Good day, and thank you for standing by. And welcome to the Q4 2021 Aspen Technology Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation there will be a question and answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

[Operator Instructions] I would now like to hand the conference over to your first speaker today, your CFO, Chantelle Breithaupt. Thank you. Please go ahead, madam..

Antonio will discuss business highlights from the fourth quarter and then I will review our financial results and discuss our guidance for fiscal year 2022. With that, let me turn the call over to Antonio.

Antonio?.

first, a global chemical company based in Asia, signed an expanded renewal for Aspen Mtell that extended its initial 1-year license for 3 more years after signing an initial contract for 2 of its plants based on the ease of use and scalability of the solution.

This customer will now be expanding its deployment to 4 sites due to Antel's AI capabilities that enhance the safety and sustainability of their operations. Second, a global chemical company based in Asia and one of AspenTech's first customers has embarked in a transition of its business from bulk to specialty chemical production.

At the same time, this customer is also undertaking a digital transformation to leverage more technology in its operations.

As part of the most recent renewal, the customer expanded its commitment to AspenTech with added usage of Aspen AI model builder for some of the nonlinear specialty chemicals processes, which are difficult to model using first principles. The customer is also increasing usage of Aspen DMC3 and will continue to deploy in Aspen Anto.

All of this resulted in a renewal with material growth with plans for expansion of usage in these and other technology areas.

And lastly, a North American integrated oil company and long-term customer of AspenTech decided to embark on a digital transformation of its petroleum supply chain from production to retail to capture the full potential of their value chain. More than 15 vendors were invited to a rigorous evaluation of their technology and capabilities.

AspenTech was ultimately selected as a leading technology partner for the comprehensive program that is expected to generate incremental free cash flow in the hundreds of millions of dollars for this customer.

I would now like to provide you with some additional details about our performance for the full year 2021, all of which are quoted on an annual spend basis. From a product perspective, the engineering business grew annual spend 3.3% for the year, generating 40% of our overall annual spend growth.

This performance exceeded our expectations, supported by stronger performance than expected in the E&C vertical. Our manufacturing and supply chain, our MSC business delivered annual spend growth of 5.8%, representing 40% of our total annual spend growth.

MSC was the area most heavily impacted by coverage-related disruptions and the related macro environment, as customers pulled back on their OpEx budgets due to the significant deterioration in their operating environment. This was the first time in many years, the MSC business did not grow more than 10%.

Traditionally, MSC has not been a cyclical business, and we don't expect it to be in the future, but the historic COVID related downturn impacted our owner-operator customers in ways not experienced before.

The Asset Performance Management or APM business generated total annual spend growth of 16.2% or 13% of our total annual spend growth for the year. contributing 0.6 points of annual spend growth.

As we discussed throughout the year, APM's performance reflected an increase in no decisions by customers looking to defer investment decisions until they had more visibility into their business outlook. At the end of the year, our installed base of business was split 57% engineering, 39% MSC and 4% APM.

Our three core verticals of energy, chemicals and engineering and construction contributed 46%, 24% and 24% of our growth in annual spend during the year, respectively. Global economy industries or GIs contributed 6% of our inaspend growth for the year and grew 4.7% in the year. We are in the early days of our investment in Pharmaceuticals.

We grew our business 8.6% in the year. We expect this industry to be a more meaningful contributor to growth in this fiscal year and going forward.

In addition to standing up an organization focused on this industry and increasing our R&D and marketing investments, we have been building our pharma sales channel in Europe and North America over the last 6 months with incremental investment planned in Asia this fiscal year.

We believe pharmaceuticals represent an important opportunity for AspenTech as this industry drives the digitalization of their business operations and increases the use of technology in manufacturing and for their sustainability ambitions. We're also optimistic for the opportunity in the metals and mining industry, particularly with the APM suite.

