significant opportunity we have developed by broadening our vision and expanding our market potential. Gary's appointment is an important component of this process. I'm sure, Gary will make a positive impact on the performance of the company going forward. To wrap up, we performed well in the fourth quarter and for the year, AspenTech has returned to accelerating growth that is driven by improvements in our traditional product suites and strength in the APM business. We're forecasting further improvement in growth in fiscal 2019 along with increased cash flow. We believe that value we generate for customer has never been greater and our focus is on fully capitalizing on the substantial opportunity in front of us. 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 2018, beginning with annual spend, and then finish with our outlook for fiscal 2019. I will also provide an overview of the impact the implementation of ASC Topic 606 will have in our future financial results. Annual spend, which is a proxy for the annualized value of our recurring term license and maintenance business, at the end of each period was approximately $489 million at the end of the fourth quarter. This represented an increase of approximately 6.4% on a year-over-year basis and 1.9% sequentially. Total revenue was $126 million for the fourth quarter, above the high-end of our guidance range and an increase of 2% compared to the prior year period. Looking at revenue by line item, subscription and software revenue was $119.5 million for the fourth quarter, an increase from $115.4 million in the prior year period and $118.1 million last quarter. Services and other revenue was $6.5 million, a decrease from $8.2 million in the year ago period and $7.7 million last quarter. Turning to profitability, beginning on a GAAP basis. Gross profit was $112.9 million in the quarter, with a gross margin of 89.6%, which compares to $111.6 million and a gross margin of 90.2% in the prior year period. Operating expense for the quarter was $62.2 million compared to $62.6 million in the year-ago period. Total expenses, including cost of revenue, were $75.3 million, which was up from $74.7 million in the year-ago period and from $74.7 million last quarter. Operating income was $50.7 million for the fourth quarter of fiscal 2018 compared to $48.9 million in the year-ago period. Net income for the quarter was $38 million or $0.53 per share compared to net income of $54.4 million or $0.73 per share in the fourth quarter of fiscal 2017. Turning to non-GAAP results. Excluding the impact of stock-based compensation expense, amortization of intangibles associated with acquisition and acquisition-related fees, we reported non-GAAP operating income for the fourth quarter of $57 million, representing a 45.2% non-GAAP operating margin compared to non-GAAP operating income and margin of $57 million and 46.1%, respectively, in the year-ago period. Non-GAAP net income was $42.5 million or $0.59 per share, in the fourth quarter of fiscal 2018 based on 72.3 million shares outstanding and was above the high-end of our guidance range of $0.55. This compares to non-GAAP net income of $59.1 million or $0.79 per share in the fourth quarter of fiscal 2017, based on 74.8 million shares outstanding. Looking at our results for the full fiscal year. Revenue was $499.5 million, which increased 3% compared to fiscal year 2017. GAAP operating income of $209.6 million was down slightly from $212 million in fiscal 2017, while non-GAAP operating income of $237 million improved from $235.8 million in fiscal 2017. GAAP income per share were $2.04 and non-GAAP income per share was $2.31 compared to $2.11 and $2.30 in fiscal 2017, reflectively. Turning to the balance sheet and cash flow. The company ended the quarter with $96.2 million in cash and marketable securities compared to $102 million at the end of last quarter. During the fourth quarter, we repurchased 550,000 shares of our stock for $50 million. We repurchased 2.8 million shares for $200 million in fiscal 2018. Looking at our deferred revenue balance. It was $315.1 million at the end of the fourth quarter, representing a 5% increase compared to the end of the year-ago period. On a sequential basis, deferred revenue increased $26.6 million. As a reminder, our deferred revenue balance is heavily influenced by the timing of invoices. And over the course of the year, we expect deferred revenue growth to generally be in line with the underlying growth in the business. However, there can be some quarter-to-quarter variability. From a cash flow perspective, we generated $79.1 million of cash from operations during the fourth quarter and $79.5 million of free cash flow after taking into consideration the net impact of capital expenditures, capitalized software, litigation and acquisition-related payments. A reconciliation of our GAAP to non-GAAP results is provided in the tables within our press release, which is also available on our website. I would now like to close with our guidance for fiscal 2019. In fiscal 2019, we're adopting ASC Topic 606. Topic 606 will have a significant impact on timing of our revenue; and as a result, we believe our income statement will provide an inconsistent view into our financial performance. In our view, annual spend will continue to be the most important metric in judging the growth of our business. However, similar to what we provide investors during our model transition that began in fiscal 2010, we will be adding two new non-GAAP metrics that we believe will give investors additional insights into our financial performance. The first new metrics is bookings. Bookings is defined as the total value of customer term license contracts signed in the current period, less the value of term license contracts signed in the current period, but where the initial licenses are not yet deemed delivered under Topic 606, plus term license contracts signed in the previous period, for which the initial licenses are deemed delivered in the current period, under Topic 606. A second new non-GAAP metric is total contract value. Total contract value is the value of all payments received or to be received under all active term license agreements, including escalation. We believe these two new non-GAAP metrics are useful for analyzing our business performance by providing insight into the growth of our business over time. Starting in fiscal 2019, we will only be providing guidance on an annual basis for revenue, operating income, EPS and bookings. We intend to also provide directional guidance on the timing of annual spending bookings during the year, similar to the directional guidance we have given on annual spend growth in the past. The reason for the change in annual guidance on our revenue and profitability metrics is that bookings, which drives revenue, can