This Form 10-K contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements relate to future events or our future financial performance. We generally identify forward-looking statements by terminology such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "potential," "should," "target," or the negative of these terms or other similar words. These statements are only predictions. The outcome of the events described in these forward-looking statements is subject to known and unknown risks, uncertainties and other factors that may cause our, our customers' or our industry's actual results, levels of activity, performance or achievements expressed or implied by these forward-looking statements, to differ. "Item 1. Business," "Item 1A. Risk Factors" and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" as well as other sections in this Form 10-K, discuss some of the factors that could contribute to these differences. The forward-looking statements made in this Form 10-K relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make. The industry in which we operate is subject to a high degree of uncertainty and risk due to variety of factors, including those described in "Item 1A. Risk Factors." Unless the context indicates otherwise, references in this report to "we", "us", "our" and other similar references mean Aspen Technology, Inc. and its subsidiaries.

Our software incorporates our proprietary mathematical and empirical models of manufacturing and planning processes and reflects the deep domain expertise we have amassed from focusing on solutions for the process and other capital-intensive industries for over 35 years. We have developed our applications to design and optimize processes across three principal business areas: engineering, manufacturing and supply chain.chain, and asset performance management. We are a recognized market and technology leader in providing process optimization and asset performance management software solutions for each of these business areas.

We have established sustainable competitive advantages within our industry based on the following strengths:

We have approximately 2,100 customers globally. Our customers consist of companies engaged in the process and other capital-intensive industries such as energy, chemicals, engineering and construction, as well as consumer packaged goods,pharmaceuticals, transportation, power, metals and mining, pulp and paper, pharmaceuticals and biofuels.consumer packaged goods.

The process manufacturing industries consist of companies that typically manufacture finished products by applying a controlled chemical process either to a raw material that is fed continuously through the plant or to a specific batch of raw material.

Process manufacturing is often complex becauseindustry characteristics and dynamics are complex; therefore, any small changesimprovement in the high-volume feedstocks used, or to the chemical process applied, can have a significant impact on the efficiency and cost-effectiveness of manufacturing operations. As a result, process manufacturers, as well as the engineering and construction firms that partner with these manufacturers, have extensive technical requirements and need sophisticated, integrated software to help design,

Companies in different segments of the process industries face specific challenges that are driving the need for software solutions that design, operate and managemaintain manufacturing environments more effectively:

Companies in the consumer packaged goods, power, metals and mining, pulp and paper, pharmaceuticals and biofuels industries are also seeking processasset optimization solutions that help them deliver improved financial and operating results in the face of varied process manufacturing challenges.

Companies in the process industries constantly face pressure on margins causing them to continually seek ways to operate more efficiently. At the same time, these manufacturers face complexity as a result of the following:

Technology solutions play a major role in helping companies in the process industries improve their manufacturing productivity. In the 1980s, process manufacturers implemented distributed control systems, or DCS, to automate the management of plant hardware. DCS use computer hardware, communication networks and industrial instruments to measure, record and automatically control process variables. In the 1990s, these manufacturers adopted enterprise resource planning, or ERP, systems to streamline back office functions and interact with DCS. These systems allowed process manufacturers to track, monitor and report the performance of each plant, rather than rely on traditional paper and generic desktop spreadsheets.

Many process manufacturers have implemented both DCS and ERP systems but have realized that their investments in hardware and back-office systems are inadequate. DCS are only able to control and monitor processes based on fixed sets of parameters and cannot dynamically react to changes in the manufacturing process unless instructed by end users. ERP systems can only record what is produced in operations. Although DCS and ERP systems help manage manufacturing performance, neither of these systems can optimize what is produced, how it is produced or where it is produced. Moreover, neither can help a process manufacturer understand how to improve its processes or how to identify opportunities to decrease operating expenses.

Process optimization software addresses the gap between DCS and ERP systems. ProcessAsset optimization software focuses on the optimum design, operation, and optimizationmaintenance of the manufacturing process; how the design is optimized for operations and reliability, how the process is runoperated and the economics of the process.process, and how the design and operations impact the longevity and reliability of the equipment. By connecting DCS and ERP systems with intelligent, dynamic applications, processasset optimization software allows a manufacturer to make better, faster economic decisions. Examples of how processasset optimization software can optimize a manufacturing environment include incorporating process manufacturing domain knowledge, supporting real-time decision making, predicting equipment failure, and providing the ability to forecast and simulate potential actions. Furthermore, these solutions can optimize the supply chain by helping a manufacturer to understand the operating conditions in each plant, which enables a manufacturer to decide where best to manufacture products.enabling more efficient and optimized production decisions.

Process manufacturers employ highly skilled technical personnel specializing in areas such as process design, equipment design, control engineering, manufacturing operations, analytics, planning, scheduling, and supply chain management. To drive efficiency and improve operating margins, these personnel need to collaborate across functional areas and increasingly rely on software to enable this collaboration as well as automate complex tasks associated with their jobs. Process companies must adapt to the changing nature of the technical workforce. A generation of highly experienced plant operators and engineers is nearing retirement. Companies are lookingAs a result, we believe there is increasing demand for intelligent software applications that capture and automate expert knowledge and are intuitive and easy-to-learn.

