PTC Announces Q1 Results; Provides Q2 and Updated FY'14 Outlook
Highlights
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Q1 Results:
-
Revenue of
$325 million , up 1% year over year on non-GAAP Q1'13 revenue and up 2% on a constant currency basis -
Non-GAAP EPS of
$0.50 , up 37% year over year and on a constant currency basis - Non-GAAP operating margin of 25.3%, up 700 basis points year over year and on a constant currency basis
-
GAAP operating margin of 16.9% and GAAP EPS of
$0.33 , including a$1 million restructuring charge related to actions announced in Q4'13 -
Q1 revenue contribution from acquired businesses Enigma (acquired
on
July 11, 2013 ) and NetIDEAS (acquired onSeptember 5, 2013 ) was$2 million
-
Revenue of
-
Q2 Guidance:
-
Revenue of
$320 to$330 million and non-GAAP EPS of$0.43 to$0.48 -
License revenue of
$75 to$90 million -
GAAP EPS of
$0.28 to$0.33 (excluding acquisition accounting for the ThingWorx transaction) -
Assumes
$1.36 USD / EURO and104 YEN / USD
-
Revenue of
-
FY'14 Guidance:
-
Revenue of
$1,330 to$1,345 million and non-GAAP EPS of$2.03 to$2.13 -
License revenue of
$355 to$370 million - Non-GAAP operating margin of approximately 25%
-
GAAP EPS of
$1.38 to$1.48 and GAAP operating margin of approximately 18% (excluding acquisition accounting for the ThingWorx transaction) -
Assumes
$1.36 USD / EURO and104 YEN / USD
-
Revenue of
The Q1 non-GAAP results exclude
Results Commentary
Heppelmann added, "CAD license revenue grew 15% year over year on a
constant currency and reported basis while total CAD revenue was up 4%
on a constant currency basis and 3% on a reported basis. Our extended
PLM business was up 1% year over year on a constant currency and
reported basis compared to very strong performance in Q1'13, which
included a mega deal. Our SLM business saw a 4% constant currency and
reported revenue decline versus the year-ago period. Keep in mind that
the
Outlook Commentary
"Based on the strength of our pipeline, an expanding set of impact solutions that address key customer challenges, and our ability to address future growth opportunities in the smart, connected product space through our recent acquisition of ThingWorx, we are very excited about the longer-term growth opportunity for PTC. With strong Q1 results, we remain comfortable with our 25% non-GAAP operating margin target for FY'14. Furthermore, we are committed to driving non-GAAP margin expansion toward our FY'17 target range of 28% to 30%," said Heppelmann.
Glidden added, "For Q2'14, we are providing guidance of
The Q2 guidance assumes
Glidden continued, "Given our Q1 performance and the inclusion of
revenue from ThingWorx this fiscal year, we are now targeting FY'14
revenue of
The FY'14 targets assume a non-GAAP tax rate of 25%, a GAAP tax rate of
25% and 121 million diluted shares outstanding. The FY'14 non-GAAP
guidance excludes
Q1 Earnings Conference Call and Webcast
Prepared remarks for the conference call have been posted to the investor relations section of our website. The prepared remarks will not be read live; the call will be primarily Q&A.
What: |
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When: |
Thursday, January 23rd, 2014 at |
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Dial-in: |
1-800-857-5592 or 1-773-799-3757
Call Leader: Passcode: PTC |
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Webcast: | |||
Replay: |
The audio replay of this event will be archived for public replay
until Dial-in: 800-835-4112 Passcode: 8821 To access the replay via webcast, please visit www.ptc.com/for/investors.htm. |
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Important Information About Non-GAAP References
PTC provides non-GAAP supplemental information to its financial results.
