NEEDHAM, Mass. — (BUSINESS WIRE) — January 25, 2012 — PTC (Nasdaq: PMTC), today reported results for its first fiscal quarter ended December 31, 2011. PTC also announced an organizational realignment and restructuring to drive long-term growth and enhanced profitability.

Highlights

• 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 on September 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%
  • 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
• 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
• 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
  • 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
• 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 $1.5 million effect of purchase accounting on the fair value of the acquired deferred maintenance balance of MKS Inc. The Q1 non-GAAP EPS results also exclude $13.4 million of stock-based compensation expense, $9.3 million of acquisition-related intangible asset amortization, $2.1 million of acquisition-related expense, $0.8 million in other expense and $6.7 million of income tax adjustments. The Q1 non-GAAP EPS results include a tax rate of 25% and 121 million diluted shares outstanding. The Q1 GAAP EPS results include a tax rate of 26% and 121 million diluted shares outstanding.

Results Commentary

James Heppelmann, president and chief executive officer, commented, “PTC had a good start to FY’12, with Q1 non-GAAP revenue at the high end of our guidance range and non-GAAP EPS exceeding the high end of our guidance range. Our license revenue of $89.1 million was up 18% on a year-over-year basis, driven by organic growth of 12%. Continuing the momentum we experienced in Q4’11, our Enterprise (PLM) business delivered very good results with non-GAAP revenue up 38% year over year and 21% on an organic basis. Enterprise (PLM) license growth increased 41% year over year and 27% on an organic basis. Revenue in our Desktop (MCAD) business increased 5% year over year. Desktop license revenue decreased 1% year over year, reflecting very strong comparable results in Q1’11.” On a constant currency basis, total non-GAAP revenue growth was 19% and license revenue growth was 17% when compared to Q1’11.

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 New York on February 7^th where we will provide further insight into our growth and margin expansion initiatives.”

Jeff Glidden, chief financial officer, commented, “From a profitability standpoint, Q1 was another solid quarter with a good mix of revenue, better than anticipated Services margins, and lower than planned operating expenses as we remained vigilant on all non-sales related hiring; we delivered $0.35 non-GAAP EPS, this despite a $0.01 headwind due to a higher-than-expected tax rate and currency effects. Non-GAAP EPS increased 59% from $0.22 non-GAAP EPS in Q1’11. We ended Q1’12 with $187 million of cash up from $168 million at the end of Q4’11, reflecting $36 million in cash provided by operating activities.”