We provide integrated processasset optimization software solutions designed and developed specifically for the process and other capital-intensive industries. Customers use our solutions to improve their competitiveness and profitability by increasing throughput and productivity, reducing operating and maintenance costs, enhancing capital efficiency, enabling collaboration among different functions and decreasing working capital requirements. Our aspenONE software applications are organized into two suites, which are centered on our principal business areas of engineering,three suites: 1) engineering; 2) manufacturing and supply chain:chain; and 3) asset performance management, or APM:

Our aspenONE licensing model is a subscription offering under which customers receive access to all of the products within the aspenONE suite(s) they license, including the right to any new unspecified future software products and updates that may be introduced into athe licensed aspenONE software suite. This affords customers the ability to use our software whenever required and to experiment with different applications to best solve whatever critical business challenges they face.

We offer customer support, professional services and training services to our customers. Under our aspenONE licensing model, software maintenance and support is included for the term of the arrangement. Professional services are offered to customers as a means to further implement and extend our technology across their corporations.

The key benefits of our aspenONE solutions include:

In addition to the breadth and depth of our integrated aspenONE software and the flexibility of our aspenONE licensing model, we believe our key competitive advantages include the following:

We seek to maintain and extend our position as a leading global provider of process optimization software and related services to the process industries. In the last twelve months, we have introduced a new strategy to evolve our scope of optimization from the process units in a plant to the process and the equipment in the plant or entire asset. We plan to expand our reach in optimization from conceptualization and design, operations, and supply chain to the maintenance aspects of the plant. We plan to build on our expertise in process optimization, our installed base, and long term customer relationships to expand our reach in the maintenance area of the plant. By focusing on asset optimization, we would be able to optimize the design and operations of a plant taking into accountconsidering the relevant maintenance performance of process equipment so as to optimize the full asset lifecycle. Our primary growth strategy is to expand organically within our core verticals by leveraging our market leadership position and driving increased usage and product adoption of the broad capabilities in our aspenONE offerings. Additionally, we seek acquisitions to accelerate our overall growth in the design and operations of the process, and acquisitions that will begin to buildexpand our maintenance solution to deliver asset optimization. To accomplish these goals, we will pursue the following activities:

Our integrated processasset optimization software solutions are designed and developed specifically for the process industries. Customers use our solutions to improve their competitiveness and profitability by increasing throughput and productivity, reducing operating costs, enhancing capital efficiency, and decreasing working capital requirements. We have designed and developed our software applications across threefour principal business areas:

Our software applications are currently offered in twothree suites: aspenONE Engineering, and aspenONE Manufacturing and Supply Chain.Chain, and aspenONE Asset Performance Management. These suites are integrated applications that allow end users to design process manufacturing environments, forecast and simulate potential actions, monitor operational performance, predict the reliability of an asset and equipment failure, and manage planning and scheduling activities as well as collaborate across these functions and activities. The twothree suites are designed around core modules and applications that allow customers to design, manageoperate and operatemaintain their process manufacturing environments, as shown below:

Our product development activities are currently focused on strengthening the integration of our applications and adding new capabilities that address specific operational business processes in each industry. As of June 30, 2016,2017, we had a total of 456513 employees in our research and development group, which is comprised of product management, software development and quality assurance. Research and development expenses were $79.5 million in fiscal 2017, $67.2 million in fiscal 2016 and $69.6 million in fiscal 2015 and $68.4 million in fiscal 2014.2015.

We employ a value-based sales approach, offering our customers a comprehensive suite of software and services that enhance the efficiency and productivity of their engineering, manufacturing and supply chain and maintenance operations. We have increasingly focused on positioning our products as a strategic investment and therefore devote an increasing portion of our sales efforts to our customers’ senior management, including senior decision makers in manufacturing, operations, maintenance and technology. Our aspenONE solution strategy supports this value-based approach by broadening the scope of optimization across the entire enterprise andover its lifecycle, expanding the use of process models in the operations environment.environment, and enabling the use of analytics and data science to enhance equipment and process reliability. We offer a variety of training programs focused on illustrating the capabilities of our applications as well as online training built into our applications. We have implemented incentive compensation programs for our sales force to reward efforts that increase customer usage of our products. Furthermore, we believe our aspenONE licensing model enables our sales force to develop consultative sales relationships with our customers.

Historically, most of our license sales have been generated through our direct Field Sales organization. In order to market the specific functionality and other technical features of our software, our account managers work with specialized teams of technical sales personnel and product specialists organized for each sales and marketing effort. Our technical sales personnel typically have degrees in chemical engineering or related disciplines and actively consult with a customer’s plant engineers. Product specialists share their detailed knowledge of the specific features of our software solutions as they apply to the unique business processes of different vertical industries. In addition to our direct Field Sales organization, we employ an inside sales team that targets customers in certain market segments.

We have established channel relationships with select companies that we believe can help us pursue opportunities in non-core target markets. We also license our software products to universities that agree to use our products in teaching and research. We believe that students' familiarity with our products will stimulate future demand once the students enter the workplace.

We supplement our sales efforts with a variety of marketing initiatives, including industry analyst and public relations activities, campaigns to promote product usage and adoption, user group meetings and customer relationship programs. Our broad user base spans multiple verticals and geographies and these users possess a variety of skills, experience and business needs. In order to reach each of them in an effective, productive and leveraged manner we will increasingly capitalize on digital customer engagement solutions. Using webinars, digital communities, social media, videos, email and other digital means, we seek to engage our extensive user base with targeted messages intended to address the specific needs of each market, customer and user.

Our overall sales force, which consists of sales account managers, technical sales personnel, indirect-channel personnel, inside sales personnel, and marketing personnel, consisted of 445416 employees as of June 30, 2016.2017.