Non-GAAP revenue, operating expenses, margin and EPS exclude the effect
of purchase accounting on the fair value of acquired deferred revenue of
Forward-Looking Statements
Statements in this press release that are not historic facts, including
statements about our fiscal 2014 and other future financial and growth
expectations and anticipated tax rates, are forward-looking statements
that involve risks and uncertainties that could cause actual results to
differ materially from those projected. These risks include the
possibility that the macroeconomic climate may not improve or may
deteriorate, the possibility that customers may not purchase or adopt
our solutions when or at the rates we expect and that our pipeline deals
may not convert as we expect, the possibility foreign currency exchange
rates may vary from our expectations and thereby affect our reported
revenue and expense, the possibility that we may not achieve the
license, services or support growth rates that we expect, which could
result in a different mix of revenue between license, service and
support and could impact our EPS results, the possibility that we may be
unable to improve services margins as we expect, the possibility that we
may be unable to improve sales productivity as we expect, the
possibility that our CAD and SLM businesses and the ThingWorx business
may not expand and/or generate the revenue we expect, the possibility
that resource constraints and personnel reductions could adversely
affect our revenue, and the possibility that remedial actions relating
to our previously announced investigation in
PTC, the PTC logo, and all other PTC product names and logos are
trademarks or registered trademarks of
About PTC
PTC (Nasdaq: PTC) enables manufacturers to achieve sustained product and service advantage. The company's technology solutions help customers transform the way they create and service products across the entire product lifecycle - from conception and design to sourcing and service. Founded in 1985, PTC employs nearly 6,000 professionals serving more than 27,000 businesses in rapidly-evolving, globally distributed manufacturing industries worldwide. Get more information at www.ptc.com.
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UNAUDITED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||
(in thousands, except per share data) | ||||||||||||||
Three Months Ended | ||||||||||||||
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2013 | 2012 | |||||||||||||
Revenue: | ||||||||||||||
License | $ | 79,192 | $ | 79,185 | ||||||||||
Service | 75,591 | 76,760 | ||||||||||||
Support | 170,142 | 163,806 | ||||||||||||
Total revenue | 324,925 | 319,751 | ||||||||||||
Cost of revenue: | ||||||||||||||
Cost of license revenue (1) | 7,545 | 8,012 | ||||||||||||
Cost of service revenue (1) | 65,495 | 68,592 | ||||||||||||
Cost of support revenue (1) | 19,916 | 20,468 | ||||||||||||
Total cost of revenue | 92,956 | 97,072 | ||||||||||||
Gross margin | 231,969 | 222,679 | ||||||||||||
Operating expenses: | ||||||||||||||
Sales and marketing (1) | 84,238 | 93,549 | ||||||||||||
Research and development (1) | 53,073 | 57,429 | ||||||||||||
General and administrative (1) | 30,931 | 35,817 | ||||||||||||
Amortization of acquired intangible assets | 7,789 | 6,623 | ||||||||||||
Restructuring charges | 1,067 | 15,402 | ||||||||||||
Total operating expenses | 177,098 | 208,820 | ||||||||||||
Operating income | 54,871 | 13,859 | ||||||||||||
Other expense, net | (1,753 | ) | (1,805 | ) | ||||||||||
Income before income taxes | 53,118 | 12,054 | ||||||||||||
Provision (benefit) for income taxes | 13,461 | (23,757 | ) | |||||||||||
Net income | $ | 39,657 | $ | 35,811 | ||||||||||
Earnings per share: | ||||||||||||||
Basic | $ | 0.33 | $ | 0.30 | ||||||||||
Weighted average shares outstanding | 118,933 | 119,927 | ||||||||||||
Diluted | $ | 0.33 | $ | 0.29 | ||||||||||
Weighted average shares outstanding | 121,100 | 121,805 | ||||||||||||
(1) | The amounts in the tables above include stock-based compensation as follows: | |||||||||||||
Three Months Ended | ||||||||||||||
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2013 | 2012 | |||||||||||||
Cost of license revenue | $ | 4 | $ | 5 | ||||||||||
