Well, let me just start. I'm Rob Oliver. I follow the software and SaaS sector here at Baird. It's a pleasure to have AspenTech here, Chantelle Breithaupt, CFO. Chantelle, thank you so much for coming to the conference. We really appreciate it, and, great to see you. Yeah, pleasure. Pleasure to finally meet you in person, Rob. Yeah, I know. Pandemic, all that stuff, and- That's right. you know, feel like it... How could it be? Yes, it is the first time we've met in person. I know you have a few slides that you wanna run through. Yeah. Maybe run through those, and then I know we'll have lots of questions. If you have questions also, and I believe there's gonna be a breakout after. Either way, you can send them here or join the breakout or both. Great. Go ahead. Thank you. Good morning, everyone. Hope you're having a good day so far. Let's get started. I just wanna put the safe harbor statement there for your review, just quickly before we go in. Use of non-GAAP financial measures. Now let's get into it. For those of you that are new to AspenTech, and I'm assuming some are, I wanted to be sure we kinda laid what we call the new AspenTech. That's with the AspenTech now with Emerson. I think there's a few things there just to highlight, and then we'll get into more conversation as Rob and I get into Q&A. You know, I think that this joint venture merger with Emerson, you know, really allows us to be an even bigger, stronger, enhanced leader, industrial software powerhouse player. It allows us, and we can get into more detail through the Q&A, to have deeper, stronger investment capacity in the sense of looking at M&A opportunities and how we continue to grow our portfolio. It definitely allows us an expanded channel market industries, and we can discuss that as we go through. Together, along with Emerson, you know, how can we do a lot of co-innovation joint solutions together as we come to market? AspenTech now at a glance, for those of you new before or just coming into it, you know, our goal is to be this world leader in industrial software for asset-intensive industries. We're now 3,000+ customers worldwide. We doubled in size the number of employees when we closed the transaction in May of 2022, so now we're 3,700+. 40 years of innovation, AspenTech's originally an MIT project-led company. We have over 170 established partnerships, and those range in variety through academia, innovation, et cetera. It's not just partner reselling kind of contribution. If you look at our markets, you know, we survey our customers, and we show and demonstrate we have an annual customer-delivered value of $59 billion of their profit, and starting out on the journey, saving 16 million metric tons of carbon emissions as we work through the sustainability agenda. What are we like now that we're the two Emerson assets and AspenTech together? You know, we're very happy and excited to be through a lot of the life cycle, you know, both design, operate, and maintain. Then, you can look at these five great suites. We go to market with a suite tokenization perspective. We have Performance Engineering, which is setting up and design of CapEx-oriented projects working with E&Cs. We have our MSC suite, Manufacturing & Supply Chain. How do we optimize the process through industries such as chemical and oil and gas? Asset Performance Management, our APM suite, in the sense of how do we monitor and help be predictive to avoid downtime for our customers. SSE, Subsurface Science & Engineering, that's the subsurface geological work for reservoir modeling and upstream and carbon capture and sequestration. Digital Grid Management, the transmission and distribution and industry, excuse me, how do we work there in the sense of making sure the grids around the world are what they need to be as we go into the next couple of decades? We've been on this journey with our customers to operational excellence, and you can look at the various stages of digitalization journey, and we go from everything, the 40 years of our history and the industries, new and old, coming in, from manual work to looking at the smart enterprise. We think there's phenomenal opportunity going into new industries for us, such as transmission and distribution, for a brand-new digitalization journey. Just quickly, you know, what we look at in the sense of global mega trends, what we're excited about as a company being a industrial software powerhouse leader. Look at some of these things that are ahead of us, and even if you take a percentage of them, we think it's great opportunity ahead of us. The global demand for energy is expected to grow 50% by 2050, 75% of that's to come from electricity, and 90% of that's looking to be from renewables. You can imagine that value chain and transmission and distribution energy and how we can help there. Global chemicals demand growth by 2050 is looked to be 300% as we grow the population. Metals for electrification, you know, we're looking at at least 600% production growth for lithium by 2035. You have the whole aspect of circularity as we deal with plastics around the world, infrastructure growth for