Software maintenance and support (“SMS”) consists primarily of providing customer technical support and access to software fixes and upgrades. Customer technical support services are provided throughout the world by our three global call centers as well as via email and through our support website. For license term arrangements entered into subsequent to our transition to a subscription-based licensing model, SMS is included with the license arrangement. For license arrangements that don’t include SMS, customers can purchase standalone SMS.

We offer professional services focused on implementation of our solution. Our professional services team primarily consists of project engineers with degrees in chemical engineering or a similar discipline, or who have significant relevant industry experience. Our employees include experts in fields such as thermophysical properties, distillation, adsorption processes, polymer processes, industrial reactor modeling, the identification of empirical models for process control or analysis, large-scale optimization, supply distribution systems modeling and scheduling methods. Our primary focus is the successful implementation and usage of our software, and in many instances, this work can be professionally performed by qualified third parties. As a result, we often compete with third-party consulting firms when bidding for professional services contracts, particularly in developed markets. We offer our services on either a time-and-material or fixed-price basis.

We offer a variety of training solutions ranging from standardized training, which can be delivered in a public forum, on-site at a customer's location or over the Internet, to customized training sessions, which can be tailored to fit customer needs. We have also introduced a wide range of online computer-based training courses offering customers on-demand training in basic and advanced features of our products directly from within the products. As of June 30, 2016,2017, we had a total of 293297 employees in our customer support, professional services and training groups.

We have two operating and reportable segments: i) subscription and software and ii) services. The subscription and software segment is engaged in the licensing of processasset optimization software solutions and associated support services. The services segment includes professional services and training.

Our markets in general are competitive, and we expect the intensity of competition in our markets to increase as existing competitors enhance and expand their product and service offerings and as new participants enter the market. Increased competition may result in price reductions, reduced profitability and loss of market share. We cannot ensure that we will be able to compete successfully against existing or future competitors. Some of our customers and companies with which we have strategic relationships also are, or may become, competitors.

Many of our current and potential competitors have greater financial, technical, marketing, service and other resources than we have. As a result, these companies may be able to offer lower prices, additional products or services, or other incentives that we cannot match or offer. These competitors may be in a stronger position to respond more quickly to new technologies and may be able to undertake more extensive marketing campaigns. We believe they also have adopted and may continue to pursue more aggressive pricing policies and make more attractive offers to potential customers, employees and strategic partners. For example, some competitors may be able to initiate relationships through sales and installations of hardware and then seek to expand their customer relationships by offering processasset optimization software at a discount. In addition, competitors with greater financial resources may make strategic acquisitions to increase their ability to gain market

We seek to develop and offer integrated suites of targeted, high-value vertical industry solutions that can be implemented with relatively limited service requirements. We believe this approach provides us with an advantage over many of our competitors that offer software products that are point solutions or are more service-based. Our key competitive differentiators include:

Our software is proprietary. Our strategy isproprietary and fundamental to our business. We rely on a combination of copyright, patent, trademark and trade secret laws in the United States and other jurisdictions, and to rely on license and confidentiality agreements and software securitytechnology measures to further protect our proprietary technology and brand. The laws of many countries in which our products are licensed may not protect our intellectual property rights to the same extent as the laws of the United States.

The laws of many countries in which our products technology, processes and know-how than on trademarks, copyrights or patents.are licensed may not protect our intellectual property rights to the same extent as the laws of the United States. While we consider our intellectual property rights to be valuable, we do not believe that our competitive position in the industry is dependent simplycan depend solely on obtaining legal protection for our software products and technology. Instead, we believe that the success of our business also depends primarily on our ability to maintain a leadership position by developing proprietarycontinuing to develop innovative software products technology, information, processes and know-how. Nevertheless, we attempttechnology.

Our proprietary rights are subject to protectrisks and uncertainties described under Item 1A. “Risk Factors” below. You should read that discussion, which is incorporated into this section by reference.

In connection with our intellectual property rights with respect to our products and development processes through trademark, copyright and patent registrations, both foreign and domestic, whenever appropriate as partacquisition of our ongoing research and development activities.

In March 1982, we entered into a System License Agreement with the Massachusetts Institute of Technology, or MIT, granting us a worldwide, perpetual non-exclusive license (with the right to sublicense) to use, reproduce, distribute and create derivative works of the computer programsprogram known as "ASPEN". The ASPEN program licensed from MIT which provides a framework for simulating the steady-state behavior of chemical processes that we utilize in the simulation engine for our Aspen Plus product. MIT agreed that we would own any derivative works and enhancements. A one-time license fee of $30,000 was paid in full. MIT has the right to terminate the agreement ifif: we breach the agreementit and do not cure the breach within 90 days after receiving a written notice from MIT; if we cease to carry on our business; or if certain bankruptcy or insolvency proceedings are commenced and not dismissed. In the event of such termination, sublicenses granted to our customers prior to termination will remain in effect.

As of June 30, 2016,2017, we had a total of 1,3961,419 full-time employees, of whom 775777 were located in the United States. None of our employees is represented by a labor union, except for one employee of our subsidiary Hyprotech UK Limited who belongs to the Prospect union for professionals. We have experienced no work stoppages and believe that our employee relations are satisfactory.

We have implemented a product strategy that unifies our software solutions under the aspenONE brand with differentiated aspenONE vertical solutions targeted at specific process industry segments.capital-intensive industries. We cannot ensure that our product strategy will result in products that will continue to meet market needs and achieve significant usage and product adoption. If we fail to increase usage and product adoption or fail to develop or acquire new software products that meet the demands of our customers or our target markets, our operating results and cash flows from operations will grow at a slower rate than we anticipate and our financial condition could suffer.