Cost of service revenue | 1,598 | 1,612 | ||||||||||||
Cost of support revenue | 924 | 826 | ||||||||||||
Sales and marketing | 2,499 | 2,458 | ||||||||||||
Research and development | 2,689 | 2,512 | ||||||||||||
General and administrative | 5,050 | 4,480 | ||||||||||||
Total stock-based compensation | $ | 12,764 | $ | 11,893 | ||||||||||
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NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (UNAUDITED) | ||||||||||||||
(in thousands, except per share data) | ||||||||||||||
Three Months Ended | ||||||||||||||
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2013 | 2012 | |||||||||||||
GAAP revenue | $ | 324,925 | $ | 319,751 | ||||||||||
Fair value of acquired company's deferred support revenue | - | 1,554 | ||||||||||||
Non-GAAP revenue | $ | 324,925 | $ | 321,305 | ||||||||||
GAAP gross margin | $ | 231,969 | $ | 222,679 | ||||||||||
Fair value of acquired company's deferred support revenue | - | 1,554 | ||||||||||||
Stock-based compensation | 2,526 | 2,443 | ||||||||||||
Amortization of acquired intangible assets included in cost of license revenue | 4,405 | 4,639 | ||||||||||||
Amortization of acquired intangible assets included in cost of service revenue | 92 | - | ||||||||||||
Non-GAAP gross margin | $ | 238,992 | $ | 231,315 | ||||||||||
GAAP operating income | $ | 54,871 | $ | 13,859 | ||||||||||
Fair value of acquired company's deferred support revenue | - | 1,554 | ||||||||||||
Stock-based compensation | 12,764 | 11,893 | ||||||||||||
Amortization of acquired intangible assets included in cost of license revenue | 4,405 | 4,639 | ||||||||||||
Amortization of acquired intangible assets included in cost of service revenue | 92 | - | ||||||||||||
Amortization of acquired intangible assets | 7,789 | 6,623 | ||||||||||||
Acquisition-related charges included in general and administrative expenses | 1,305 | 4,599 | ||||||||||||
Restructuring charges | 1,067 | 15,402 | ||||||||||||
Non-GAAP operating income (2) | $ | 82,293 | $ | 58,569 | ||||||||||
GAAP net income | $ | 39,657 | $ | 35,811 | ||||||||||
Fair value of acquired company's deferred support revenue | - | 1,554 | ||||||||||||
Stock-based compensation | 12,764 | 11,893 | ||||||||||||
Amortization of acquired intangible assets included in cost of license revenue | 4,405 | 4,639 | ||||||||||||
Amortization of acquired intangible assets included in cost of service revenue | 92 | - | ||||||||||||
Amortization of acquired intangible assets | 7,789 | 6,623 | ||||||||||||
Acquisition-related charges included in general and administrative expenses | 1,305 | 4,599 | ||||||||||||
Restructuring charges | 1,067 | 15,402 | ||||||||||||
Income tax adjustments (3) | (6,858 | ) | (36,400 | ) | ||||||||||
Non-GAAP net income | $ | 60,221 | $ | 44,121 | ||||||||||
GAAP diluted earnings per share | $ | 0.33 | $ | 0.29 | ||||||||||
Fair value of deferred support revenue | - | 0.01 | ||||||||||||
Stock-based compensation | 0.11 | 0.10 | ||||||||||||
Amortization of acquired intangibles | 0.10 | 0.09 | ||||||||||||
Acquisition-related charges | 0.01 | 0.04 | ||||||||||||
Restructuring charges and other | 0.01 | 0.13 | ||||||||||||
Income tax adjustments | (0.06 | ) | (0.30 | ) | ||||||||||
Non-GAAP diluted earnings per share | $ | 0.50 | $ | 0.36 | ||||||||||
(2) | Operating margin impact of non-GAAP adjustments: | |||||||||||||
Three Months Ended | ||||||||||||||
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2013 | 2012 | |||||||||||||
GAAP operating margin | 16.9 | % | 4.3 | % | ||||||||||
Fair value of deferred support revenue | 0.0 | % | 0.5 | % | ||||||||||
Stock-based compensation | 3.9 | % | 3.7 | % | ||||||||||
Amortization of acquired intangibles | 3.8 | % | 3.5 | % | ||||||||||
Acquisition-related charges | 0.4 | % | 1.4 | % | ||||||||||
Restructuring charges | 0.3 | % | 4.8 | % | ||||||||||
Non-GAAP operating margin | 25.3 | % | 18.2 | % | ||||||||||
(3) |
Income tax adjustments for the first quarter of 2014 and 2013
reflect the tax effects of non-GAAP adjustments which are calculated
by applying the applicable tax rate by jurisdiction to the non-GAAP
adjustments listed above, and also include any identified tax items.