We grew our business in this industry, 12.6% in the year. There's an increasing number of APM customers in this industry, and they have expanded the use of our technology because preventive failure alerts create significant value. We will plan for increasing our investments as the opportunity evolves and our strategy is executed.

At the end of fiscal year 2021, the energy vertical represented 41% of our business; chemicals, 28%; engineering and construction, 25% and GEIs, including pharma, 6%. For the full year, our attrition rate was 6.7%.

This is above the high end of the 5% to 6% range that we provided at the beginning of the year and guidance even in our most recent earnings call. Most of the additional attrition was attributable to a divestiture of certain assets by a few customers.

This impacts attrition since these assets rolled out those customers' contracts but it is offset by a corresponding increase in spend by the customer acquiring the assets. Despite the challenges this year, it is important to note that we generated gross growth or growth prior to attrition of 11.4% in fiscal 2021.

This is a tremendous validation of how valuable our solutions are to customers. During the fourth quarter, we held our biannual Optimize Conference, our first virtual customer conference. This year's optimize was 5 times larger than our most recent in-person event with more than 5,400 participants, representing over 2,000 companies and 84 countries.

This year's optimize was entitled the future starts with industrial AI and the recurring topic was how customers can generate new levels of operational excellence while simultaneously addressing their sustainability targets.

This dual challenge broadly means meeting the increasing demand for resources and higher standards of living from a growing population while also addressing sustainability goals, reductions in emissions and reductions in plastic waste in the environment.

Many of our existing customers share their progress on meeting the dual challenge using our products and solutions. One notable example was a customer in Japan, which is a producer of packaging materials derived from propylene and other resins.

This customer implemented our supply chain management solution in their distribution network and we're able to achieve reductions in CO2 emissions of over 160,000 metric tons per year.

Also, as part of its supply chain distribution, optimization and logistics, the customer collected some of the waste being produced as a result of the use of their products and returned over 43,000 metric tons per year to warehouses for recycling, all simply through the use of supply chain management capabilities.

This customer received the 2020 Green Supply Chain award from the demand and supply executive publication in Japan. Taking this to a higher level, AspenTech has estimated that collectively among our customers, the use of our products and solutions generate $59 billion in profit per year through greater efficiencies and productivity.

At the same time, we have calculated that among our European refinery customers alone, they have in total realized CO2 emission reductions of 2.3 million metric tons per year associated with $4.2 billion in efficiencies and productivity gains per year.

Our unmatched domain expertise and growing data science capabilities have resulted in methodology and capabilities that we now refer to as hybrid products or hybrid modeling. This approach announced last year as part of Aspen 1 version 12, enhances first principle driven most with artificial intelligence capabilities.

Our latest product introduction in May, Aspen 112.1 built on the hybrid model approach and represents the next step in fulfilling our vision of the self-optimizing plan. With our version 12.1 enhancements, we have extended industrial AI across our solutions to drive higher levels of profitability and sustainability in customers' operations.

One of the most important futures to come out of this new release is first principles driven hybrid models embedded within our products, which brings AI directly into our simulators.

With version 12.1, we now have a library of sustainability application examples that customers can leverage that range from carbon capture and sequestration modeling to optimizing the reduction of carbon emissions in production operations, also including biomass processing and hydrogen production modeling.

Over the next few quarters and years, you will see us release more and more sustainability applications that will allow customers to not only model hydrogen production, both hydrogen transportation, distribution and capture.

We will also introduce more capabilities around chemicals or advanced recycling and other processes that are of keen interest to customers. As I have said many times, there is no trade-off between safety, sustainability, reliability and profitability.

It is all intertwined and it is what we have been doing for our customers throughout our 40 years of existence. As we look ahead to fiscal 2022, we are optimistic we will deliver increased growth while there continues to be heightened levels of uncertainty. We currently expect the year to be a tale of 2 halves.

The first half, we expect to look broadly similar to what we have experienced in the second half of fiscal year 2021 due to current customer budgets. And the second half to start showing an acceleration of growth as we expect customers' budgets for calendar 2022 to increase given their improved business outlook.