OurWe have introduced the aspenONE APM suite, and our aspenONE engineering and manufacturing and supply chain suites account for a significant majority of our revenue and will continue to do so for the foreseeable future. If we do not grow our aspenONE APM business or if demand for, or usage of, our softwareother suites declines for any reason, our operating results, cash flows from operations and financial position would suffer. Our business could be adversely affected by:

Because of the nature of their products and manufacturing processes and their global operations, companies in the process and other capital intensive industries are subject to risk of adverse or even catastrophic environmental, safety and health accidents or incidents and are often subject to changing standards and regulations worldwide.

In addition, worldwide economic downturns and pricing pressures experienced by energy, chemical, engineering and construction, and other processcapital intensive industries have led to consolidations and reorganizations. In particular, we believe that the volatility in oil prices has impacted and may continue to impact the operating levels and capital spending by certain of our customers in the engineering and construction market, which has resulted and could continue to result in less predictable and lower demand for our products and services.

Any such adverse environmental, safety or health incident, change in regulatory standards, or economic downturn that affects the processcapital-intensive industries, including continued challenges and uncertainty among customers whose business is adversely affected by volatility in oil prices, as well as general domestic and foreign economic conditions and other factors that reduce spending by companies in these industries, could harm our operating results in the future.

Our business is influenced by a range of factors that are beyond our control and difficult or impossible to predict. If the market for processasset optimization software grows more slowly than we anticipate, demand for our products and services could decline and our operating results could be impaired. Further, the state of the global economy may deteriorate in the future. Our operating results may be adversely affected by unfavorable global economic and market conditions, including significant volatility in oil prices, as well as a lessening demand for processasset optimization software generally.

Customer demand for our products is linked to the strength of the global economy. If weakness in the global economy persists, many customers, including those whose businesses are negatively impacted by lower oil prices, may delay or reduce technology purchases. This could result in reductions in sales of our products, longer sales cycles, slower adoption of new technologies, increased price competition or reduced use of our products by our customers. We will lose revenue if demand for

As of June 30, 2016,2017, we operated in 31 countries. We sell our products primarily through a direct sales force located throughout the world. In the event that we are unable to adequately staff and maintain our foreign operations, we could face difficulties managing our international operations.

Customers outside the United States accounted for the majority of our total revenue during the fiscal years ended June 30, 2017, 2016 2015 and 2014.2015. We anticipate that revenue from customers outside the United States will continue to account for a significant portion of our total revenue for the foreseeable future. Our operating results attributable to operations outside the United States are subject to additional risks, including:

During fiscal 2017, 2016 and 2015, 9.8%, 11.5% and 2014, 11.5%, 13.8% and 15.7% of our total revenue was denominated in a currency other than the U.S. dollar.dollar, respectively. In addition, certain of our operating expenses incurred outside the United States are denominated in currencies other than the U.S. dollar. Our reported revenue and operating results are subject to fluctuations in foreign exchange rates. Foreign currency risk arises primarily from the net difference between non-U.S. dollar receipts from customers outside the United States and non-U.S. dollar operating expenses for subsidiaries in foreign countries. Currently, our largest exposures to foreign exchange rates exist primarily with the Euro, Pound Sterling, Canadian dollarDollar and Japanese Yen against the U.S. dollar. During fiscal 2017, 2016 2015 and 2014,2015, we did not enter into, and were not a party to any, derivative financial instruments, such as forward currency exchange contracts, intended to manage the volatility of these market risks. We cannot predict the impact of foreign currency fluctuations, and foreign currency fluctuations in the future may adversely affect our revenue and operating results. Any hedging policies we may implement in the future may not be successful, and the cost of those hedging techniques may have a significant negative impact on our operating results.

Our markets in general are competitive and differ among our principal product areas: engineering, manufacturing, and supply chain management and asset performance management. We face challenges in selling our solutions to large companies in the process industries that have internally developed their own proprietary software solutions, and we face competition from well-established vendors to the process industries as well as new entrants in our markets. Many of our current and potential competitors have greater financial, technical, marketing, service and other resources than we have. As a result, these companies may be able to offer lower prices, additional products or services, or other incentives that we cannot match or offer. These competitors may be in a stronger position to respond more quickly to new technologies and may be able to undertake more extensive marketing campaigns. We believe they also have adopted and may continue to pursue more aggressive pricing policies and make more attractive offers to potential customers, employees and strategic partners. For example, some competitors may be able to initiate relationships through sales and installations of hardware and then seek to expand their customer relationships by offering processasset optimization software at a discount. In addition, many of our competitors have established, and may in the future continue to establish, cooperative relationships with third parties to improve their product offerings and to increase the availability of their

Competition could seriously impede our ability to sell additional software products and related services on terms favorable to us. Businesses may continue to enhance their internally developed solutions, rather than investing in commercial software such as ours. Our current and potential commercial competitors may develop and market new technologies that render our existing or future products obsolete, unmarketable or less competitive. In addition, if these competitors develop products with similar or superior functionality to our products, we may need to decrease the prices for our products in order to remain competitive. If we are unable to maintain our current pricing due to competitive pressures, our margins will be reduced and our operating results will be negatively affected. We cannot ensure that we will be able to compete successfully against current or future competitors or that competitive pressures will not materially adversely affect our business, financial condition and operating results.