experience variability quarter-to-quarter due to delayed renewals, timing of customer contracts and our discipline around maintaining pricing in turns even at the end of the quarter. I will discuss both our new metrics and our changed annual guidance in our supplemental webcast slide presentation about ASC Topic 606 and its impact on our financial model, which will be broadcast at the conclusion of our prepared remarks. For fiscal 2019, we will be providing guidance under both 605 and Topic 606 revenue. Although, we will only report our results in accordance with Topic 606. We're providing guidance under topic 605 to aid investors in understanding our adoption of Topic 606. I will start with guidance under Topic 606. For the full-year, we expect bookings in the range of $555 million to $585 million, which includes $398 million of contracts that are up for renewal in fiscal 2019. From a timing perspective, we expect bookings and therefore revenue will be more heavily weighted to the second half of the year and that the first quarter will be the smallest bookings quarter. With respect annual spend growth in fiscal 2019, as Antonio mentioned, we're providing guidance of 7% to 9% annual spend growth. Breaking this down further, we expect 5.5 points to 7 points of growth will come from our core Engineering and MSC suites with 1.5 points to 2.5 points of growth from the APM suite. Similar to fiscal year 2018, we expect growth to be weighted to the back half of the year due to the timing of customer budget cycles. We expect revenue in the range of $540 million to $564 million. Under Topic 606, we will be reporting three revenue lines; license revenue, maintenance revenue and service and other revenue. We expect license revenue in the range of $345 million to $365 million. Maintenance revenue in the range of $165 million to $169 million and service and other revenue in the range of $28 million to $30 million. From an expense perspective, we expect total GAAP expense of $307 million to $312 million. Taking together, we expect GAAP operating income in a range of $228 million to $255 million for fiscal 2019 with GAAP net income of approximately $200 million to $220 million. We expect GAAP net income per share to be in a range of $2.74 to $3.03. From a non-GAAP perspective, we expect non-GAAP operating income of $257 million to $283 million and non-GAAP income per share in a range of $3.06 to $3.34. From a free cash flow perspective, we expect $220 million to $225 million. Our fiscal 2019 free cash flow guidance assumes cash tax payments of approximately $40 million to $45 million. From a timing perspective, we require to pay 50% of our anticipated cash taxes in the second quarter, with the remaining 50% paid equally in the third and fourth quarters. Even though, we will not be reporting our results under Topic 605, we're providing fiscal 2019 revenue on a Topic 605 basis to provide compatibility. Under Topic 605, we expect revenue in the range of $523 million to $530 million with subscription and software to comprise greater than 90% of revenue with our services and other revenue representing the remainder. From an expense perspective, under Topic 605, we expect total GAAP expenses of $307 million to $312 million, which is consistent with our expectations under Topic 606. Taken together, we're targeting GAAP operating income in the range of $213 million to $220 million for fiscal 2019 with GAAP net income of approximately $165 million to $171 million. We expect GAAP net income per share of $2.27 to $2.35. From a non-GAAP perspective, we expect non-GAAP operating income of $242 million to $249 million and expect non-GAAP income per share in the range of $2.59 to $2.67. In summary, we're pleased with our performance in the fourth quarter and full fiscal year 2018 from both a financial and operational perspectives. We're executing well and are confident the investments we're making will drive continued strong financial performance in the future. That concludes our prepared remarks on the fourth quarter and full-year 2019. We will now transition to a supplemental webcast slide presentation about ASC Topic 606 and its impact on our financial model. To view the presentation, please go to the Investor Relations section of the AspenTech Company website, which you can find in the About AspenTech section of our site. Click on the webcast link enter your contact information and you will be guided to the presentation. After the webcast presentation is complete, please return to the live dial-in, where we will conduct the Q&A session. Let's begin the presentation. Thank you for joining us for our overview of Topic 606 and its impact on our financial model. I'm Karl Johnsen, CFO of AspenTech and I will be leading the presentation. Before we begin, I will make the following Safe Harbor statement. During the course of this presentation, we may make projections or other forward-looking statements about the financial performance of the company that involve risks and uncertainties or rely on preliminary estimates of how our financial performance might be reported under Topic 606. The company's actual results may differ materially from such projections, statements or estimates. Factors that might cause such differences include, but are not limited to, those discussed in this presentation and in our Form 10-K for fiscal year 2018, which is now on file with the SEC. Also, please note that the following information is related to our current business conditions and our outlook as of today, August 8, 2018. Consistent with our prior practice, we expressly disclaim any obligation to update this information, except to the extent required under applicable securities laws. We'll make this presentation available on the Investor Relations section of our website later this evening. During this presentation, we will review Topics 606 and the impact of Topic 606 will have on our revenue model and financial reporting. I will then end with an overview of our new metrics. For those who are not familiar with Topic 606, it is a new revenue standard issued by FASB in May 2014 and is effective for fiscal year starting after December 15, 2017. AspenTech adopted Topic 606 on July 1, 2018, which begins our fiscal year 2019. Although, Topic 606 covers all customer contracts, the largest change for AspenTech is to our term license contracts. Prior to our adoption of Topic 606, we recognized revenue from our term license contracts on a daily ratable basis as a single unit of accounting. Under Topic 606, we will have multiple performance obligations that will change the timing of the revenue recognition of our term license contracts. This will have a material impact on our reported revenue and we expect it will cause approximately 60% to 65% of a contract's revenue to be recognized upfront. In addition