It is important to note that there is caution in our expectations. As we have seen repeatedly in the last 18 months, the impact of COVID-19 is highly unpredictable and has led to an asymmetric recovery. The global recovery has been uneven countries have come in and out of lockdown and the emergence of the Delta Varian has added more uncertainty.

Our current expectation is for annual spend growth to be 5% to 7%. There are several assumptions underpinning our guidance. We expect the bulk of growth to come in the second half of the year.

As mentioned earlier, our baseline assumption is that spending conditions improved in the second half of the fiscal year as customers set their calendar 2022 budgets in the context of greater certainty and a better operating and macro environment than they did last year, an environment with greater certainty due to COVID the delta variant could influence budgetary decisions and result in an outcome towards the low end of the range.

From a suite perspective, we expect the engineering and MSC Suites will contribute 4 to 6 points of growth and APM is expected to contribute approximately 1 point of growth. And third, attrition is expected to be approximately 6% for the year.

Specifically, we expect attrition in the first quarter to be elevated due to the concentration of renewals in more challenged verticals like engineering and construction and upstream, which will lead to higher-than-normal attrition. This will dampen annual spend growth in the first quarter and is factored into our outlook for the year.

I would like to finish by reiterating our optimism for the business. In the midst of the most difficult environment we have seen in decades, we generated almost 5% annual spend growth and $277 million in free cash flow.

While helping our customers solve the 2 primary long-term challenges facing their businesses, operating efficiency and sustainability.

Fiscal year 2022 will represent the largest yearly increase in investment in 20 years in AspenTech demonstrating our belief on the opportunity available in our core markets and our conviction on the opportunity ahead of us in pharmaceuticals and in metals and mining.

The investment plan accelerates our product road maps adds new talent to the company and continues to enhance our go-to-market capabilities as we position AspenTech for the next 3 to 5 years.

We have demonstrated time and again the resiliency and cash flow generating capacity of this business through major downturns and our ability to generate double-digit annual spend growth during normal spending environments. We're confident the same will be through this time as budgets return to normal over time.

We're excited for the future and the opportunities ahead for AspenTech. Now let me turn the call over to Chantelle.

Chantelle?.

Thank you, Antonio. I will now review our financial results for the fourth quarter of fiscal 2021. As a reminder, these results are being reported under Topic 606, which has a material impact on both the timing and method of our revenue recognition for our term license contracts.

Our license revenue is heavily impacted by the timing of bookings, and more specifically, renewal bookings. A decrease or increase in bookings between fiscal periods resulting from a change in the amount of term license contracts up for renewal is not an indicator of the health or growth of our business.

The timing of renewals is not linear between quarters or fiscal years and this nonlinearity will have a significant impact on the timing of our revenue. As a result, we believe our income statement will provide an inconsistent view into our financial performance, especially when comparing between fiscal periods.

In our view, annual spend will continue to be the most important metric in assessing the growth of our business and annual free cash flow, the most important metric for assessing the overall value our business generates.

Annual spend, which represents the accumulated value of all the current invoices for our term license agreements at the end of each period was $621 million at the end of the fourth quarter. This represented an increase of approximately 4.8% on a year-over-year basis and 1.9% sequentially.

Total bookings, which we define as the total value of customer term license contracts signed in the current period, less the value of our term life contracts signed in the current period but where the initial licenses were not yet deemed delivered under Topic 606, plus hterm license contracts signed in a previous period for which the initial licenses are deemed delivered in the current period was $225.6 million, a 4.5% decrease year-over-year.

Total revenue was $198 million for the fourth quarter a 2% decrease from the prior year period. Turning to profitability, beginning on a GAAP basis. Operating expenses for the quarter were $77.8 million compared to $70.5 million in the year ago period.