energy transition, which is another big mega trend. The global population's looking to grow by the 8 to 9.7 billion by 2050. When you bring this all together, the new AspenTech is under this umbrella mantra of the dual challenge. How do we help our customers meet the demand for the growing population in a sustainable manner? All this is gonna require greater digitalization, and we wanna offer our customers opportunity for both profitability and sustainability. I'll just build this out quickly in the sense of, you know, we look at the pathways, and we're very clear on the pathways to get to this journey. Today, we have everything from energy efficiency, electrification, emissions management, and working with both ourselves, our partners, and Emerson. You know, how do we get to moving through the transition of biofuels, hydrogen, those kind of transition renewable energies? Looking at the future in the sense of how do we look at circularity, waste, wastewater management, new essentials, and then looking at CO2 as possibly a feedstock as we go into future endeavors. This is just to give you an example, in the last 12 months of all the sustainability models we've provided to our customers, and we're seeing great uptake in the sense of the number of discrete users who are coming to look at these pathways, these sustainability models, and you look at everything there. Look at the menu of options from carbon capture to electrification, circularity, hydrogen. We're getting a lot of great traction in all these specific use cases to meet our customers where they're at in their journey. To give you a sense of our global capacity, we're just getting started on expanding the global nature of the Emerson assets coming in, you can look at the different geographies, the different industries, the different types of wins that we've had with our customers, just to show the breadth and depth of where we're getting started. When we closed the deal in May of 2022, this was a page I just wanted to refresh for those who knew or to remind those that are new, to introduce you to this. Over the 5-year deal model, we're looking to deliver value of $110 million of EBITDA synergies. $40 million of those is coming from costs. The other $70 million, I will call, we say, revenue and transformation, we can go through those as we go through the Q&A, what that means. This is what we've committed to, $2.4 billion of estimated net synergy value. We think we're uniquely positioned. We're very excited with the breadth of our offerings, the industries that we're in, the value creation, uniquely positioned for sustainability, very strong in that, market leadership in a lot of the industries. You can read through the rest, while maintaining our goal of having best-in-class profitability and free cash flow. If you look at the bottom right, you'll see that flip now to also stronger investment capacity, having Emerson as a partner in the sense of how we can go after M&A from a larger firepower perspective. Those are my slides, Rob, just to introduce the company, and now we can go to Q&A. Great. Thank you. Thanks, Chantelle. Appreciate it. Please send questions if you have them. I guess, just to start, first question I would have is, I mean, you guys, you know, 50% non-GAAP operating margin company, Heritage Aspen, incredibly sticky customer list, almost no share shifts really ever, high single, double-digit growth, fantastic model, probably suitors knocking on the door for years and years in Bedford, Mass, trying to figure out how they can get you guys to sell the company. Why was the timing right to do the deal now? Mm-hmm. Why was Emerson the right partner? Yeah, I think it's a very logical question. Thank you for asking, because I think it's important to understand. I joined the company in March of 2021. Just a bit beforehand, Rob, before I came in, you know, Antonio Pietri, the CEO, and the board, I think, did the right decision in the sense of launching interesting strategic process to understand: Where do you take a $600 million company next for the next 20 to 30 years? What are the growth values? What can we look at in the sense of how to have runway? We could have stayed comfortably in oil and gas and chemicals, but we were seeing other entrants coming into the market, looking for some diversification, looking for some things to smooth out some of the cyclicality of the end markets. That was the goal, do we partner? Do we sell? Do we buy? Working through a number of options, eventually, we landed with Emerson as a great alternative to this. The reason was, sometimes when they present, you can't always time when you enter these things. We found through the strategic process, a really great opportunity to have, something of the size of Emerson, with the same sort of values, the same sort of industries, with 2 assets that were software-oriented, that we saw we could extract value as a software company into industries that we knew were going to be great sustainability plays, that had the same double-digit ACV potential with the best-in-class profitability. We never lost our framework of what we were