In the fourth quarter of 2012, a valuation allowance was established
against our U.S. net deferred tax assets. As the U.S. is profitable
on a non-GAAP basis, the 2014 and 2013 non-GAAP tax provision is
being calculated assuming there is no U.S. valuation allowance. The
first quarter of 2013 also includes a non-cash tax benefit of |
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UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(in thousands) | ||||||||
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2013 | 2013 | |||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 371,377 | $ | 241,913 | ||||
Accounts receivable, net | 212,570 | 229,106 | ||||||
Property and equipment, net | 63,152 | 64,652 | ||||||
Goodwill and acquired intangible assets, net | 1,029,422 | 1,042,216 | ||||||
Other assets | 228,221 | 251,019 | ||||||
Total assets | $ | 1,904,742 | $ | 1,828,906 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Deferred revenue | $ | 301,488 | $ | 336,913 | ||||
Borrowings under credit facility | 368,125 | 258,125 | ||||||
Other liabilities | 266,481 | 307,388 | ||||||
Stockholders' equity | 968,648 | 926,480 | ||||||
Total liabilities and stockholders' equity | $ | 1,904,742 | $ | 1,828,906 | ||||
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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
(in thousands) | ||||||||||||
Three Months Ended | ||||||||||||
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2013 | 2012 | |||||||||||
Cash flows from operating activities: | ||||||||||||
Net income | $ | 39,657 | $ | 35,811 | ||||||||
Stock-based compensation | 12,764 | 11,893 | ||||||||||
Depreciation and amortization | 19,100 | 19,477 | ||||||||||
Accounts receivable | 19,273 | 16,142 | ||||||||||
Accounts payable and accruals | (42,862 | ) | (27,958 | ) | ||||||||
Deferred revenue | (10,827 | ) | (3,534 | ) | ||||||||
Income taxes | 7,393 | (33,779 | ) | |||||||||
Excess tax benefits from stock-based awards | (6,802 | ) | (28 | ) | ||||||||
Other | (1,454 | ) | (4,388 | ) | ||||||||
Net cash provided by operating activities (4) | 36,242 | 13,636 | ||||||||||
Capital expenditures | (5,774 | ) | (7,393 | ) | ||||||||
Acquisitions of businesses, net of cash acquired (5) | - | (222,423 | ) | |||||||||
Proceeds (payments) on debt, net acquired (6) | 110,000 | (1,875 | ) | |||||||||
Proceeds from issuance of common stock | 351 | 645 | ||||||||||
Payments of withholding taxes in connection with | ||||||||||||
vesting of stock-based awards | (19,363 | ) | (9,348 | ) | ||||||||
Repurchases of common stock | - | (15,792 | ) | |||||||||
Excess tax benefits from stock-based awards | 6,802 | 28 | ||||||||||
Foreign exchange impact on cash | 1,206 | 1,371 | ||||||||||
Net change in cash and cash equivalents | 129,464 | (241,151 | ) | |||||||||
Cash and cash equivalents, beginning of period | 241,913 | 489,543 | ||||||||||
Cash and cash equivalents, end of period | $ | 371,377 | $ | 248,392 | ||||||||
(4) |
The first quarter of 2014 includes |
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(5) |
We acquired |
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(6) |
We borrowed |
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PTC Investor Relations
jhillier@ptc.com
Source: PTC
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