PTC Announces Strong Q1 Results, Increases FY'12 and Long-Term Targets
Highlights
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Q1 Results: Non-GAAP revenue of
$319.8 million , up 20% year over year, and non-GAAP EPS of$0.35 -
GAAP revenue of
$318.3 million and GAAP EPS of$0.18 -
Revenue contribution from MKS (acquired on
May 31, 2011 ) and 4CS Solutions (acquired onSeptember 2, 2011 ) was$20 million on a non-GAAP basis and$18.5 million on a GAAP basis - Non-GAAP operating margin of 18.4%; GAAP operating margin of 10.2%
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Relative to Q1 guidance assumptions, revenue was negatively
impacted by
$4.6 million by currency effects and non-GAAP EPS was negatively impacted by$0.01 due to a higher-than-expected tax rate and currency effects
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GAAP revenue of
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Q2 Guidance: Non-GAAP revenue of
$305 to $320 million and non-GAAP EPS of$0.32 to $0.36 -
GAAP revenue of
$304 to $319 million and GAAP EPS of$0.06 to$0.11 , including a$20 million restructuring charge -
Assumes
$1.30 USD / EURO, down from previous assumption of$1.40 ; a$6 to $8 million negative impact to Q2 non-GAAP revenue guidance. Revenue guidance assumes approximately$22 million contribution from MKS and 4CS, including$1 million in non-GAAP revenue
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GAAP revenue of
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FY'12 Targets: Non-GAAP revenue of
$1,310 to$1,330 million and non-GAAP EPS of$1.58 to $1.62 -
Assumes
$1.30 USD / EURO, down from previous assumption of$1.40 — negatively impacting Q2 through Q4 revenue guidance by approximately$20 million - Non-GAAP operating margin of approximately 20%, up from approximately 18% previously, despite currency effects
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Approximate
$5 million quarterly expense benefit from restructuring in Q3'12 and Q4'12 -
GAAP revenue of
$1,307 to$1,327 million and GAAP EPS of$0.93 to$0.97 , including a$20 million restructuring charge -
Revenue guidance assumes approximately
$90 to $100 million contribution from MKS and 4CS, including$3 million in non-GAAP revenue
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Assumes
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Initiating FY'15 target model: Key elements of our new model
- Annual revenue growth of 11% to 13%
- Non-GAAP gross margin target of 74% to 76%
- Non-GAAP operating margin target of 25% to 27%
The Q1 non-GAAP revenue results exclude a
Results Commentary
Heppelmann added, "As part of our ongoing strategy to enhance customer
focus, expand our addressable market opportunities and accelerate
profitability we are implementing an organizational realignment around
five market sectors and restructuring our business. We expect the
combination of near-term cost savings from the restructuring and the
longer-term benefit of the realignment to improve efficiencies within
our Sales and Services organizations. As a result of progress we've
already made on operating margins coupled with these new initiatives, we
are increasing our long-term, non-GAAP operating margin target by 500
basis points to a range of 25% to 27% by FY'15. Please join us at our
upcoming investor day in
Outlook Commentary
Glidden continued, "Looking to the full year FY'12, we are targeting
non-GAAP revenue growth of 12% to 14%, despite an approximate
The FY'12 targets assume a non-GAAP tax rate of 25%, a GAAP tax rate of
21% and 122 million diluted shares outstanding. The FY'12 non-GAAP
guidance excludes approximately
"Based on the market momentum we are seeing, the strength of our
pipeline, and our increasing sales capacity, we continue to be excited
about our long-term growth opportunity," said Heppelmann. "The
confidence in our long-term opportunity is supported by the 24 large
deals (license + services revenue of more than
Glidden added, "While we acknowledge that there continues to be
uncertainty regarding the strength of the global economy, our commitment
to operating margin expansion is a cornerstone of our financial
strategy, which is clearly reflected in our margin performance in Q1'12
and increased outlook for FY'12 and beyond. For Q2, we are providing
guidance of
The Q2 guidance assumes a non-GAAP tax rate of 25%, a GAAP tax rate of
21% and 122 million diluted shares outstanding. The Q2 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.
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When: |
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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
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FY'12 Investor Day
Management will host its FY'12 Investor Day on
What: | PTC FY'12 Investor Day | ||
When: |
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Register: |
Contact |
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Webcast: | |||
Replay: |
The audio replay of this event will be archived for public replay
until |
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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 the acquired deferred
maintenance balance of
Forward-Looking Statements
Statements in this press release that are not historic facts,
including statements about our fiscal 2012 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 customers may not purchase our solutions
when or at the rates we expect, the possibility the 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 maintenance growth rates that we expect, which
could result in a different mix of revenue between license, service and
maintenance and could impact our EPS results, the possibility that
strategic customer wins may not generate the revenue growth or cost
efficiencies we expect, the possibility that resource constraints could
adversely affect our revenue, and the possibility that our strategic
investments, and organizational realignment and restructuring may not
generate the revenue growth or operating margin improvements we expect.