Our software products are complex and may contain undetected defects or errors. We have not suffered significant harm from any defects or errors to date, but we have from time to time found defects in our products and we may discover additional defects in the future. We may not be able to detect and correct defects or errors before releasing products. Consequently, we or our customers may discover defects or errors after our products have been implemented. We have in the past issued, and may in the future need to issue, corrective releases of our products to remedy defects or errors. The occurrence of any defects or errors could result in:

In the ordinary course of business, we are, from time to time, involved in product-related lawsuits, claims, investigations, proceedings and threats of litigation. These matters include an April 2004 claim by a customer that certain of our software products and implementation services failed to meet the customer’scustomer's expectations. In March 2014, a judgment was issued by the trial court in favor of the claimant customer against us in the amount of approximately €1.91.9 million Euro (“€”) plus interest and a portion of legal fees.  We subsequently filed an appeal of that judgment.  As of JuneIn March 2016, the appellate court determined that we arewere liable for damages in the amount of approximately €1.7 million plus interest, with the possibility of additional damages to be determined in further proceedings by the appellate court. As of June 30, 2017, there has been no change to the appellate court’s determination.

The amount of damages cannot be predicted with certainty, and could materially adversely affect our results of operations, cash flows or financial position.

We cannot be certain that our software and services do not infringe patents, copyrights, trademarks or other intellectual property rights, so infringement claims might be asserted against us. In addition, we have agreed, and may agree in the future, to indemnify certain of our customers against infringement claims that third parties may assert against our customers based on use of our software or services. Such claims may have a material adverse effect on our business, may be time-consuming and may result in substantial costs and diversion of resources, including our management's attention to our business. Furthermore, a party making an infringement claim could secure a judgment that requires us to pay substantial damages and could also include an injunction or other court order that could prevent us from selling our software or require that we re-engineer some or all of our products. Claims of intellectual property infringement also might require us to enter costly royalty or license agreements. We may be unable to obtain royalty or license agreements on terms acceptable to us or at all. Our business, operating results and financial condition could be harmed significantly if any of these events were to occur, and the price of our common stock could be adversely affected.

Our software is proprietary. Our strategy is to rely on a combination of copyright, patent, trademark and trade secret laws in the United States and other jurisdictions, and to rely on license and confidentiality agreements and software security measures to further protect our proprietary technology and brand. We have obtained or applied for patent protection with respect to some of our intellectual property, but generally do not rely on patents as a principal means of protecting our intellectual property. We have registered or applied to register some of our trademarks in the United States and in selected other countries. We generally enter into non-disclosure agreements with our employees and customers, and historically have restricted third-party access to our software and source code, which we regard as proprietary information. In certain cases, we

The steps we have taken to protect our proprietary rights may not be adequate to deter misappropriation of our technology or independent development by others of technologies that are substantially equivalent or superior to our technology. Our intellectual property rights may expire or be challenged, invalidated or infringed upon by third parties or we may be unable to maintain, renew or enter into new licenses on commercially reasonable terms. Any misappropriation of our technology or development of competitive technologies could harm our business and could diminish or cause us to lose the competitive advantages associated with our proprietary technology, and could subject us to substantial costs in protecting and enforcing our intellectual property rights, and/or temporarily or permanently disrupt our sales and marketing of the affected products or services. The laws of some countries in which our products are licensed do not protect our intellectual property

We devote significant resources to continually updating our software and developing new products, and our financial performance is dependent in part upon our ability to bring new products and services to market. Our customers use our software to optimize their manufacturing processes and manage asset performance, and they rely on us to provide updates and releases as part of our software maintenance and support services, and to provide remote on-line troubleshooting support. The security of our information technology environment is therefore important to our research and development initiatives, and an important consideration in our customers’ purchasing decisions. If the security of our systems is impaired, our development initiatives might be disrupted, and we might be unable to provide service. Our customer relationships might deteriorate, our reputation in the industry could be harmed, and we could be subject to liability claims. This could reduce our revenues, and expose us to significant costs to detect, correct and avoid recurrences of any breach of security and to defend any claims against us.

In the past, following periods of volatility in the market price of a public company's securities, securities class action litigation has often been instituted against that company. This type of litigation against us could result in substantial liability and costs and divert management's attention and resources.

Section 203 of the Delaware General Corporation Law, our charter and our by-laws contain provisions that might enable our management to resist a takeover of our company. These provisions include:

None.

Our principal executive offices are located in leased facilities in Bedford, Massachusetts, consisting of approximately 143,000 square feet of office space to accommodate our product development, sales, marketing, operations, finance and administrative functions. The lease for our Bedford executive offices commenced in November 2014 and is scheduled to expire March 2025. Subject to the terms and conditions of the lease, we may extend the term of the lease for two successive terms of five years each.

We also lease approximately 63,000 square feet in Houston, Texas to accommodate sales, services and product development functions. In addition to our Bedford and Houston locations, we lease office space in Shanghai, Reading (UK), Singapore, Bahrain and Tokyo, to accommodate sales, services and product development functions.

In the remainder of our other locations, the majority of our leases have lease terms of one year or less that are generally based on the number of workstations required. We believe this facilities strategy provides us with significant flexibility to adjust to changes in our business environment. We do not own any real property. We believe that our leased facilities are adequate for our anticipated future needs.

None.

Our common stock currently trades on The NASDAQ Global Select Market under the symbol "AZPN." The closing price of our common stock on June 30, 20162017 was $40.24.$55.26. The following table sets forth, for the periods indicated, the high and low sales prices per share of our common stock as reported by The NASDAQ Global Select Market:

On August 4, 2016,3, 2017, there were 430385 holders of record of our common stock. The number of record holders does not include persons who held our common stock in nominee or "street name" accounts through brokers.