to the changes to the revenue recognition model, Topic 606 requires all incremental selling costs specifically commissions to be recognized over the benefit period of the related contract. We have adopted Topic 606 using the full retrospective method, whereby we are restating fiscal years 2015 through 2018, as if we had adopted Topic 606 for all fiscal periods. We will share our current estimate of the restated results for fiscal years 2015 through 2018 later in the presentation. Please note, these numbers are subject to change as we complete our audit. We will expect final audited results for these periods will be included in our Form 10-K for fiscal year 2019. Before we take a deeper look into the impact Topic 606 will have on our revenue model, I want to be clear about what isn't changing. Most importantly, the fundamental value proposition of our business isn't changing. Our cash flow profile will remain the same. We're not changing the terms of our contracts or our business model to obtain a different accounting outcome in our financial statements. Under Topic 606, our term license agreements will have multiple performance obligations that will be recognized as revenue as they are delivered. The portion of the term license agreement allocated to the initial licenses will be recognized upon delivery. Typically, initial licenses are delivered upon execution of the underlying contract, which will lead to upfront revenue recognition for the initial licenses. The other term license performance obligations, including the imputed financing arrangement are delivered and recognized in a more ratable pattern over the term of the agreement. Because our customers receive the initial licenses upon execution of the agreement, we typically pay annually in advance for them. Under Topic 606, we now have an implied financing element. The imputed value of the financing element is taken from the license fees and recognized as interest income over the payment term. In addition to the impact on our revenue model, Topic 606 will also impact how we account for commission expense and certain items on our balance sheet. Under Topic 606, incremental selling expenses, specifically commissions, are recognized over the benefit period of the contract. For AspenTech, this isn't forecasted to have a material impact on our income statement, but will result in a deferred assets being recorded on the balance sheet. Under Topic 606, deferred revenue will now only represent the unrecognized portion of the annual revenue associated with our term license maintenance, so it will be materially less than prior to our adoption of Topic 606. In addition, the portion of the initial license performance obligation that has been recognized, but not invoiced, will be recorded as unbilled accounts receivable. This represents the cash we've yet to collect for the upfront license portions of our term license contract. An easy way to understand the different performance obligations in our term license agreement is to walk through visually how a contract converts to revenue. We start with step one under Topic 606, identifying the contract. For us, nothing really changes for this step. Step two, we identify the performance obligations in the term license agreement. This is new and require some judgment. As you can see, we have four standard performance obligations. One, the initial licenses; two, new products, which are products we may add to our software suite in the future; three, maintenance, which contains bug fixes, 24/7 phone support, product enhancements and certain on-demand training; and four, the financing element I introduced earlier. Additional non-standard performance obligations could be added to a standard contract, but these are not frequent. In steps three and four, we determine the transaction price and allocate to the identified performance obligations based on the estimated selling price of the identified performance obligations. The ranges we are presenting are our current estimates and they may change in the future. After allocating the contract consideration to the identified performance obligations, revenue is then recognized as the performance obligations are delivered. For initial licenses, revenue is recognized upon delivery, assuming all other revenue recognition criteria are met. New products and maintenance performance obligations are recognized ratably over the contract period. The financing element is recognized as interest income based on the effective interest method. When there are other non-standard performance obligations, the timing of the recognition of the associated revenue will vary based on the delivery profile of the performance obligation. Topic 606 will have a significant impact on the timing of our revenue. And as a result, we believe our income statement will provide an inconsistent view into our financial performance. In our view, annual spend will continue to be the most important metric in judging the growth of our business. However, similar to what we've provided investors during our model transition that began in fiscal 2010, we will be adding two new non-GAAP metrics that we believe will give investors additional insight into our financial performance. The first new non-GAAP metric is bookings. We define bookings as a total value of customer term license contracts signed in the current period, less the value of term license contracts signed in the current period, but where the initial licenses are not yet been delivered under Topic 606, plus term license contracts signed in a previous period for which the initial licenses are deemed delivered in the current period under Topic 606. One reason there can be a delay between signing a term license contract and when the initial licenses are considered to have been deemed delivered under Topic 606 would be an early renewal, which we call a supersede. We believe bookings provide insight into the revenue contracted in a fiscal period. The limitation of the bookings metric is that it's not useful for comparing growth between periods. Our growth is heavily impacted by the timing of renewals, which are not linear between the quarters or fiscal years. Our second new non-GAAP metric is total contract value. Total contract value is the value of all payments received or to be received under all active term license agreements, including escalation. We believe this metric is useful for analyzing our business performance by providing insight into the growth of our business over time. Total contract value can be impacted by the timing of renewals and the term and escalation of our term license agreements. For those of you with a long history with AspenTech, you may recall that reported total contract value in the early years of the model transition we undertook starting in fiscal 2010. Please note that we have