Total expenses, including cost of revenue, were $92.1 million, which was up from $85.6 million in the year ago period. Operating income was $105.9 million, and net income for the quarter was $95.4 million or $1.39 per share. Turning to non-GAAP results.

Excluding the impact of stock-based compensation expense, amortization of intangibles associated with acquisitions and acquisition-related fees, we reported non-GAAP operating income for the fourth quarter of $118.4 million, representing a 59.8% non-GAAP operating margin compared to non-GAAP operating income and margin of $125.5 million and 62.2%, respectively, in the year ago period.

As a reminder, margins will fluctuate period-to-period due to the timing of customer renewals and therefore, license revenue recognized during the quarter. Non-GAAP net income was $105.3 million or $1.53 per share based on 68.6 million shares outstanding. Turning to the balance sheet and cash flow.

We ended the quarter with approximately $380 million of cash and cash equivalents and $293 million outstanding under our credit facility.

In the fourth quarter, we generated $103.2 million of cash from operations and $103.7 million of free cash flow after taking into consideration the net impact of capital expenditures, capitalized software and acquisition-related payments. In the full year 2021, we generated $276.1 million of cash from operations and $277.5 million of free cash flow.

A reconciliation of GAAP to non-GAAP results is provided in the tables within our press release, which is also available on our website. From a capital allocation perspective, we resumed our share repurchase activity in the fourth quarter, buying 361,000 shares for $50 million.

In addition, we recently announced a new share repurchase program for fiscal year 2022 to repurchase up to $300 million of stock. As part of the program, we entered into an accelerated share repurchase agreement for $150 million that we expect to complete later this quarter.

The remaining $150 million are expected to occur over the balance of the year. Utilizing our balance sheet, whether through share repurchases or M&A to generate shareholder value is an important part of our strategy. I would now like to close with guidance.

Consistent with fiscal years 2021 and 2020, we will continue to provide guidance on an annual basis. With respect to annual spend growth, as Antonio mentioned, we are forecasting 5% to 7% annual spend growth.

We expect bookings in the range of $766 million to $890 million, which includes $486 million of contracts that are up for renewal in fiscal 2022. This includes approximately $58 million of contracts up for renewal in the first quarter. We expect revenue in the range of $702 million to $737 million.

We expect license revenue in the range of $481 million to $515 million, and maintenance revenue and service and other revenue of approximately $192 million and $30 million, respectively. From an expense perspective, we expect total GAAP expenses of $386 million to $391 million.

Taken together, we expect GAAP operating income in the range of $316 million to $346 million for fiscal 2022. -- with GAAP net income of approximately $288 million to $314 million. We expect GAAP net income per share to be in the range of $4.27 to $4.65.

From a non-GAAP perspective, we expect non-GAAP operating income of $361 million to $391 million and non-GAAP income per share in the range of $4.80 to $5.17. From a free cash flow perspective, we expect free cash flow of $275 million to $285 million.

Our fiscal 2022 free cash flow guidance assumes cash tax payments in the range of $60 million to $66 million. To summarize, we continue to produce growth and significant cash generation in a challenging environment.

We are investing in our solutions to increase the value we deliver for our customers and ensure we are in the best position to accelerate growth as our customers' ability to spend with us improves. We have been through these cycles before and are confident we will return to double-digit annual spend growth over time.

With that operator, let's begin the Q&A, please..

[Operator Instructions] Your first question comes from the line of David Robinson from William Blair. Your line is now open..

The first question I had was about the kind of the budget improvements that you're expecting for the next upcoming fiscal year.

Can you quantify kind of how much you expect the budgets to improve relative to 2021 in your customers' markets?.

Well, let me -- let me frame it in the following manner. And of course, it will be up to customers to decide how much they're going to increase their budgets. But -- If you look at sort of the key metrics that we track for the performance of our customers, certainly, oil prices have been in a healthy range for the last few months.

If you look at chemicals demand is back to pre-covid or above pre-covid levels if you look both at now at refining margins, they're back to pre-covid levels. Chemicals margins have exceeded pre-covid levels and in a way, are in some cases, sitting setting records.