We have never declared or paid cash dividends on our common stock. We do not anticipate paying cash dividends on our common stock in the foreseeable future. We are party toDuring fiscal 2016, we entered into a credit agreement that$250.0 million Credit Agreement (the “Credit Agreement”) with various lenders, which restricts us from declaring or paying dividends in cash on our capital stock if our Leverage Ratio is in excess of 2.75 to 1.00 (refer to “Item 7. Management’sManagement's Discussion and Analysis of Financial Condition and Results of Operations-Recent Events-Acquisition Bid and Credit Agreement”Operations” and Note 9, Credit11, "Credit Agreement, of" to our Consolidated Financial Statements for further discussion of the credit agreement)Credit Agreement). Our Leverage Ratio is below 2.75 to 1.00 as of June 30, 2016.2017. Any future determination relating to our dividend policy will be made at the discretion of the Board of Directors and will depend on a number of factors, including our future earnings, capital requirements, financial condition and future prospects and such other factors as the Board of Directors may deem relevant.

As of June 30, 2016,2017, the total number of shares of common stock repurchased since November 1, 2010 under all programs approved by the Board of Directors was 21,854,01029,145,976 shares.

On January 28, 2015, our Board of Directors approved a share repurchase program for up to $450 million worth of our common stock. On April 26, 2016 and June 8, 2017, the Board of Directors approved a $400 million and $200 million increase in theour current share repurchase plan. As of June 30, 2016, the total remaining value under the share repurchase program was approximately $521.3 million.plan, respectively. Under the share repurchase program, purchases can be made from time to time using a variety of methods, which may include open market purchases, accelerated buyback programs, and others. The specific timing, price and size of purchases will depend on prevailing stock prices, general market and economic conditions, and other considerations, including the amount of cash generated in the United States and other potential uses of cash, such as acquisitions. Purchases may be made through a Rule 10b5-1 plan pursuant to predetermined metrics set forth in such plan. The Board of Directors' authorization of the share repurchase program does not obligate us to acquire any particular amount of common stock, and the program may be suspended or discontinued at any time.

The following table sets forth, for the month indicated, our purchases of common stock during the fourth quarter of fiscal 2016:2017:

The following table provides information about the securities authorized for issuance under our equity compensation plans as of June 30, 2016:2017:

Equity compensation plans approved by security holders consist of our 2010 and 2016 equity incentive plan.plans. Options issuable under the equity incentive plan have a maximum term of ten years.

The information included in this section is not deemed to be "soliciting material" or to be "filed" with the SEC or subject to Regulation 14A or 14C under the Securities Exchange Act or to the liabilities of Section 18 of the Securities Exchange Act, and will not be deemed to be incorporated by reference into any filing under the Securities Act or the Securities Exchange Act, except to the extent we specifically incorporate it by reference into such a filing.

The graph below matches the cumulative 5-year total return of holders of our common stock with the cumulative total returns of the NASDAQ Composite index and the NASDAQ Computer & Data Processing index. The graph assumes that the value of the investment in our common stock and in each of the indexes (including reinvestment of dividends) was $100 on June 30, 20112012 and tracks it through June 30, 2016.2017.

The following tables present selected consolidated financial data for Aspen Technology, Inc. The consolidated statements of operations data set forth below for fiscal 2017, 2016 2015 and 20142015 and the consolidated balance sheets data as of June 30, 2016,2017, and 2015,2016, are derived from our consolidated financial statements included beginning on page F-1 of this Form 10-K. The consolidated statements of operations data for fiscal 20132014 and 20122013 and the consolidated balance sheet data as of June 30, 2015, 2014, 2013, and 20122013 are derived from our consolidated financial statements that are not included in this Form 10-K. The data presented below should be read in conjunction with our consolidated financial statements and accompanying notes beginning on page F-1 and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations."

Our historical results should not be viewed as indicative of results expected for any future period.

You should read the following discussion in conjunction with our consolidated financial statements and related notes beginning on page F-1. In addition to historical information, this discussion contains forward-looking statements that involve risks and uncertainties. You should read “Item 1A. Risk Factors” for a discussion of important factors that could cause our actual results to differ materially from our expectations.

Our fiscal year ends on June 30, and references to a specific fiscal year are the twelve months ended June 30 of such year (for example, "fiscal 2016"2017" refers to the year ended June 30, 2016)2017).

We are a leading global providersupplier of asset optimization solutions that optimize asset design, operations and maintenance in complex, industrial environments. We combine decades of process optimizationmodeling and operations expertise with big data machine-learning and analytics. Our purpose-built software solutions designed to manage and optimize plant and process design, operational performance, and supply chain planning. Our aspenONE software and related services have been developed specifically for companies inimprove the process industries, including the energy, chemicals, and engineering and construction industries. Customers use our solutions to improve their competitiveness and profitability of our customers by increasing throughput, energy efficiency, and productivity,production, reducing operating costs,unplanned downtime, enhancing capital efficiency, and decreasing working capital requirements.requirements over the entire asset lifecycle to support operational excellence.

Our software incorporates our proprietary mathematical and empirical models of manufacturing and planning processes and reflects the deep domain expertise we have amassed from focusing on solutions for the process and other capital-intensive industries for over 35 years. We have developed our applications to design and optimize processes across three principal business areas: engineering, manufacturing and supply chain.chain, and asset performance management. We are a recognized market and technology leader in providing process optimization and asset performance management software solutions for each of these business areas.