modified the calculation methodology slightly, so while the underlying concept is the same, the results are not directly comparable. Let's take a look at how fiscal year 2015 through fiscal year 2018 would look under Topic 606. We'll start with our selected financial historical results as presented under Topic 605. Before we look at the restated results under Topic 606, I will remind you again that these are our preliminary unaudited results based on current estimates and the actual results that we plan to present in our fiscal 2019 10-K may differ. Under Topic 606, we now have three revenue categories; license revenue, maintenance revenue, and services and other revenue. Let's first take a look at the impact Topic 606 had on our subscription revenue. To do this, we need to compare the subscription revenue line under Topic 605 to the license and maintenance revenue lines under Topic 606. You can see that Topic 606 revenue is greater than under Topic 605 in the periods presented. This is a function of the timing of bookings and initial license revenue being recognized upfront under Topic 606 instead of ratably over the term of the agreement as under Topic 605. The timing of bookings heavily impacts the license revenue and could result in Topic 606 revenue being below what Topic 605 revenue would have been, especially on a quarterly basis. Looking at the maintenance revenue line, you can see that under Topic 606, we have a traditional maintenance waterfall, representing the recognition of the maintenance revenue ratably over the term of the agreement. Services and other revenue is somewhat impacted by the timing of recognition due to the elimination of cash basis accounting under Topic 606, but otherwise, remains consistent. Turning to our GAAP and non-GAAP profitability metrics, the impact of Topic 606 on the timing of our revenue recognition is reflected in our profitability metrics, which no longer move in the same direction or in the same order of magnitude as they did under Topic 605. It's important to note that Topic 606 does not have a material impact on our expense structure. So the fluctuation of profitability is solely a function of the timing of revenue. AspenTech will continue to have a highly scalable and profitable financial model. This is one of the main reasons, we believe that to fully understand our performance between fiscal periods under Topic 606, investors should look to free cash flow, annual spend and our two additional non-GAAP metrics of bookings and total contract value. These metrics allow for comparability between fiscal periods. Going forward, we expect to continue to give guidance on our historical GAAP and non-GAAP metrics, including annual spend, and to begin giving guidance on our new non-GAAP metric of bookings. However, starting with fiscal 2019, we will only be providing guidance on an annual basis with directional guidance on the timing of bookings during the year, similar to the directional guidance we have given on the annual spend growth in the past. The reason for the change to annual guidance on our revenue and profitability metrics is that bookings which drives revenue can experience variability quarter-to-quarter due to the delayed renewals, timing of customer contracts and our discipline around maintaining pricing and terms even at the end of the quarter. Now that we have reviewed the impact Topic 606 has had on our historical periods, I'd like to give you some insight into our future bookings coming from renewals and the impact the timing of the renewals will have on our financial performance and metrics. The data used on this slide and the next slide are based on our current view of bookings from renewals and assumed 7% to 9% annual spend growth rate and free cash flow generation consistent with fiscal year 2018 metrics. These assumptions, for example, purposes-only, are subject to change and are not indicators of future performance or forecasts. As mentioned previously, we can see that renewal bookings are not linear between years and our forecasted view shows the impact of both early renewals and the timing of renewals. Assuming our current average contract life and escalation combined with a 7% to 9% annual spend growth, we can see how that translates to bookings from growth in the fiscal years. Revenue under Topic 606 will move generally in line with our bookings. Looking at annual spend and free cash flow, you can see they generally behave in same manner they did under Topic 605. Using the same assumptions as in the prior slide, we can see our total contract value gives insight into the health and growth of our base of business. Total contract value generally moves in the same manner as annual spend and free cash flow. We believe that the new non-GAAP metrics taken in conjunction with our other GAAP and non-GAAP metrics provide meaningful insight into our business performance. Because revenue under Topic 606 will fluctuate year-to-year, we will be using ending annual spend to express our business model. Below, we show our historical results using ending annual spend and preliminary Topic 606 revenue as well as Topic 605 revenue. As you can see, using the ending annual spend, gives a more consistent insight into our performance than using Topic 606 revenue. Topic 606 has had a significant impact on the timing of when we recognize revenue from our term license contracts, but not on the fundamental value proposition of AspenTech. We believe our cash flows have been and will continue to be the best indicator of the value we create in a period. Because our revenue and profitability metrics will be heavily impacted by the timing of our booking, we are providing two new non-GAAP metrics to aid investors in understanding our performance. And lastly, we're not weakening our financial model, specifically the terms of our customer contracts to achieve a more predictable revenue model. AspenTech's underlying business fundamentals are strong and improving. Our financial model continues to be characterized by substantial free cash flow generation. We believe annual spend and free cash flow remain meaningful metrics to judge the underlying strength of the business and provide comparability between periods. We've also introduced new metrics today that we believe provide investors with additional insight into the financial and operational performance of the business. We're excited at the opportunities we see in the market and AspenTech's ability to continue to delivering strong financial results and value for our shareholders. Thank you for joining our presentation on the impact Topic 606 will have on our financial model. In order to participate in the questions and answers portion of this presentation, please rejoin our audio call now. Thank you for rejoining the live dial-in. Operator, let's start the Q&A.