There's an expectation that CapEx investment will begin to grow, perhaps in the low single digits. But nonetheless, as well. So if you take all those metrics as a group, you think that we will have a better budget and spending environment next year.

Now at the same time, look, the COVID pandemic and the Delta variant certainly introduce a question mark around where the outlook will be in the fall season. And that's something that may or may not have an impact on budget. But overall, we feel that our customers will be increasing their budgets for calendar 2022..

And then one other question I had around the attrition. So you said you kind of came in within your expectations for the year.

Was that kind of last customer that you referenced that disposed or disinvested in some assets? Was that kind of built into your original attrition expectations? I'm just trying to get a sense of kind of how that affected the overall rate for the rest of the year?.

Yes.

So I just want to clarify, we came in somewhat above the range that we had given investors at the beginning of the year, 6.7% versus a range of $56 million -- What we saw in the last 12 months was an increase in M&A activity by customers, especially in the oil sector, where they were actually divesting assets, refining assets and that certainly led to greater attrition as a result of the divestiture -- This is not something that we had expected or planned for.

But it's a result of the sort of reassessment of our oil customers of their businesses going forward. The sale of stand-alone refineries as they reposition their portfolios for the refining portfolios to be more integrated petrochemical sites. But to answer your question specifically, no, no, it was not something that we had expected..

Your next question comes from the line of Jackson Ader from JPMorgan. Your line is now open..

And Ken, we've looked for a long time that when customers are under pressure, is that a lot of times, that will drive some efficiency purchases or efficiency demand. I'm just curious why you think that didn't materialize this year for your chemicals or refinery customers that were particularly under pressure..

Sorry, and your question is why it will or did it materialize?.

Yes. Why didn't it materialize this past year in fiscal '20..

Okay. Yes. Well, look, we've now been engaged with customers, both virtually and in the last few months, I finally had some in-person meetings with customers, which was great.

Look, as we said in the prepared remarks, the disruption that took place in the last 12 months was like nothing before, especially operating rate dropping into the low 60s for refineries and the impact that had in operational stability and their margins overall.

When you're operating at those rates, your ability to create value from driving greater efficiencies in your operations is in there, okay? Because you are just not processing as much crude oil or or feedstock for your naphtha crackers to produce ethylene. So the need for technology to drive operational efficiencies is just is in there.

anymore in such an environment.

And frankly, in my entire career and I'm now getting to -- towards the end of it, I had not experienced a moment like this, where you have refineries operate at such low rates that their decision is whether to keep these assets operating at the edge of operational stability or shutting them down, which some of them had to do.

So that incentive to drive more technology implementation, it just wasn't there equally with chemical companies. And our expectation going forward, though, is that as operating rates are now coming back to that 85%, 90% range. If you listen to Marathon Petroleum's earnings call, the CEO talked about their operating rates being at 94%.

So that's all very healthy for them to start thinking about how to squeeze more efficiencies out of their operations, including chemicals. So including in the chemical sector. So I do think that we're now back to a range of operations where the incentive for technology adoption is back in play. And we'll see what happens going forward. So..

And then another kind of maybe strategic follow-up as well for you, Antonio.

I mean is it fair to wonder whether the planned investments in pharma or the other GEI industries are warranted or worth it? I mean, if they're not necessarily growing that much faster, if at all, than the core on a much smaller bas I mean I guess I just would have expected that harm the pharma revenue would have grown a little bit faster than 8%.

And so if it's not growing that much faster at the moment, do you think it's worth creating all this kind of sales and go-to-market investments around it?.

Look, Jackson, that's a fair question from you. But look, let me say the following. Fiscal '21 certainly was a very difficult year from a someone of our end markets. But at the same time, there was a lot happening inside the company as we put our foot to the pedal on investments.

