PTC Announces Q3 Results; Provides Q4 and Updated FY'14 Outlook
Highlights
-
Q3 Results:
-
Revenue of
$337 million , up 7% over Q3'13 non-GAAP revenue and up 5% on a constant currency basis -
Non-GAAP EPS of
$0.53 , up 19% year over year and up 14% year over year on a constant currency basis - Non-GAAP operating margin of 24.2%, up 200 basis points year over year and up 130 basis points year over year on a constant currency basis
-
GAAP operating margin of 16.2% and GAAP EPS of
$0.32 -
Q3 revenue contribution from acquired businesses Enigma (acquired
on
July 11, 2013 ), NetIDEAS (acquired onSeptember 5, 2013 ), andThingWorx (acquired onDecember 30, 2013 ) was$3 million
-
Revenue of
-
Q4 Guidance:
-
Revenue of
$340 to$355 million and non-GAAP EPS of$0.59 to$0.63 -
License revenue of
$95 to$110 million -
GAAP EPS of
$0.39 to$0.43 (excluding the pendingAxeda transaction and acquisition accounting for Atego) -
Assumes
$1.35 USD / EURO and101 YEN / USD
-
Revenue of
-
FY'14 Guidance:
-
Revenue of
$1,330 to$1,345 million and non-GAAP EPS of$2.10 to$2.14 -
License revenue of
$352 to$367 million - Non-GAAP operating margin of approximately 25%
-
GAAP EPS of
$1.40 to$1.44 and GAAP operating margin of approximately 17% (excluding the pendingAxeda transaction and acquisition accounting for Atego)
-
Revenue of
The Q3 non-GAAP results exclude
Results Commentary
Heppelmann added, "We saw strong growth in our core CAD and PLM
businesses. CAD license revenue grew 26% year over year on a constant
currency basis driven by large deals, new seats, and sales of modules
and upgrades associated with our Creo® platform. Extended PLM
license revenue was up 7% year over year on a constant currency basis.
License revenue for our SLM business (which includes Enigma and
Heppelmann continued, "We had 33 large deals (recognized license +
services revenue of more than
Outlook Commentary
"We are encouraged by a macroeconomic environment that appears healthier
now than it was a year ago at this time; however, we continue to see a
somewhat uncertain pace of recovery in the global manufacturing
industry, with specific concerns in
Glidden remarked, "For Q4'14, we are providing guidance of
The Q4 guidance assumes
Glidden continued, "We are targeting FY'14 revenue of
The FY'14 targets assume a tax rate of 23%, and 120 million diluted
shares outstanding. The FY'14 non-GAAP guidance excludes
Preliminary Directional Color on FY'15
"We are in the midst of our annual planning process, and will be
providing formal FY'15 guidance in conjunction with our Q4 earnings
release later this year. However, we wanted to provide some directional
insight into our next fiscal year. Assuming a stable macroeconomic
environment and no significant currency fluctuations, we are currently
targeting non-GAAP EPS growth in the low to mid teens, with total
revenue growth in the low to mid single digit range, including Atego and
Q3 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: | PTC Fiscal Q3 FY'14 Conference Call and Webcast | |
When: |
|
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Dial-in: | 1-800-857-5592 or 1-773-799-3757 | |
Call Leader: |
||
Passcode: PTC | ||
Webcast: | ||
Replay: |
The audio replay of this event will be archived for public replay
until |
|
Dial-in: 1-888-566-0650 Passcode: 8672 | ||
To access the replay via webcast, please visit www.ptc.com/for/investors.htm. |
||
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 that 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 businesses, including the SLM business and the
PTC, the PTC logo,
About PTC