We have established sustainable competitive advantages within our industry based on the following strengths:

We have approximately 2,100 customers globally. Our customers consistsconsist of companies engaged in the process and other capital-intensive industries such as energy, chemicals, engineering and construction, as well as consumer packaged goods,pharmaceuticals, transportation, power, metals and mining, pulp and paper, pharmaceuticals and biofuels.consumer packaged goods.

Our services and other revenue consists primarily of revenue related to professional services and training. The amount and timing of this revenue depend on a number of factors, including:

We estimate that annual spend grew by approximately 4.1% during fiscal 2017, from $441.4 million at June 30, 2016 to $459.6 million at June 30, 2017. We estimate that annual spend grew by approximately 5.3% during fiscal 2016, from $419.3 million at June 30, 2015 to $441.4 million at June 30, 2016. We estimate that annual spend grew by approximately 10.5% during fiscal 2015, from $379.5 million at June 30, 2014 to $419.3 million at June 30, 2015. The growth was attributable primarily to an increase in the number of tokens or products sold.

The following table provides a reconciliation of netGAAP cash flows provided byflow from operating activities to free cash flow for the indicated periods:

Total free cash flow decreased $58.5increased $22.1 million during fiscal 20162017 as compared to the prior fiscal year primarily due to higher net income tax payments of $65.3$22.2 million.

Excess tax benefits are related to stock-based compensation tax deductions in excess of book compensation expense and reduce our income taxes payable. We have included the impact of excess tax benefits within free cash flow to be consistent with the treatment of other tax benefits.

Total free cash flow increased $23.6decreased $58.5 million during fiscal 20152016 as compared to the prior fiscal year.

Non-GAAP operating income excludes certain non-cash and non-recurring expenses, and is used as a supplement to operating income presented on a GAAP basis. We believe that non-GAAP operating income is a useful financial measure because removing certain non-cash and other items provides additional insight into recurring profitability and cash flow from operations.

The following table presents our net income, as adjusted for stock-based compensation expense, non-capitalized acquired technology and amortization of purchased technology intangibles, and other items, such as acquisition related expenses, for the indicated periods:

Non-GAAP operating income increased $34.3$3.1 million, or approximately 17%1%, in fiscal year 20162017 as compared to the prior year primarily due to a larger base of license arrangements recognized on a ratable basis amounting to $34.8$13.1 million. Non-GAAP operating income increased $48.9$34.3 million, or approximately 33%17%, in 20152016 as compared to the prior year due to an increase in revenue primarily due to a larger base of license arrangements recognized on a ratable basis amounting to $55.1 million, partially offset by lower costs of services and other revenue amounting to $4.1$34.8 million.

In fiscal 2017, 2016 2015 and 2014,2015, we acquired technology that did not meet the accounting requirements for capitalization and therefore the cost of the acquired technology was expensed as research and development. We have excluded the expense of the acquired technology from non-GAAP operating income to be consistent with transactions where the acquired assets were capitalized.

The following table sets forth the results of operations, percentage of total revenue and the year-over-year percentage change in certain financial data for fiscal 2017, 2016 2015 and 2014:2015:

Total revenue increased by $32.0 million during fiscal 2016 as compared to the prior fiscal year. The increase was due to higher subscription and software revenue of $34.8 million, partially offset by lower services and other revenue of $2.8 million.

Total revenue recognized during fiscal 2016 included $6.1 million related to the completion of customer arrangements recognized under completed contract accounting. This amount was recognized as $5.1 million of subscription and software revenue and $1.0 million of services and other revenue. We did not have a comparable event in fiscal 2015.

The increase in subscription and software revenue during fiscal 2016 as compared to the prior fiscal year was primarily the result of a larger base of license arrangements being recognized on a ratable basis.

The subscription and software revenue for fiscal 2016 included $5.1 million related to the completion of customer arrangements recognized under completed contract accounting, as noted above. We did not have a comparable event in fiscal 2015.

Services and other revenue consists primarily of revenue related to professional services and training.

The decrease in services and other revenue of $2.8$2.5 million during fiscal 20162017 as compared to the prior fiscal year was attributable to lower professional services revenue of $1.8$1.6 million and lower training revenue of $1.0$0.8 million.

Under the aspenONE licensing model, revenue from committed professional service arrangements that are sold as a single arrangement with, or in contemplation of, a new aspenONE licensing transaction is deferred and recognized on a ratable basis over the longer of (a) the period the services are performed or (b) the term of the related software arrangement. As our typical contract term approximates five years, professional services revenue on these types of arrangements will usually be recognized over a longer period than the period over which the services are performed. Revenue from professional service arrangements bundled with and recognized over the term of aspenONE transactions was consistent year-over-year.

The decrease in services and other revenue of $6.2$2.8 million during fiscal 20152016 as compared to the prior fiscal year was attributable to lower professional services revenue of $5.1$1.8 million and lower training revenue of $1.1$1.0 million.

The year-over-year decrease in professionalProfessional services revenue of $5.1during fiscal 2016 included $1.0 million was attributablerelated to the recognition,completion of customer arrangements recognized under completed contract accounting, as noted above. We did not have a comparable event in fiscal 2014, of $2.7 million of previously deferred professional services revenue on the significant customer arrangement noted above, combined with lower levels of professional service activity in fiscal year 2015.

Cost of subscription and software revenue decreasedincreased by $0.8$0.7 million during fiscal 20162017 as compared with the prior fiscal year and increaseddecreased by $0.8 million during fiscal year 20152016 as compared with the prior fiscal year. Subscription and software gross profit margin was 95.4% in fiscal 20162017 and increased fromwas consistent with 95.4% and 94.8% and 94.3% in fiscal years 2016 and 2015, and 2014 respectively. Subscription and software gross margins increased due to revenue growth exceeding increases in cost of revenue over the periods shown.