looking to bring into the company, and we see that in those assets. Got it. Let's talk about those assets, because historically, Aspen, as I set up in that last question. Mm-hmm. -like, you guys have really dominated what you do and what you do best, you know, whether it be Engineering suite, Supply Chain, core EMPs, E&Cs, chems. These assets are certainly attractive, but they're not your core. Obviously, therein lies the opportunity. Maybe talk a little bit about First of all, talk about the two assets, the DGM and SSE. Mm-hmm. You know, why those in particular were attractive and what gives you the confidence that you guys can actually, you know, take it to the promised land in terms of driving that growth? Yeah, absolutely. We're very confident. I would say 12 months in, we've only enhanced that confidence versus when we closed the transaction. Now that we've learned even more, I would say our enthusiasm has only strengthened. SSE, Subsurface Science & Engineering, is in the exploration, production, upstream, oil and gas. I think that coming from Emerson, $100 million of $18 billion into our kind of $1 billion, we can give it a lot more attention and software focus. We think there's great opportunity, not only from the upstream sort of CapEx cycle that we're seeing, which coming out, we think we can do a lot with that, but also the energy transition to carbon capture sequestration. If you think about reservoir modeling, you can explore, produce, pull it out of the ground, work through the value chain, and then the CCS, carbon capture sequestration, is how do we put it back into those same reservoirs and have the monitoring capability? We're very excited by the potential transition in that, Rob, to your question. We can now definitely see, you know, growth in the sense of getting the double-digit growth and productivity, profitability out of that software asset. The second one, which has even likely more potential DGM, which is Digital Grid Management, is a pure play software, one of the only, if the only, pure play software vendors in transmission and distribution. If you think about what's happening with the T&D industry, it is on just the beginning of a digitalization journey. This is where oil and gas and chemicals were for AspenTech 20 years ago. We look at the 4 things that are pulling on this industry. They have to go faster than they've ever had to go before. There's expansion. Many more people requiring electricity due to electrification. Cybersecurity concerns, which we have a very strong cybersecurity presence in our software because it's a critical asset. There's the outage management. You know, some of the storms you see around the world, how quickly can you get the asset up and running from the grid? There's complexity. If you go back to the statistics, 50% growth, 75% coming from electricity, 95%, 90% coming from renewables. Our software has the capability to help the grid customers manage solar, wind, battery, microgrid to grid, and those four things are a tremendous. We're only right now currently mostly in North America, competing against industrials that have software, so back to the pure play software. Our first synergy is to take that into the European market. Got it. Great, I want to talk about that. Mm-hmm. I think you mentioned on the last call, Chantelle, that, like, that Emerson is now your largest channel partner. Very quickly, you guys have been able to get, not only some synergies, but really, you know, come together in a very complex kind of transaction and to kind of drive, you know, Aspen product across- Mm-hmm. The Emerson sales channel, which is obviously incredibly attractive long-term opportunity. That having been said, I think those who are new to the story probably took a look at the fact sheet and the stock chart, and they're probably wondering what happened last quarter. Mm-hmm. Maybe you can walk a little bit through last quarter. I think the. We can come back and speak to some of the great things we're doing with Emerson, too. I think in the sense of what happened last quarter, I think that we're on a five-year journey in the sense of we're in quarter three of 20 quarters. I think as you look through, we had incredible learning opportunities in the last 12 months since we've closed the transaction. We've learned, we validated the thesis that there is a tremendous demand for the two assets brought in. We have validated that there's a great software play. I would say I would distinguish software versus the services, because I think the services. DGM coming in, $220 million, is coming in half services, and coming from a 40-year history of being basically like a systems integrator. We see tremendous value in the software, and we're gonna pull that software out and grow the innovation in the software and push the services to external parties to allow them. Similar to heritage AspenTech, it's a rinse, repeat of what we did 15 years ago. With that services, project milestones, we took the opportunity to revisit the projects and took a I would say it's not a deduction of the revenue, it's a deferral of the revenue. We re-guided the