PTC (Nasdaq: PTC) enables manufacturers to achieve sustained product and service advantage. PTC's technology solutions help customers transform the way they create, operate and service products for a smart, connected, world. Founded in 1985, PTC employs approximately 6,000 professionals serving more than 28,000 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 | Nine Months Ended | ||||||||||||||||
|
June, 29 |
|
June, 29 | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Revenue: | |||||||||||||||||
License | $ | 92,707 | $ | 79,902 | $ | 257,118 | $ | 238,777 | |||||||||
Service | 70,187 | 72,540 | 222,942 | 222,384 | |||||||||||||
Support | 173,740 | 162,554 | 510,199 | 487,535 | |||||||||||||
Total revenue | 336,634 | 314,996 | 990,259 | 948,696 | |||||||||||||
Cost of revenue: | |||||||||||||||||
Cost of license revenue (1) | 7,831 | 8,431 | 23,348 | 24,734 | |||||||||||||
Cost of service revenue (1) | 61,910 | 62,941 | 191,666 | 196,083 | |||||||||||||
Cost of support revenue (1) | 21,335 | 19,796 | 62,815 | 60,693 | |||||||||||||
Total cost of revenue | 91,076 | 91,168 | 277,829 | 281,510 | |||||||||||||
Gross margin | 245,558 | 223,828 | 712,430 | 667,186 | |||||||||||||
Operating expenses: | |||||||||||||||||
Sales and marketing (1) | 91,440 | 88,298 | 261,612 | 269,906 | |||||||||||||
Research and development (1) | 57,405 | 53,834 | 166,109 | 166,791 | |||||||||||||
General and administrative (1) | 33,817 | 28,812 | 98,888 | 98,027 | |||||||||||||
Amortization of acquired intangible assets | 7,998 | 6,532 | 23,772 | 19,795 | |||||||||||||
Restructuring charges | 514 | 3,137 | 1,581 | 34,349 | |||||||||||||
Total operating expenses | 191,174 | 180,613 | 551,962 | 588,868 | |||||||||||||
Operating income | 54,384 | 43,215 | 160,468 | 78,318 | |||||||||||||
Other income (expense), net | (2,278 | ) | 3,181 | (6,724 | ) | (491 | ) | ||||||||||
Income before income taxes | 52,106 | 46,396 | 153,744 | 77,827 | |||||||||||||
Provision (benefit) for income taxes | 14,080 | 11,941 | 32,305 | (9,476 | ) | ||||||||||||
Net income | $ | 38,026 | $ | 34,455 | $ | 121,439 | $ | 87,303 | |||||||||
Earnings per share: | |||||||||||||||||
Basic | $ | 0.32 | $ | 0.29 | $ | 1.02 | $ | 0.73 | |||||||||
Weighted average shares outstanding | 118,328 | 119,440 | 118,753 | 119,628 | |||||||||||||
Diluted | $ | 0.32 | $ | 0.29 | $ | 1.01 | $ | 0.72 | |||||||||
Weighted average shares outstanding | 119,901 | 120,828 | 120,573 | 121,234 | |||||||||||||
(1) | The amounts in the tables above include stock-based compensation as follows: | ||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
|
June, 29 |
|
June, 29 | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Cost of license revenue | $ | 4 | $ | 4 | $ | 13 | $ | 17 | |||||||||
Cost of service revenue | 1,608 | 1,372 | 4,632 | 4,404 | |||||||||||||
Cost of support revenue | 898 | 722 | 2,711 | 2,383 | |||||||||||||
Sales and marketing | 3,065 | 2,693 | 8,583 | 7,986 | |||||||||||||
Research and development | 2,231 | 2,139 | 7,067 | 6,475 | |||||||||||||
General and administrative | 4,726 | 4,247 | 14,856 | 13,615 | |||||||||||||
Total stock-based compensation | $ | 12,532 | $ | 11,177 | $ | 37,862 | $ | 34,880 | |||||||||
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||||||||||||||||||
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (UNAUDITED) | ||||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||
|
June, 29 |
|
June, 29 | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||
GAAP revenue | $ | 336,634 | $ | 314,996 | $ | 990,259 | $ | 948,696 | ||||||||||
Fair value of acquired company's | ||||||||||||||||||
deferred support revenue | - | 534 | - | 2,748 | ||||||||||||||
Non-GAAP revenue | $ | 336,634 | $ | 315,530 | $ | 990,259 | $ | 951,444 | ||||||||||
GAAP gross margin | $ | 245,558 | $ | 223,828 | $ | 712,430 | $ | 667,186 | ||||||||||
Fair value of acquired company's | ||||||||||||||||||
deferred support revenue | - | 534 | - | 2,748 | ||||||||||||||