In addition, our assumptions concerning our future GAAP and non-GAAP
effective income tax rates are based on estimates and other factors that
could change, including the geographic mix of our revenue, expenses and
profits and loans and cash repatriations from foreign subsidiaries.
Other risks and uncertainties that could cause actual results to differ
materially from those projected are detailed from time to time in
reports we file with the
PTC and all other PTC product names and logos are trademarks or
registered trademarks of
About PTC (www.ptc.com)
PTC (Nasdaq: PMTC) provides discrete manufacturers with software and services to meet the globalization, time-to-market and operational efficiency objectives of product development. Using the company's PLM and CAD and related solutions, organizations in the Industrial, High-Tech, Aerospace/Defense, Automotive, Retail/Consumer and Life Sciences industries are able to support key business objectives such as reducing costs and shortening lead times while creating innovative products that meet customer needs and comply with industry regulations.
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UNAUDITED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||
(in thousands, except per share data) | ||||||||||||||
Three Months Ended | ||||||||||||||
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2011 | 2011 | |||||||||||||
Revenue: | ||||||||||||||
License | $ | 89,088 | $ | 75,473 | ||||||||||
Service | 229,188 | 191,079 | ||||||||||||
Total revenue | 318,276 | 266,552 | ||||||||||||
Costs and expenses: | ||||||||||||||
Cost of license revenue (1) | 7,659 | 5,954 | ||||||||||||
Cost of service revenue (1) | 90,560 | 80,107 | ||||||||||||
Sales and marketing (1) | 97,778 | 84,521 | ||||||||||||
Research and development (1) | 54,993 | 51,522 | ||||||||||||
General and administrative (1) | 29,572 | 23,484 | ||||||||||||
Amortization of acquired intangible assets | 5,209 | 3,854 | ||||||||||||
Total costs and expenses | 285,771 | 249,442 | ||||||||||||
Operating income | 32,505 | 17,110 | ||||||||||||
Other expense, net | (2,643 | ) | (1,886 | ) | ||||||||||
Income before income taxes | 29,862 | 15,224 | ||||||||||||
Provision for income taxes | 7,739 | 1,964 | ||||||||||||
Net income | $ | 22,123 | $ | 13,260 | ||||||||||
Earnings per share: | ||||||||||||||
Basic | $ | 0.19 | $ | 0.11 | ||||||||||
Weighted average shares outstanding | 117,715 | 116,827 | ||||||||||||
Diluted |
$ |
0.18 |
$ | 0.11 | ||||||||||
Weighted average shares outstanding | 120,576 | 121,150 | ||||||||||||
(1) |
The amounts in the tables above include stock-based compensation as follows: | |||||||||||||
Three Months Ended | ||||||||||||||
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2011 | 2011 | |||||||||||||
Cost of license revenue | $ | 5 | $ | 3 | ||||||||||
Cost of service revenue | 2,513 | 2,137 | ||||||||||||
Sales and marketing | 3,728 | 2,429 | ||||||||||||
Research and development | 2,549 | 2,393 | ||||||||||||
General and administrative | 4,587 | 4,065 | ||||||||||||
Total stock-based compensation | $ | 13,382 | $ | 11,027 | ||||||||||
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NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (UNAUDITED) | |||||||||||||||
(in thousands, except per share data) | |||||||||||||||
Three Months Ended | |||||||||||||||
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2011 | 2011 | ||||||||||||||
GAAP revenue | $ | 318,276 | $ | 266,552 | |||||||||||
Fair value of acquired MKS deferred maintenance | |||||||||||||||
revenue | 1,522 | - | |||||||||||||
Non-GAAP revenue | $ | 319,798 | $ | 266,552 | |||||||||||
GAAP operating income | $ | 32,505 | $ | 17,110 | |||||||||||
Fair value of acquired MKS deferred maintenance | |||||||||||||||
revenue | 1,522 | - | |||||||||||||
Stock-based compensation | 13,382 | 11,027 | |||||||||||||
Amortization of acquired intangible assets | |||||||||||||||
included in cost of license revenue | 4,103 | 3,363 | |||||||||||||
Amortization of acquired intangible assets | 5,209 | 3,854 | |||||||||||||
Acquisition-related charges included in | |||||||||||||||
general and administrative expenses | 2,068 | - | |||||||||||||
Non-GAAP operating income (2) | $ | 58,789 | $ | 35,354 | |||||||||||
GAAP net income | $ | 22,123 | $ | 13,260 | |||||||||||
Fair value of acquired MKS deferred maintenance | |||||||||||||||
revenue | 1,522 | - | |||||||||||||
Stock-based compensation | 13,382 | 11,027 | |||||||||||||