Your first question comes from the line of Mr. Matthew Pfau from William Blair. Your line is now open. Karl E. Johnsen - Aspen Technology, Inc.: Hey, Matt. Matthew Charles Pfau - William Blair & Co. LLC: Hey, guys. Thanks for taking my question. First, I just wanted to start off in terms of the new metrics with bookings and TCV and maybe I missed it, but are you going to give us the historicals for those, so we can see how they trended and what's the implied growth rates are for the fiscal 2019 guidance? Karl E. Johnsen - Aspen Technology, Inc.: Yeah, Matt. This is Karl. We're going to give the annuals for the bookings. We're just in the process of finalizing the audit of the re-profiling or the adopting of 606. So, that'll be wrapping up shortly and then with the Q1 results, we expect to be publishing those audited quarters, reviewed quarters and audited transition adjustment, and we'll push out the bookings for the historical periods, so you can see how they converted into the revenue. Matthew Charles Pfau - William Blair & Co. LLC: Okay. Got it. And then just a follow-up in terms of the change to ASC 606. As we think about modeling now, how should we think about the RAD (00:53:08) with the revenue between renewals in quarters? And then also, as we think about the five-year contract, typically, are there more renewals? And if you were to look over like a five-year period, are there big disparities between the amount of renewals in a certain year? Karl E. Johnsen - Aspen Technology, Inc.: Yes, I'll take your last question first and I'll repeat it just to make sure I have it right. So, your last question was, is there a disparity between the amount of the bookings value that's coming up for renewal between years? Matthew Charles Pfau - William Blair & Co. LLC: That's correct. Karl E. Johnsen - Aspen Technology, Inc.: Yeah, so there is. So, one of the slides that was just on that slide deck, it will be available on the website, shows what the – we talked a little bit about what's coming up for bookings in one of those slides, it's like 10 or 11... Antonio J. Pietri - Aspen Technology, Inc.: Nine. Karl E. Johnsen - Aspen Technology, Inc.: ...or nine rather that showed what that looked like. So there is some disparity. We gave you what was coming up for in 2019. And then going forward, we'll probably give you two years, give you the current year and the next year, what that looks like so you can know what your model should look like. Matthew Charles Pfau - William Blair & Co. LLC: And then on a quarterly basis? Karl E. Johnsen - Aspen Technology, Inc.: Yeah, so on a quarterly basis, it's hard, because there could be movements based on customers doing early renewals through proceeds or just the timing within the year. But there is some renewal variability quarter-to-quarter, which is really the reason we're going to annual guidance. So, if you look to kind of how annual spend has grown quarter-to-quarter, historically, that gives you an idea of what that renewal profile would look like. So, we'll give you a directional during the year. We talked a little bit about this when we gave guidance this year. It'll be with more back-end loaded similar to the annual spend, with Q1 being the lowest renewal period. Matthew Charles Pfau - William Blair & Co. LLC: Got it. Okay. Thanks, guys. Karl E. Johnsen - Aspen Technology, Inc.: Thank you.

