Strong ARR, Revenue and Cash Flow Performance

BOSTON, Jan. 27, 2021 — (PRNewswire) —  PTC (NASDAQ: PTC) today reported financial results for its fiscal first quarter ended December 31, 2020. 

"Fiscal 2021 is off to a great start with double-digit top line growth and strong cash flow generation in the first fiscal quarter. PTC's results reflect strong demand across our product portfolio as customers continue to power their digital transformation initiatives with PTC's market-leading solutions," said James Heppelmann, President and CEO, PTC.

"With adoption of cloud and SaaS-based technologies accelerating in the industrial market, we believe our investments in product innovation and strategic acquisitions position PTC to take share and expand our leadership position in the markets we serve. The acquisition of Arena Solutions, which closed this month, together with Onshape, create the leading pure-SaaS CAD and PLM solution set in the market today.  We are excited to welcome the Arena team, and pleased to complement our strong momentum in the traditional CAD and PLM markets," concluded Heppelmann.  

First quarter 2021 highlights¹

Key operating and financial highlights are set forth below. For additional details, please refer to the Q1'21 earnings presentation and financial data tables that have been posted to the Investor Relations section of our website at investor.ptc.com.

• ARR was $1.34 billion, which is growth of 16%, or 12% in constant currency, compared to Q1'20, reflecting strong performance in our Core and Growth businesses and in our global channel.
• Revenue was $429 million compared to $356 million in Q1'20, growth of 20%, or 17% in constant currency, driven primarily by strong large-deal results and longer contract durations.
• Cash flow from operations was $114 million and free cash flow was $111 million in Q1'21, compared to Q1'20 cash flow from operations of $8 million and free cash flow of $3 million.
• Operating margin was 21% in Q1'21, compared to 9% in Q1'20; Q1'21 non-GAAP operating margin was 36%, compared to 26% in Q1'20.
• Total cash and cash equivalents as of the end of Q1'21 was $399 million; total debt, net of deferred issuance costs, was $988 million.

Fiscal 2021 Guidance

"Given our strong financial performance again this quarter and the acquisition of Arena Solutions in January 2021, we are updating our fiscal 2021 financial guidance to reflect the effect of Arena Solutions², the impact of foreign currency, and our Q1'21 performance," said Kristian Talvitie, EVP and CFO, PTC.

¹ We include operating and non-GAAP financial measures in our operational highlights. The detailed definitions of these items and reconciliations of Non-GAAP financial measures to comparable GAAP measures are included below and in the reconciliation tables at the end of this press release.
² Our FY'21 financial guidance does not include the effect of purchase accounting and related tax effects for Arena Solutions, which is expected to have a material effect on our financial statements.

Our FY'21 financial guidance includes the assumptions below:  

• Macroeconomic conditions related to the COVID-19 crisis remain stable near-term with conditions improving in the second-half of FY'21.
• Organic ARR growth of 10% to 12% on a constant currency basis, an increase of 100 basis points at the low-end of guidance vs. our prior guidance.
• Arena Solutions contributes ~400 basis points of ARR growth.
• Changes in foreign currency since September 30, 2020 contribute ~200 basis points of ARR growth.
• ARR growth includes a ~2% headwind from lower backlog for FY'21 exiting FY'20, resulting primarily from COVID-19-related bookings pressure in FY'20.
• ARR YoY growth rates, on a constant currency basis, are expected to be approximately linear each quarter throughout FY'21.
• Churn improves ~100 bps YoY.
• GAAP tax rate is expected to be ~50%, including an approximately $35 million tax reserve related to an ongoing tax matter in a non-US jurisdiction. Non-GAAP tax rate is expected to be ~19%.
• Operating cash flow and free cash flow benefit by ~$15 million from Fx, but the Fx benefit is offset by an un-forecasted foreign tax assessment of ~$15 million, related to the matter noted above.
• Our FY'21 financial guidance does not include the effect of purchase accounting for Arena Solutions, which is expected to have a material effect on our financial statements.