Amortization of acquired intangible assets | |||||||||||||||
included in cost of license revenue | 4,103 | 3,363 | |||||||||||||
Amortization of acquired intangible assets | 5,209 | 3,854 | |||||||||||||
Acquisition-related charges included in | |||||||||||||||
general and administrative expenses | 2,068 | - | |||||||||||||
Non-operating foreign currency transaction loss (3) | 761 | 722 | |||||||||||||
Income tax adjustments (4) | (6,678 | ) | (5,810 | ) | |||||||||||
Non-GAAP net income | $ | 42,490 | $ | 26,416 | |||||||||||
GAAP diluted earnings per share | $ | 0.18 | $ | 0.11 | |||||||||||
Stock-based compensation | 0.11 | 0.09 | |||||||||||||
Income tax adjustments | (0.06 | ) | (0.05 | ) | |||||||||||
Acquisition-related charge | 0.02 | - | |||||||||||||
All other items identified above | 0.10 | 0.07 | |||||||||||||
Non-GAAP diluted earnings per share | $ | 0.35 | $ | 0.22 | |||||||||||
(2) | Operating margin impact of non-GAAP adjustments: | ||||||||||||||
Three Months Ended | |||||||||||||||
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2011 | 2011 | ||||||||||||||
GAAP operating margin |
10.2 | % | 6.4 | % | |||||||||||
Fair value of deferred maintenance revenue | 0.5 | % | 0.0 | % | |||||||||||
Stock-based compensation | 4.2 | % | 4.2 | % | |||||||||||
Amortization of acquired intangibles | 2.9 | % | 2.7 | % | |||||||||||
Acquisition-related charges | 0.6 | % | 0.0 | % | |||||||||||
Non-GAAP operating margin | 18.4 | % | 13.3 | % | |||||||||||
(3) |
In the first quarter of 2012 we recorded |
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(4) |
Reflects the tax effects of non-GAAP adjustments for the first
quarter of 2012 and 2011, which are calculated by applying the
applicable tax rate by jurisdiction to the non-GAAP adjustments
listed above, as well as a one-time non-cash charge of |
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UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(in thousands) | ||||||||
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September 30, | |||||||
2011 | 2011 | |||||||
ASSETS | ||||||||
Cash and cash equivalents |
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Accounts receivable, net | 221,436 | 230,220 | ||||||
Property and equipment, net | 62,156 | 62,569 | ||||||
Goodwill and acquired intangible assets, net | 822,070 | 835,411 | ||||||
Other assets | 320,372 | 333,604 | ||||||
Total assets |
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LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Deferred revenue |
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Borrowings under revolving credit facility | 200,000 | 200,000 | ||||||
Other liabilities | 282,359 | 312,668 | ||||||
Stockholders' equity | 847,729 | 822,690 | ||||||
Total liabilities and stockholders' equity |
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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||
(in thousands) | |||||||||||||
Three Months Ended | |||||||||||||
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2011 | 2011 | ||||||||||||
Cash flows from operating activities: | |||||||||||||
Net income | $ | 22,123 | $ | 13,260 | |||||||||
Stock-based compensation | 13,382 | 11,027 | |||||||||||
Depreciation and amortization | 17,026 | 14,069 | |||||||||||
Accounts receivable | 13,295 | (958 | ) | ||||||||||
Accounts payable and accruals (5) | (32,937 | ) | (29,233 | ) | |||||||||
Deferred revenue | (2,075 | ) | (7,425 | ) | |||||||||
Litigation settlement | - | (52,129 | ) | ||||||||||
Other | 5,671 | 3,351 | |||||||||||
Net cash provided (used) by operating activities | 36,485 | (48,038 | ) | ||||||||||
Capital expenditures | (7,570 | ) | (5,412 | ) | |||||||||
Acquisitions of businesses, net of cash acquired | (880 | ) | - | ||||||||||
Proceeds from issuance of common stock | 7,196 | 12,232 | |||||||||||
Payments of withholding taxes in connection with | |||||||||||||
vesting of stock-based awards | (12,661 | ) | (17,168 | ) | |||||||||
Other investing and financing activities | 150 | 262 | |||||||||||
Foreign exchange impact on cash | (3,247 | ) | 786 | ||||||||||
Net change in cash and cash equivalents | 19,473 | (57,338 | ) | ||||||||||
Cash and cash equivalents, beginning of period | 167,878 | 240,253 | |||||||||||
Cash and cash equivalents, end of period | $ | 187,351 | $ | 182,915 | |||||||||
(5) | Includes accounts payable, accrued expenses, and accrued compensation and benefits |
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