revenue piece to future quarters. It's not disappeared. It'll come back, but we wanted to make sure we understood the project milestones. The services piece is the part that will zigzag through this transformation, but we're very confident in what we need to do. Then we had chemicals materialize. You know, the chemicals end market is going through a bit of a destocking, rebalancing, and, you know, if you listen to their earnings calls, they see that coming back, you know, this second half of calendar year, which we'll guide in August, what it means to our fiscal year. I think it's a little bit of transformation. It's not integration. Our integration has gone great in the sense of bringing the companies together, and we're very confident on the thesis going forward. That's great. I want to get back to some of the longer term opportunities. Yeah. Emerson and stuff, but I want to touch on another thing on the quarter. Yeah. That's, you know, one of the things that you guys had set, as really an operating goal around Emerson, and I would assume any future assets. Mm-hmm. -that you would acquire, which you will be, is that you want them to look and feel like heritage Aspen. Mm-hmm. For those who know Aspen, that probably means predictable, high margin with a token model. Mm-hmm. you know, the SSE business is going really well, but there also was a bit of a moment there in the quarter where you guys maybe had made some assumptions about your ability to get towards the Aspen model more quickly and just maybe address some of the learnings there. Yeah, it's a great question. I think for SSE, we now have tokenization available for our SSE software asset. That is where we definitely gain the sales productivity model. We get into longer contracts, stickiness, escalation, et cetera. We assumed earlier in the five-year model that we could get the contracts that are coming in at a one-year average to be a little longer. SSE coming in actually had sub-one-year contracts, cancellability. We cleaned all those up with the terms and conditions, now we're looking. Mm. to lengthen that duration, and that matters from a revenue perspective. It doesn't drive ACV, 'cause ACV is a 12-month look. If you're looking at SSE, we've course-corrected the revenue assumption, and if we can get them to go to further duration under tokenization, usually they do, they don't have to re-RFP to do tokens. I think. That's a, I think that's a, that's a quick kind of reconciliation on that one. From the perspective, I think, to the second part of your question, What was the second part? Well, that was it. That was it. It was on SSE, and it was around the kind of getting-. Yeah. -up to the token model and the timing around that. That's right. Yeah. That's right. okay. That's, you still feel comfortable that you're gonna be able to get there. It's just gonna probably take a little bit more. Yeah, I think the tokenization model 'cause we know these customers. These customers, for SSE, are the same we have in midstream and downstream. Mm. They're just. It's the upstream, so we say: Please go speak to your procurement in the midstream and downstream. You know, they're expecting this to come together for them as a company. Mm-hmm across all the pieces. Basically, you got some people saying, like, "Look, I've got a 1-year contract with, you know, this SSE asset that was under Emerson. Now I've got Aspen. I know these guys over here know who Aspen is. I don't. Why would I sign a 3-year deal? Well, I think that the, with tokenization, it'll be a very familiar model. Yes. I think they're expecting to go to that, to have one ease of contracting with us across all the offices. Got it. Yep. Got it. Okay. Yeah. You mentioned chemicals. That's another topic. I think it might be an opportunity to sort of pivot upwards a bit. Mm-hmm Talk about the macro. You guys deal, at least in your core and also in these other businesses, in a handful of different macro environments. There's some internal hedging, but maybe talk about the where we are, you know, with the macro relative to your different businesses, and then I want to dive in on chemicals. Yeah, absolutely. Happy to. I think if you think of the various macro environments, so for E&Cs, the kind of the engineering construction side, we're actually seeing strength. You know, we think that that industry went through a bit of a restructuring and trough during COVID, you know, having some of the downturn there, and I think now that we see it coming back out. Two things we think are driving that, which is a strength for us, because we sell our engineering suite to the E&Cs, and then they use our engineering suite to design their facilities that they're working on. We see CapEx coming through for upstream in oil and gas, and we also see it coming through for sustainability. We feel there's a real tailwind coming for hydrogen, LNG, CCS. We see both of those things coming through up on E&Cs from a macro perspective. Oil and gas, you know, oil and gas, even though it's not at the record high margins, it's at a very comfortable band for us in this kind of $50-$80 range of a barrel