While fiscal '22 will be the largest investment year in 20 years, fiscal '21 was the second largest -- We launched our AIoT business unit on October 1 of last year.

We launched our Pharmaceuticals business unit on April 1 and -- We hired a metals and mining executive that is now formulating a strategy and we're beginning to execute put the business in place for that strategy. We've been growing our GI sales organization that is actually the 1 that's going to market.

In metals and mining, we've been standing up our pharmaceutical sales organization as well. So in the context of -- from an operational standpoint, everything that we were working on was really to set up for faster growth in fiscal '22 and going forward. I'm not disappointed on our results in pharma or metals and mining.

As a matter of fact, and glad we had it. But we do expect better results in fiscal '22 and going forward. And absolutely, those investments will be merited..

Your next question comes from the line of Andrew Obin from Bank of America. Your line is now open..

Can you hear me?.

Yes. Hi..

So Hey. I completely appreciate having to guide on oil and gas budgets as your customers have not even really started the planning process for calendar '22. Having said that, I think a couple of your competitors are definitely talking about the fact that having good visibility into '22 and even '23.

And I think our channel checks indicate some of that as well. Can you just talk about this longer-term visibility and what kind of conversations you are having with your customers that are giving you confidence into '22 and '23? ..

Okay. Well, I mean, look, we in AspenTech, it's been our philosophy to only guide one year at a time. So I will not talk about. Okay. Look, I think you're also implying that we were claiming not full visibility into our customers' budgets for '22, but some of our competitors are.

I won't talk about our competitors, but what I can tell you is that where we see today, -- And what we have experienced in the first half of this calendar year, gives us a certain sense for what the second half of the calendar year, the first half of our fiscal year will be we believe the budget will be the same.

These customers will maintain their sort of their fiscal discipline and continue to spend through the budgets that they said last call. And then come '22, look, we do think that budget will improve, and we're having good conversations with customers.

But we'd rather be more cautious with our guidance at this point in the fiscal year and the calendar year. and then wait until what customers tell us they plan to do for calendar '22. So..

No, no. What I meant to imply is that, I think it's easier for your competitors to make more vague statements about '22 without having to formally guide. I was not implying that they have more visibility. No, no, no. Another question Yes. And then just -- it's tough to guide in the middle of the year, that's all I'm saying.

Another thing, I just want to understand, as we think about annual spend and where we are for fiscal '21 and where you're guiding for fiscal '22.

As you think about longer-term plan, do you think that the curve has prominently shifted down? Or do you think there's going to be a catch-up down the line to sort of to get back to you on this track of, I think, 12% CAGR that you were talking about at your February Analyst Day..

Yes. Well, I mean, look, first of all, we're very optimistic about our end markets going forward. If anything, an expectation that CapEx investments in upstream will increase over the next 2, 3 to 5 years.

Certainly, the refining industry will probably be going through sort of a slow readjustment in that integrated refining and chemical site will be more profitable going forward. And you'll see some refinery rationalization. At the same time, refining capacity in Asia and the Middle East will continue to grow.

And on a net-net basis, refining capacity will continue to increase around the world. Now what happens in 15, 20 years from now, we can have that be paid in a separate call. But no, we're very optimistic about the next 5 to 10 years.

Look, our job in Aspen Technology is to help our customers be the best towards of those resources in order to drive more sustainable businesses by reducing CO2 emissions and plastic waste in the environment. That's what we've always done in AspenTech.

It wasn't how we position ourselves, but it is absolutely what our customers are now looking to do with this company. And therefore, we see a lot of positive going forward..

Your next question comes from the line of Jason Celino from KeyBanc. Your line is now open..

It sounds like the approval processes in your customers are still elongated, but it was interesting that you said that as the quarter kind of went on, it started to improve a little bit, but Help us understand the magnitude of that improvement, the end of the quarter versus maybe the beginning?.