Stock-based compensation | 2,510 | 2,098 | 7,356 | 6,804 | ||||||||||||||
Amortization of acquired intangible assets | ||||||||||||||||||
included in cost of license revenue | 4,323 | 4,598 | 13,044 | 13,865 | ||||||||||||||
Amortization of acquired intangible assets | ||||||||||||||||||
included in cost of service revenue | 92 | - | 275 | - | ||||||||||||||
Non-GAAP gross margin | $ | 252,483 | $ | 231,058 | $ | 733,105 | $ | 690,603 | ||||||||||
GAAP operating income | $ | 54,384 | $ | 43,215 | $ | 160,468 | $ | 78,318 | ||||||||||
Fair value of acquired company's | ||||||||||||||||||
deferred support revenue | - | 534 | - | 2,748 | ||||||||||||||
Stock-based compensation | 12,532 | 11,177 | 37,862 | 34,880 | ||||||||||||||
Amortization of acquired intangible assets | ||||||||||||||||||
included in cost of license revenue | 4,323 | 4,598 | 13,044 | 13,865 | ||||||||||||||
Amortization of acquired intangible assets | ||||||||||||||||||
included in cost of service revenue | 92 | - | 275 | - | ||||||||||||||
Amortization of acquired intangible assets | 7,998 | 6,532 | 23,772 | 19,795 | ||||||||||||||
Charges included in general and administrative expenses (3) | 1,528 | 900 | 6,768 | 7,609 | ||||||||||||||
Restructuring charges | 514 | 3,137 | 1,581 | 34,349 | ||||||||||||||
Non-GAAP operating income (2) | $ | 81,371 | $ | 70,093 | $ | 243,770 | $ | 191,564 | ||||||||||
GAAP net income | $ | 38,026 | $ | 34,455 | $ | 121,439 | $ | 87,303 | ||||||||||
Fair value of acquired company's | ||||||||||||||||||
deferred support revenue | - | 534 | - | 2,748 | ||||||||||||||
Stock-based compensation | 12,532 | 11,177 | 37,862 | 34,880 | ||||||||||||||
Amortization of acquired intangible assets | ||||||||||||||||||
included in cost of license revenue | 4,323 | 4,598 | 13,044 | 13,865 | ||||||||||||||
Amortization of acquired intangible assets | ||||||||||||||||||
included in cost of service revenue | 92 | - | 275 | - | ||||||||||||||
Amortization of acquired intangible assets | 7,998 | 6,532 | 23,772 | 19,795 | ||||||||||||||
Charges included in general and administrative expenses (3) | 1,528 | 900 | 6,768 | 7,609 | ||||||||||||||
Restructuring charges | 514 | 3,137 | 1,581 | 34,349 | ||||||||||||||
Non-operating one-time gain (4) | - | (5,123 | ) | - | (5,123 | ) | ||||||||||||
Income tax adjustments (5) | (1,275 | ) | (2,303 | ) | (23,088 | ) | (47,844 | ) | ||||||||||
Non-GAAP net income | $ | 63,738 | $ | 53,907 | $ | 181,653 | $ | 147,582 | ||||||||||
GAAP diluted earnings per share | $ | 0.32 | $ | 0.29 | $ | 1.01 | $ | 0.72 | ||||||||||
Fair value of acquired deferred support revenue | - | - | - | 0.02 | ||||||||||||||
Stock-based compensation | 0.10 | 0.09 | 0.31 | 0.29 | ||||||||||||||
Amortization of acquired intangibles | 0.10 | 0.09 | 0.31 | 0.28 | ||||||||||||||
Charges included in general and administrative expenses (3) | 0.01 | 0.01 | 0.06 | 0.06 | ||||||||||||||
Restructuring charges | - | 0.03 | 0.01 | 0.28 | ||||||||||||||
Non-operating one-time gain (4) | - | (0.04 | ) | - | (0.04 | ) | ||||||||||||
Income tax adjustments (5) | (0.01 | ) | (0.02 | ) | (0.19 | ) | (0.39 | ) | ||||||||||
Non-GAAP diluted earnings per share | $ | 0.53 | $ | 0.45 | $ | 1.51 | $ | 1.22 | ||||||||||
(2) | Operating margin impact of non-GAAP adjustments: | |||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||
|
June, 29 |
|
June, 29 | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||
GAAP operating margin | 16.2 | % | 13.7 | % | 16.2 | % | 8.3 | % | ||||||||||
Fair value of acquired deferred support revenue | 0.0 | % | 0.2 | % | 0.0 | % | 0.3 | % | ||||||||||
Stock-based compensation | 3.7 | % | 3.5 | % | 3.8 | % | 3.7 | % | ||||||||||
Amortization of acquired intangibles | 3.7 | % | 3.5 | % | 3.7 | % | 3.5 | % | ||||||||||