Your next question comes from the line of Ms. Monika Garg from KeyBanc. Your line is now open. Antonio J. Pietri - Aspen Technology, Inc.: Hi, Monika. Monika Garg - KeyBanc Capital Markets, Inc.: Hi. Thanks. Hi, Antonio. Thanks for taking my question. Karl, first on the free cash flow. I mean, free cash flow came, $212 million, much higher than your guidance and you had raised it, if I remember correctly, last two quarters also. But then if I look at this, so maybe can you walk through what led to the free cash being very strong. But the main question is, your guidance of free cash for 2019, $220 million to $225 million, at the midpoint is somewhere like $10 million, $12 million raise, taxable base itself is adding some $10 million, $15 million benefit. So maybe talk about why we are not seeing higher growth in free cash flow year-over-year? Karl E. Johnsen - Aspen Technology, Inc.: Yeah. It's really that over-performance that you mentioned. We raised the guidance during the year, we really saw it coming in at that $210 million, maybe $1 million more. In the last quarter, we pressed hard and we're able to reduce our DSO by four or five days. So it's sort of a one-time event. So I would say that kind of the run rate out of 2018 is at that $210 million range. That extra amount that we – or the $200 million range – the additional $212 million that we kind of put in there that was really related to – the $12 million that got us to $212 million was really related to that over-performance by reducing our DSO. But once you reduce it, those dollars are already collected. They're not repetitive in nature. So, really can't use the $200 million and so your run rate out and that other piece is just really an over-performance in the quarter. Monika Garg - KeyBanc Capital Markets, Inc.: Okay. Then, Antonio, on the APM side, I mean you talked about signed 40 new customers, 10 six-figure deals, I think, if my numbers are correct, you said four mid-six-figure deals, can we talk about what led to such significant ramp in APM? Thank you. Antonio J. Pietri - Aspen Technology, Inc.: Sorry, Monika, can you repeat the last part of your question after...? Monika Garg - KeyBanc Capital Markets, Inc.: Yes. I mean, the APM deals you talked about, 10 six-figures. I think four mid-six-figures. Antonio J. Pietri - Aspen Technology, Inc.: Yes. Monika Garg - KeyBanc Capital Markets, Inc.: So I'd like to understand what led to such significant ramp in APM six-figure deals? Antonio J. Pietri - Aspen Technology, Inc.: Yeah, I mean look, I think certainly part of it is the fact that we changed our licensing model into a site licensing model from sort of equipment by equipment. And that meant that customers had to make a greater upfront commitment to an AspenTech Mtell license. And that's really what supported the 10 six-figure deals that we talked about and the ones in the mid-six-figures range. Monika Garg - KeyBanc Capital Markets, Inc.: Thank you. Antonio J. Pietri - Aspen Technology, Inc.: Oh, yeah. You're welcome.

Your next question comes from the line of Mr. Rob Oliver from Baird. Your line is now open. Antonio J. Pietri - Aspen Technology, Inc.: Hi, Rob. Matt S. Lemenager - Robert W. Baird & Co., Inc.: Great. Thank you. Hey, Antonio. This is actually Matt Lemenager on for Rob tonight. I have a question around kind of the new talent coming in from outside of the company, announced Gary as the new COO and additional kind of talent coming from outside of the company in APM. Can you talk about maybe the size of the sales force that will be selling APM in fiscal 2019 versus maybe if we can look back a year ago and it doesn't have to be an exact number but just directionally at least how much bigger is that now? Antonio J. Pietri - Aspen Technology, Inc.: Well, I mean, even directionally, we've never talked this specifically about head count numbers, but most of our investment in APM went into building a business consulting group, a technical sales support group that is now distributed on a global basis. We've also made significant investments in our partners organization as interest in partnering with AspenTech has increased. And we have also set up direct sales team for the GEI that is now very active in the GEI verticals. It's a meaningful number of head count that we have added to the APM organization to support our pipeline that today is 38% or so of our total pipeline. And then with regards to Gary, Gary is coming in as into a new position, a position of Chief Operating Officer. I'm very excited about this because it not only adds incremental capacity to the executive team but also his skills and expertise and an experience that I'm sure we're going to benefit from going forward. So these are all investments that, we believe, are appropriate to really capture the opportunity that we have created over the last 12, 18 months and that it's incumbent on us to really be ready and prepared for it Matt S. Lemenager - Robert W. Baird & Co., Inc.: Got it. Thanks guys. Antonio J. Pietri - Aspen Technology, Inc.: Yeah.

Your next question comes from the line of Mr. Sterling Auty with JPMorgan. Your line is now open. Antonio J. Pietri - Aspen Technology, Inc.: Hi, Sterling. Jackson E. Ader - JPMorgan Securities LLC: Good evening, guys. It's actually Jackson Ader on for Sterling tonight. Antonio J. Pietri - Aspen Technology, Inc.: Okay. Go on. Jackson E. Ader - JPMorgan Securities LLC: Our first question on the annual spend metric for outlook for 2019 just as it relates to the core engineering and MSC suites. Looks like it's slightly up from where we ended in 2018. Is there anything other than the noted improvement in attrition that you are expecting that's driving this up? Antonio J. Pietri - Aspen Technology, Inc.: No. Look, maybe three factors, certainly, we expect attrition to be somewhat down from FY 2018. Our engineering business is improving, albeit slowly, but it is improving. And we also expect to continue to see strength in our MSC business. Those three factors added together give us the confidence that we can be in that range that we highlighted. Jackson E. Ader - JPMorgan Securities LLC: Okay. And then a quick follow-up on, and maybe we just missed it. Karl, did you mention the commission expensing, and how many years commissions will be expensed under 606? Karl E. Johnsen - Aspen Technology, Inc.: Yeah, I didn't give the number of years, but it's going to be – again, it doesn't go against the contract life, it goes over kind of what the benefit of that original contract is which can take a renewal period. But, on average, you'd see something in that kind of four to seven range – four to seven years where some of our customers that kind of towards the bottom end of that range, kind of think of SMB in those, and then some of our more longer term contract – bigger customers longer term will be toward the high-end of that range. If you kind of blend it, you'd be fine kind of in that range. But, in general, when you think about commission expense, it's not going to change materially from where we are today, because we built up – basically, we're going to be putting on an asset on the balance sheet, kind of prepaid commissions. But when you build this waterfall up since the inception of time, it doesn't change the expense very much. So I wouldn't expect it to change our P&L materially at all. Jackson E. Ader - JPMorgan Securities LLC: Okay. All right. Thanks, guys. Antonio J. Pietri - Aspen Technology, Inc.: Thank you.