Cost of services and other revenue includes the cost of providing professional services and training.

Cost of services and other revenue decreased by $0.2 million during fiscal 2016 as compared to the prior fiscal year. The decrease was due to lower cost of professional services revenue of $0.4 million, slightly offset by higher cost of training revenue of $0.2 million.

The year-over-year decrease of $0.4 million in cost of professional services revenue is attributable to lower costs of revenue of $0.9 million related to lower professional service business activity during fiscal year 2016, partially offset by higher cost of revenue of $0.5 million related to projects accounted for under the completed contract method.

Gross profit margin on services and other revenue decreased from 18.3% during fiscal 2015 to 11.6% during fiscal 2016 primarily due to lower services and other revenue and flat costs.

Gross profit increased by $4.1$11.7 million during fiscal 20152017 as compared to the prior fiscal year.year and gross profit margin remained consistent at 90.1% in fiscal 2017 compared to 89.7% in fiscal 2016. The decreaseyear-to-year increase in gross profit was due to lower cost of professional services revenue of $4.3 million, slightly offset by higher cost of training revenue of $0.2 million.

Gross profit increased by $32.9 million during fiscal 2016 as compared to the prior fiscal year and gross profit margin increased to 89.7% in fiscal 2016 from 88.7% in fiscal 2015. The year-to-year increase in gross profit and gross margin was primarily attributable to the growth of our subscription and software revenue, as well as decreases in costs of subscription and software revenue.

The year-over-year decrease in selling and marketing expense in fiscal 2016 as compared to the prior fiscal year was primarily the result of lower commissions expense of $5.6 million, partially offset by higher compensation costs of $2.0 million, higher stock-based compensation of $1.3 million and higher overhead allocations of $1.1 million.

Overhead allocations consist of information systems costs, facility costs and certain benefit costs. The overhead expenses are allocated to departments based on relative headcount, geographic location and total salary.

The year-over-year decrease in sellingResearch and marketing expense indevelopment expenses increased by approximately $12.4 million during fiscal 20152017 as compared to the prior fiscal year, which was primarily the result of lowerdue to acquisitions and hiring related to our new asset performance management suite. The increase resulted primarily from higher compensation expense of $1.7 million, lower severance costs of $0.7$5.2 million lower third-party commissionsrelated to an increase in headcount, higher stock-based compensation of $0.6$2.4 million, and lower net other costs of $1.3 million. These lower expense items were partially offset by higher overhead allocations of $1.5$1.9 million, as well as higher costs of acquired technology of $1.9 million and higher marketing costsprofessional fees of $0.7$1.0 million.

In fiscal 2017 and 2016, we acquired technology in two separate transactions for $2.3 million relatedand $0.3 million, respectively. At the time we acquired the technology, the projects to our global customer conference held in fiscal 2015. We typically host our global customer conference every other fiscal year.

Research and development expenses decreased by approximately $2.4 million during fiscal 2016 as compared to the prior fiscal year. The decrease resulted primarily from lower costs of acquired technology of $3.0 million and lower stock-based compensation of $0.5 million, partially offset by higher compensation costs of $0.6 million and higher overhead allocations of $0.4 million.

In fiscal 2016 and 2015, we acquired technology in two separate transactions for $0.3 million and $3.3 million, respectively. At the time we acquired the technology, the projects to develop commercially available products did not meet the accounting definition of having reached technological feasibility and therefore the cost of the acquired technology was expensed as a research and development expense.

The year-over-year increase in general and administrative expense during fiscal 2016 as compared to the prior fiscal year was primarily attributable to the Acquisition Bid costs of $5.2 million, higher compensation expense of $0.9 million, higher bad debt expense of $0.8 million and a benefit in fiscal 2015 of $0.9 million associated with the collection of a business tax refund. These increases were partially offset by lower legal and litigation related expenses of $2.2 million and lower consulting costs of $1.0 million.

The year-over-year increase in general and administrative expenseinterest income during fiscal 20152017 as compared to the prior fiscal year was primarily attributable to a higher consulting and contractor costslevel of $1.2 million, higher allocation costs of $1.0 million, higher stock-based compensation expense of $1.0 million, and higher compensation costs of $0.8 million. These increases were partially offset by a $0.9 million business tax refund and lower other net costs of $0.1 million.

The year-over-year decrease in interest income during fiscal 2016 as compared to the prior fiscal year was attributable to a lower level of interest income from investments.

The year-over-year increase in interest expense during fiscal 2016 as compared to the prior fiscal year was primarily attributable to interest expenses related to ourthe Credit Agreement.

Other income (expense), net is comprised primarily of unrealized and realized foreign currency exchange gains and losses generated from the settlement and remeasurement of transactions denominated in currencies other than the functional currency of our operating units. Other income (expense), net also includes miscellaneous non-operating gains and losses.

During fiscal 2017, other income, net was comprised of a $0.7 million litigation related recovery receipt and other net currency gains. During fiscal 2016, other income, (expense), net was less than $0.1 million of net currency gains, which was comprised primarily of $(3.4)$3.4 million of foreign currency exchange losses related to the Acquisition Bid, offset by $3.5 million of net currency gains. During fiscal 2015, and 2014, other income (expense),expense, net was $(0.8)$0.8 million, and $(2.3) million, respectively, which was comprised primarily of net currency losses.