of oil costing. We think that that should sustain OpEx budgets going into next year, we see upside in the sense of the oil and gas market. We have chemicals in the sense of... We've discussed that. We've already touched on SSE, then from a transmission distribution on the DGM side, definitely demand in those markets. You know, we're seeing strong pipeline growth. We're seeing, you know, customers convert very quickly from perpetual to term license. The other thing we didn't discuss is that DGM coming in were basically perpetual licenses with services implementation. Our goal is to have a synergy to move them to term and then tokenization, which will be available, you know, very soon. Mm-hmm. The pick-up on the industry and the demand for the term licenses has gone very well, and we're very excited by that for all the reasons. Mm I demonstrated why they need to invest in the grid infrastructure. The U.S. has at least $29 billion earmarked for- Mm -grid infrastructure, improvements, Europe has $40 billion+ that they're looking at. We're definitely targeting Europe next. Got it. You mentioned that comfort range on on oil and gas, around the price that, you know, on Aspen standalone, or Heritage Aspen, that was always a super hot topic. I just did want to also just get out there, like, you guys, you don't do oil sands, right? No. You do not shale. that, you know, that comfort zone, that still exists today? There's nothing that's changed with Emerson that's changed that comfort zone? Nothing's changed the comfort zone. What that informs is, it informs the type of CapEx and OpEx budgets those customers will have and what they look to spend- Mm, mm in their calendar fiscal year. That usually informs that agenda going into the next 12 months. Got it. On chemicals, you know, I think, you know, one of the things that, you know, we heard from investors, you know, was that, hey, like, we kind of knew chemicals was weak. You guys kind of knew chemicals were weak, and you'd been indeed, you'd been talking about it. Okay. It's not as if it was anything new. No. On the other hand, clearly, there was something relatively dramatic in a short period of time that happened, which changed your expectations. Maybe talk through... I know you've addressed it a little bit, or Antonio addressed it on the call, but maybe... Yeah Talk a little bit about that. Yeah, I think that, we definitely... Mm, mm. We guided the year, and then through our earnings calls, Q1, Q2, said, we're looking at it in Europe. Mm. We're starting to hear some things there, but hadn't really seen customers behave differently. That's the logical next one, is it turned to customer behavior. I think that it was emphasized by North America. Mm -also starting to experience. We thought it would be Europe, and then it went to North America, and I think that's what put it over the tipping point of not material to at least a material difference. I think, Rob, to, you know, to your point in that. We're looking at, you know, basically, when we listen to what's driving it's their margin pressure because of a destocking environment. That's what we're getting from the conversations and the earnings calls, transcripts that we read. They're working through that destocking and re-leveling of their production, and I think that they're coming out the other side. You know, for us, it's. The thing to understand is that our customers, because we are critical to their production, they don't attrit their spend. What we're talking about is how much new growth they add. They're not allowed to. Mm -reduce their contracts during the 3-5 years, depending what they have. It's not like they're reducing their spend, it's just when do they introduce the new projects? Those haven't disappeared. It's more of a postponement in our conversations with them. We're looking forward to them coming back up through their cycle. We tried it, bear, experimenting with that commission model of you can't reduce, and it didn't go over with clients. We're still experimenting with it. Good for you guys, getting that through. Thank you. you. Thank you. Couple questions, in here, and thank you for sending them. I think I'll just consolidate a couple around your guidance philosophy. Mm-hmm. We're coming into your fiscal year-end. You alluded earlier how some of the chemicals companies are, you know, potentially feeling a little bit better about the back half of the year. I've heard Antonio say that as well. You know, because you guys are in a very interesting spot. I think the first time I met you virtually, I said, "Change your fiscal year. Yeah. To- Yeah You know, because you have to guide for a full year at a time when you don't have full visibility on CapEx for your customers yet. It's a tough spot to be in. Talk a little bit about your guidance philosophy. Mm-hmm particularly relative to the moving parts of chemicals right now, how we should think about that coming into year-end. Yeah, I think it's a fair point. I think that, a couple of things in that, the one thing that we're hoping as we go through is that As DGM becomes a larger part of our portfolio and one of