Charges included in general and administrative expenses (3) | 0.5 | % | 0.3 | % | 0.7 | % | 0.8 | % | ||||||||||
Restructuring charges | 0.2 | % | 1.0 | % | 0.2 | % | 3.6 | % | ||||||||||
Non-GAAP operating margin | 24.2 | % | 22.2 | % | 24.6 | % | 20.1 | % | ||||||||||
(3) Represents acquisition-related charges and costs related to
terminating a U.S. pension plan of
(4) The third quarter of 2013 includes a legal settlement gain of
(5) Income tax adjustments for the three and nine months ended
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UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
(in thousands) | ||||||
|
|
|||||
2014 | 2013 | |||||
ASSETS | ||||||
Cash and cash equivalents | $ | 304,173 | $ | 241,913 | ||
Accounts receivable, net | 228,623 | 229,106 | ||||
Property and equipment, net | 63,582 | 64,652 | ||||
Goodwill and acquired intangible assets, net | 1,138,784 | 1,042,216 | ||||
Other assets | 223,044 | 251,019 | ||||
Total assets | $ | 1,958,206 | $ | 1,828,906 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Deferred revenue | $ | 371,890 | $ | 336,913 | ||
Borrowings under credit facility | 315,000 | 258,125 | ||||
Other liabilities | 298,847 | 307,388 | ||||
Stockholders' equity | 972,469 | 926,480 | ||||
Total liabilities and stockholders' equity | $ | 1,958,206 | $ | 1,828,906 | ||
|
|||||||||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||||
(in thousands) | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
|
June, 29 |
|
June, 29 | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Cash flows from operating activities: | |||||||||||||||||
Net income | $ | 38,026 | $ | 34,455 | $ | 121,439 | $ | 87,303 | |||||||||
Stock-based compensation | 12,532 | 11,177 | 37,862 | 34,880 | |||||||||||||
Depreciation and amortization | 19,026 | 18,568 | 57,299 | 57,432 | |||||||||||||
Accounts receivable | (2,112 | ) | 13,689 | 14,625 | 35,874 | ||||||||||||
Accounts payable and accruals | 9,423 | 16,218 | (28,208 | ) | (8,524 | ) | |||||||||||
Deferred revenue | 25,656 | 12,108 | 55,339 | 42,951 | |||||||||||||
Income taxes | 8,666 | 204 | 14,545 | (40,349 | ) | ||||||||||||
Excess tax benefits from stock-based awards | (1,484 | ) | (32 | ) | (9,576 | ) | (171 | ) | |||||||||
Other | (3,310 | ) | (21,797 | ) | (9,938 | ) | (28,374 | ) | |||||||||
Net cash provided by operating activities (6) |
106,423 | 84,590 | 253,387 | 181,022 | |||||||||||||
Capital expenditures | (6,379 | ) | (6,702 | ) | (16,721 | ) | (19,128 | ) | |||||||||
Acquisitions of businesses, net of cash acquired (7) | - | 1,606 | (111,519 | ) | (220,817 | ) | |||||||||||
Proceeds (payments) on debt, net | (3,125 | ) | (40,000 | ) | 56,875 | (101,875 | ) | ||||||||||
Proceeds from issuance of common stock | 85 | 538 | 801 | 3,412 | |||||||||||||
Payments of withholding taxes in connection with vesting of stock-based awards |
(5,112 | ) | (2,083 | ) | (26,749 | ) | (14,974 | ) | |||||||||
Repurchases of common stock | (59,950 | ) | (19,965 | ) | (99,915 | ) | (54,912 | ) | |||||||||
Excess tax benefits from stock-based awards | 1,484 | 32 | 9,576 | 171 | |||||||||||||
Credit facility origination costs | - | - | (4,120 | ) | - | ||||||||||||
Foreign exchange impact on cash | 277 | (1,794 | ) | 645 | (5,411 | ) | |||||||||||
Net change in cash and cash equivalents | 33,703 | 16,222 | 62,260 | (232,512 | ) | ||||||||||||
Cash and cash equivalents, beginning of period | 270,470 | 240,809 | 241,913 | 489,543 | |||||||||||||
Cash and cash equivalents, end of period | $ | 304,173 | $ | 257,031 | $ | 304,173 | $ | 257,031 | |||||||||
(6) The three and nine months ended
(7) We acquired
PTC Investor Relations
jhillier@ptc.com
Source: PTC
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