Your next question comes from the line of Mr. Gal Munda from Berenberg Capital. Your line is now open. Antonio J. Pietri - Aspen Technology, Inc.: Hi, Gal. Gal Munda - Berenberg Capital Markets LLC: Hey, thanks for taking my questions. The first one, I'd just like to understand when you think about contribution to annual spend in terms of APM for FY 2019, basically you are expecting kind of doubling or tripling the contribution. How do you see that in terms of that land and expand strategy that you mentioned. Would you say that the vast majority is still from landing new customers or do you expect some of those customers that you signed basically expanding and contributing, just not asking the exact percentages, just kind of trying to directionally understand it. Antonio J. Pietri - Aspen Technology, Inc.: No, good question. Look, as we said, our APM pipeline today is over four times the size of our APM pipeline in June of 2017, which is the – it's natural that we took when we decided to highlight a range of one to two points of growth from APM. So if you look at that ratio of almost just over four times the size of the pipeline and you look at the conversion rate that we achieved for that pipeline in FY 2018, then we're comfortable that the current pipeline assuming the same conversion ratio will deliver an outcome in the range of 1.5 to 2.5 points of growth contribution by APM. Certainly, in that pipeline, there is also now a number of deals from customers that have already signed up for APM and have implemented or are implementing the solution. And some of those deals involved adding a number of more sites to what they've already acquired or even an enterprise license. So we're already starting to see the dynamic from land and expand. But as you can imagine, most of that pipeline is new customers, but if you assume the same conversion ratio based on new customers, we believe that we can be in that 1.5 to 2.5 points range. Gal Munda - Berenberg Capital Markets LLC: That's very helpful. So in terms of what I was implying, I guess, is that the close rate would potentially be higher on the existing customers and on the new customers. If I just ask as a follow-up in terms of the investment kind of needed to get there, how do you guys see ramping up – continuing ramping up the sales force to support APM when you talked about that plan for the annual cost base? And also, how much of that will go kind of in R&D, maybe integration of the suite? You've mentioned last year when you presented a target, you also talked about the multi-year potential of integrating the suites together to get the potential benefits beyond just the predictive maintenance. Can you talk about that how you manage the budget between those two? Antonio J. Pietri - Aspen Technology, Inc.: Well, certainly, APM is an important opportunity, but today most of our revenue is coming from engineering and MSC, so we have to be conscious of that fact as well. Now, when you look at the size of our pipeline being 38% of our total pipeline, then we need to make sure that we're appropriately staffed to capture that opportunity, both from a customer-facing organization, sales and business consulting partners as well because in that pipeline we have a component of partners business and also marketing. So we were ramping up our investment in those areas in APM to make sure we capture that opportunity and we're confident that we are. Similarly, as we sign up more and more customers, there will be the need to implement and roll out the technology, and that will be a combination of partners that we are enabling through training so that they not only do pilots but also do to their rollouts – their rollout of the technology. But we ourselves will also be involved in some of those rollouts. So there'll also be some incremental staff in that area. Now, we also believe, as you referred to, that there's an important opportunity that has developed for us after we acquired these APM technologies in that we believe these technologies can be leveraged to enhance the value that our engineering and MSC products create. And this is now a project that we have going on in AspenTech and, hopefully, we'll have the initial prototypes of what we believe can be done with these technologies in our MSC and engineering products for our OPTIMIZE Conference in May of next year. So we're putting additional resources, R&D resources, into that area. And then, lastly, as we've seen our SMB business recover and also our business in emerging regions such as Latin America, we were also adding some additional sales staff in those areas to make sure we support the growth that, we believe, will be available to us in FY 2019 and beyond. Gal Munda - Berenberg Capital Markets LLC: Thank you so much. Antonio J. Pietri - Aspen Technology, Inc.: Yeah. You're welcome.

