Strong ARR, Revenue, EPS, and Cash Flow Performance for the Third Quarter
BOSTON, July 28, 2021 — (PRNewswire) — PTC (NASDAQ: PTC) today reported financial results for its fiscal third quarter ended June 30, 2021.
"Our performance in the third quarter and year to date reflects continued strong execution. We again delivered double-digit top line growth, leading to solid operating and free cash flow results," said James Heppelmann, President and CEO, PTC.
"This performance reflects how PTC's 'Digital Transforms Physical' strategy is resonating with customers and driving demand for our Core CAD and PLM solutions as well as our new Onshape and Arena SaaS offerings," said Heppelmann. "Our breakthrough technologies across the product portfolio are gaining mindshare as customers are realizing the value these innovative solutions can bring to their organizations."
"The SaaS delivery model is just beginning to disrupt the industrial technology market and I am excited that PTC has carved out a leadership position at the forefront of that paradigm shift," continued Heppelmann. "By delivering CAD, PLM, IOT, and AR technologies in the cloud, customers can work faster, reduce total cost of ownership, be more efficient and increase the return on their investment over the long-term."
Third quarter 2021 highlights1
Key operating and financial highlights are set forth below. For additional details, please refer to the Q3'21 earnings presentation and financial data tables that have been posted to the Investor Relations section of our website at
investor.ptc.com.
- ARR was $1.42 billion in Q3'21, representing growth of 18%, or 15% in constant currency, compared to Q3'20, in line with our guidance. Organic growth was 14% in Q3'21, or 11% in constant currency, compared to Q3'20.
- Revenue was $436 million in Q3'21 compared to $352 million in Q3'20, growth of 24%, or 19% in constant currency, driven primarily by strong execution, as well as the impact of up front license revenue recognition under ASC 606, and a modest contribution from Arena.
- Cash flow from operations was $88 million and free cash flow was $85 million in Q3'21, in line with our expectations, compared to Q3'20 cash flow from operations of $105 million and free cash flow of $99 million.
- Operating margin was 17% in Q3'21, compared to 18% in Q3'20. Non-GAAP operating margin in Q3'21 was 31%, compared to 29% in Q3'20.
- Total cash and cash equivalents as of the end of Q3'21 was $366 million; gross debt was $1.5 billion. We repaid $30 million on our revolver in Q3'21.
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.
Fiscal 2021 Guidance
"Year to date, PTC has delivered strong ARR, Revenue, EPS, Operating Cash Flow and Free Cash Flow, consistent with our guidance throughout the year. We remain on track to deliver against our full year guidance on a constant currency basis," said Kristian Talvitie, EVP and CFO, PTC.
Our FY'21 financial guidance includes the assumptions below, which remain unchanged other than updating currency impact on ARR:
- Our current guidance assumes a ~60 bps positive currency effect in FY'21.
- Macroeconomic conditions related to the COVID-19 crisis improve in the second-half of FY'21.
- Organic ARR growth of 10% to 12% on a constant currency basis and Arena contributes ~400 basis points of ARR growth.
- FY'21 ARR growth is inclusive of a ~2% headwind from lower-than-expected Deferred ARR exiting FY'20, primarily due to lower bookings in FY'20 reflecting the effect of the COVID-19 pandemic.
- ARR YoY growth rates, on an organic constant currency basis, are expected to be approximately linear each quarter throughout FY'21.
- Organic churn improves ~100 bps YoY.
- GAAP tax rate is expected to be ~20%, including a benefit of $42 million related to the tax effects for Arena Solutions and an approximately $35 million tax reserve related to a tax matter in a non-US jurisdiction. Non-GAAP tax rate is expected to be ~19%.
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In millions except per share amounts | Previous Guidance | Revised Guidance | YoY |
ARR | $1,445 - $1,470 | $1,453 - $1,478 | 14% - 16% |
| Cash from Operations (1) | ~$365 |
| ~55% |
| Free Cash Flow (1) | ~$340 |
| ~60% |
| Revenue | $1,710 - $1,740 | $1,733 - $1,763 | 19% - 21% |
| GAAP Operating Margin (2) | 15% - 17% | 17% – 19% | 300 bps – 500 bps |
| Non-GAAP Operating Margin (2) | 31% -32% | 32% - 33% | 300 bps – 400 bps |
| GAAP EPS (2) | $1.38 - $1.59 | $1.59 - $1.84 | 41% - 63% |
| Non-GAAP EPS (2) | $3.18 - $3.39 | $3.35 - $3.60 | 31% - 40% |
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| (1) | Cash from operations and free cash flow include ~$15 million of restructuring payments, ~$15 million of acquisition-related payments, ~$18 million of un-forecasted payments related to the prior period tax exposure from a non-U.S. tax dispute, and ~$5 million of incremental interest related to the Arena acquisition; free cash flow is net of capital expenditures of ~$25 million. |
| (2) | The FY'21 non-GAAP guidance excludes the estimated items outlined in the table below, as well as any additional tax effects and discrete tax items (which are not known or reflected). Our FY'21 non-GAAP guidance also excludes tax expense of ~$35 million related to a non-U.S. prior period tax exposure related to foreign withholding taxes and a tax benefit of ~$42 million related to Arena Solutions. Our FY'21 guidance and the table below do not reflect any anticipated gains related to our investment in Matterport, Inc. |