the bigger growth drivers, excuse me, hopefully, that helps to smooth some of the cyclicality we see in heritage AspenTech. That's just generally how do we start to smooth for events that are macro and market driven that we can't control? The guidance philosophy coming in is, you know, we will be, we will be watching the chemicals, oil and gas, CapEx, OpEx, all the different indicators, and take a look through and make an assumption, especially for chemicals, to your point, Rob, in this, how we guide FY 2024 in August. You know, the fiscal year-end change might have been something if we hadn't entered into the transaction, but. Who am I? Yeah. Sorry about that. No, it's a logical question. Mm-hmm. Now we have Emerson has a year-end that's even a quarter different than ours. We're working through all the different year ends. The guidance philosophy will be, you know, I think to take a probably a somewhat prudent approach to our guidance, given some of the end markets. We'll, you know, we'll go from there based on what we see on some of the other industries. Got it. Great. Thanks for all the questions. I'm gonna try to get to a few more. A couple are around M&A. Mm-hmm. You guys have said, you know, that you're going to go out and to do more transactions. Bunch of questions around that. One would be, what areas we, you know, should expect you guys would consider? I'll just step back and ask this one. Aspen didn't make a lot of acquisitions. Like, you guys made tuck-ins. Mm-hmm. You know, now you're gonna make a lot of acquisitions. Like, how should we get comfortable that this becomes a core competency for you guys? Yeah, I think, I'll distinguish what we mean in our M&A strategy. The first thing is, one of the reasons we went into the strategic process is because we went after meaningful M&A and kept running into firepower issues. We'd get to the nth line, and we just couldn't cross that line. Going with this Emerson transaction gives us firepower for meaningful M&A. It doesn't mean we are going to do any M&A and all M&A just to do M&A. We're very thoughtful. It has to be a framework of where the asset can have double-digit ACV and best-in-class profitability within a 3-5-year time frame. We're not looking for it all to be transformative like DGM. We're looking for things that are integration versus transformation. We're not looking to do high volume. It's probably larger, low volume, high quality. I would say in the sense of the ability, we'll pace it and the type of M&A as we go through. You can't always determine when M&A is available. I think it allows us to do a few larger ones if we find the right timing, versus a flurry of them, Rob. We're not looking to do a flurry of them, but we'll do the thoughtful ones. I think that, you know, once we get into metals and mining, we'll be in enough industries. We'll probably look to what we can do within those industries in the next, you know, few years, just to settle on the industries and supplement what we have. We've built core competencies, both between our teams and Emerson. We've built an integration office inside the company. We've brought in talent from large companies that know how to scale, people like myself and some of my peers that have joined. It's thoughtful, but it gives us the ability to go after meaningful, is the way I would position it, more than lots and lots. Makes a lot of sense. You mentioned metals and mining, and I'm glad you did. I don't know what you can say about Micromine, because I think it still has not closed. That's right. it excited us because that's an area where looking back to, like, the evolution of your APM business, it's an area where you saw real traction. Mm-hmm. Like, Aspen has a fit in metals and mining, and I feel like you can exploit that. What can you tell us about Micromine, and if not, about the transaction, specifically about, you know, why it's exciting to you? Yeah. Two things why it's exciting, because I know we're running up the clock. The first thing that's super exciting is metals and mining is in just sort of the same spot as the T&D market in the sense of a digitalization journey. It is, it's an industry that needs digitalization. There's tremendous demand for all the electrification reasons we've discussed earlier. Rinse, repeat for this industry. Super excited by the next few decades of opportunity in metals and mining, generally. Micromine, specifically, it is a pure play software term license business, we're not looking to transform it. We would look to, you know, tokenize it, globally expand it, because currently it's mostly in Australia and Asia, lots of great global opportunities to go outside of those areas. Super excited about that entry into that market. We're waiting on one final country approval, which is out of nothing from our side. We're waiting for that country to respond. We're excited for that industry. Absolutely. Great. Thanks. With that, we're out of time. Please join me in thanking Chantelle Breithaupt from AspenTech for joining us. Thanks, Chantelle. Thank you, Rob. There will be a breakout for those who are interested. It's in the Ask-.