Your next question comes from the line of Shankar Subramanian from Bank of America Merrill Lynch. Your line is now open. Antonio J. Pietri - Aspen Technology, Inc.: Hi, Shankar. Shankar Subramanian - Bank of America Merrill Lynch: Hi. How are you guys? Antonio J. Pietri - Aspen Technology, Inc.: Good. Thank you. Shankar Subramanian - Bank of America Merrill Lynch: Quick question on the pricing for APM. You talked about briefly in the prepared remarks, but can you add some color on how the different segments – the customers in different segments thinking about pricing for APM? Is it per use case, per machine? And as you think about GEI versus your core, what percentage of your pipeline is between the two and how do you see that progress in fiscal 2019? That's it. Antonio J. Pietri - Aspen Technology, Inc.: Yeah, I mean, look, certainly pricing has been an area of a lot of learning in FY 2018 and that's been mostly in our core industries. And that as we've gone to market, there is – one of the things that I've said about why the fact that our sales cycle has extended has do with when we get into negotiations, customers sort of being very careful about what they commit to, from a pricing standpoint, not knowing – not having other price point references in the market. So that's been a lot of what we've experienced in FY 2018. And I also think it's a reflection of perhaps the outcome that we achieved in the fiscal year 2018 for APM, and that some deals that we felt we're going to close in Q4 have extended into FY 2019. But we're confident that they're going to close anyway. Now, from a standpoint of pricing and value, certainly, look, the more complexity there is in an industry, the greater value is created when you keep an asset or a piece of equipment from failing. So in the GEIs when you talk about locomotives, well, a locomotive failing, certainly, is a complex piece of equipment, but there is also complexity in retrieving that locomotive from a rail line and there's a lot of value in keeping that locomotive from failing. But then you get into other industries, packaging, for example, the manufacturing of cardboard paper, if you will, very thin margins in that industry, but there's still an interest in pricing, the solution, or keeping the equipment from failing. So you have to be more cognizant of your value proposition, the value that can be captured versus what you can command for your product. So, look, this is an ongoing process of learning, what are the appropriate price points by industry. The technology will be tested also in windmills, the turbines for the wind farms; the windmills in wind farms. It's being deployed in mining, in pharmaceuticals. We've had some successful pilots as well. So the price points will vary depending on the opportunity to create value, but also the profitability in those industries and our expectations as well. I know that's not a specific answer, but it's what I can tell you right now. Shankar Subramanian - Bank of America Merrill Lynch: Got it. And then on the pipeline between GEI and your core, how is that mix in fiscal 2018 and how do you expect that to kind of move along in fiscal 2019? Antonio J. Pietri - Aspen Technology, Inc.: Yeah. No, look, I believe last time I talked about the partners pipeline representing – I believe it was 10% or 15% of that overall pipeline. We've now signed up 70 partners. We have higher expectations of business closing from GEIs in 2019, but also now we have – we're starting the year with a much larger group of partners that are now signed up, trained and committed to go on after business in those industries. So we expect that pipeline to continue to grow. Will it grow faster than the overall APM pipeline? Well, time will tell, but I believe it will support the growth of the APM pipeline going forward. I don't want to get into specifics. Shankar Subramanian - Bank of America Merrill Lynch: Thank you so much. Antonio J. Pietri - Aspen Technology, Inc.: Yeah.

Your next question comes from Mr. Ahmad Khalil from Wedbush Securities. Your line is now open. Antonio J. Pietri - Aspen Technology, Inc.: Hi, Ahmad. Ahmad Khalil - Wedbush Securities, Inc.: Hi, guys. Antonio J. Pietri - Aspen Technology, Inc.: Hello. Ahmad Khalil - Wedbush Securities, Inc.: I have a few questions on APM, and then a follow up. So, first off, which specific APM use cases are you more excited about in driving fiscal 2019 acceleration? And can you help us understand the significance in terms of how they rank, whether it's Mtell for predictive outages, Fidelis or ProMV? Antonio J. Pietri - Aspen Technology, Inc.: Yeah, sure. Well, let me look at it, from a pipeline constitution standpoint, certainly Mtell has a significant portion of that pipeline followed by ProMV. The fact is that of the over 40 deals that we signed in FY 2018 or 40 or so deals that we signed in FY 2018, an important number were ProMV deals. Now, in 2019, we're moving ProMV to a site license model as well. We believe it will allow our customers to capture more value that way and also it will allow us to capture more upfront value. So we're moving (01:15:58-01:16:05) this product is a nascent product that has gotten interest from customers and we continue to drive that, but I would rank them as Mtell, ProMV, Fidelis, and the Column Analytics product. Sorry, I forgot the second part of your question, Ahmad. Karl E. Johnsen - Aspen Technology, Inc.: He dropped off. Antonio J. Pietri - Aspen Technology, Inc.: He dropped off? Okay.

There are no questions. You may continue. Antonio J. Pietri - Aspen Technology, Inc.: Okay. Well – so there are no more questions, certainly, I want to thank everyone for joining the earnings call today. We look forward to hosting those of you that are traveling to our Bedford headquarters tomorrow at our Investor Day and, certainly, hopefully, see you in the upcoming months during the investor conferences or NDRs. Thank you.