Yes. I think it's a tale of 2 sides, Jason. One, the larger the deal, the certainly scrutiny is still there. Look, we work on on some 7-figure deals in the quarter. And certainly, there were still a lot of scrutiny on that level of spend. But as you get to smaller deals, we saw a lot less friction in getting those deals approved.

So I think there's a greater degree of comfort on the environment. All these -- our oil and chemical companies have reported incredible cash flow generation in the last quarter. And I think that's also been leading to a loosening of some of the approval processes for smaller spend. larger spend, yes, is still there, the approval processes.

So -- but I think that will continue to evolve over the next few months..

And then when I look at the free cash flow guidance, it's basically flat year-over-year, and it's lower growth than the annual spend that we saw that you're forecasting.

Maybe why is that?.

Yes. I'll let Chantelle step in here. Go ahead, Chantelle..

Yes. I think that there are 2 things, and this is really have a prudent free cash flow guidance, I would say that the 2 things I would take into consideration are the investments that we're making where we can play the big -- the largest investment as Antonio referred to in 20 years into those diverse kind of industries and our core.

And two, we have a position on cash taxes that we're still working through to see. So I'd say cash tax assumptions and the investments are the 2 main factors we're working through in that guide..

And then maybe 1 quick follow-up on the big investments here.

And how much is it headcount related versus other development or product type investment?.

Yes. I would say there's three main categories. We have talent, what you call it headcount, I'd call it talent investment. -- we have R&D investments. And then the third one would be our go-to-market, especially in some of the geographies that Antonio mentioned. So there's three main areas that we're focusing on..

Yes. Jason, I mean look, as we go into this new -- I mean, new industries, we've been in pharmaceuticals for a while, but certainly, we need to raise the visibility of AspenTech in pharmaceuticals, our visibility in pharma and our brand recognition.

So some of those investments are onetime investments, but there's a lot of talent investment in there as well..

Your next question comes from the line of Mark Schappel from Benchmark. Your line is now open..

Antonio, last quarter, you called out a competitor that was giving away at software for free, I think, for like a 3-year period.

Did you continue to see that type of intense pricing discount from competitors this quarter?.

Look, now that I'm aware it wasn't raised or I heard of but something like that in our forecast call during the quarter. So maybe that competitor heard me talked about it in the last earnings call and was a little embarrassed and stopped the practice..

And then with respect to your ESG products, right, you expect to launch in the coming year or so. You did mention in detail the work you're doing in the of hydrogen production.

I was wondering if you could give another example or to of some of the other ESG areas that you're developing?.

Great, and thank you for that question, Mark, because the fact of the matter is that there's so much functionality in a product today that is ESG or sustainability-related that in a way, a lot of our customers are not familiar with it because they really never had a need for it. But now, of course, this is front and center.

But look, carbon capture and sequestration modeling. Some of the early pilot sites for carbon capture and sequestration were modeled using our Aspen technology, biomass processing modeling. You can talk about, well, okay, hygiene in production, but also advanced chemicals or chemical recycling. So there's a lot in our products.

Look, you can optimize a refinery from the standpoint of reducing the amount of CO2 emissions. And we have customers that are now inquiring about that functionality in a product that they've been using for 25 years. But at the same time, we are going to enhance the capabilities of our products around all of this.

Just so you know, look, when I was in Asia, based in Asia, one of the biggest users of our Aspen custom modeling technology, which is a layer product and Aspen Plus where Japanese automobile makers because they were modeling -- they were modeling electrical batteries for some of their hybrid automobiles back in the mid-2000.

So we've had pockets of usage of these capabilities, and now it's all at the forefront and probably will drive certainly some of our growth in over the next 5, 10 years and beyond for sure..

There are no further questions. At this time, I will turn the call over to our CEO, Antonio Pietri..

All right. Well, thank you, everyone, for participating in today's call. I look forward to hopefully have some in-person meetings here in the future. But nonetheless, thank you all..

This concludes today's conference call. Thank you for participating. You may now disconnect..