PTC Announces Q1 Results, Initiates Q2 Guidance and Updates FY’13 Targets

“We had 27 large deals (recognized license + services revenue of more than $1 million) in Q1’13, driven primarily by activity in the Americas. Consistent with last quarter, the mix of large deal revenue was skewed more heavily toward Services, reflecting strong PLM implementation activity and a lower level of large license transactions. During the quarter we recognized revenue from leading organizations such as AGCO, Caterpillar, Embraer, Esaote Group, Otto Bock Healthcare, Sulzer Pumpen, Turbomeca, and the Washington Metro Area Transit Authority.”

Jeff Glidden, chief financial officer, commented, “From a profitability standpoint we had another solid quarter; we delivered $0.36 non-GAAP EPS and achieved an 18.2% non-GAAP operating margin. We ended Q1 with $248 million of cash, down from $490 million at the end of Q4’12, reflecting in part $222 million used to complete the Servigistics acquisition and $16 million for stock repurchases.” Q1 GAAP EPS was $0.29 and GAAP operating margin was 4.3%.

Outlook Commentary

“We continue to be excited about our long-term growth opportunity based on the strength of our pipeline, market acceptance of our products in core markets, as well as the significant interest we are seeing in our broader solution areas. While the slowdown in the global manufacturing industry and uncertainty about the near-term economy remains a headwind for revenue growth, we remain committed to driving operating margin expansion and achieving our goal of 25% to 27% non-GAAP operating margin in FY’15,” said Heppelmann.

Glidden added, “For Q2’13, we are providing guidance of $305 to $325 million in non-GAAP revenue with $70 to $85 million in license revenue, $75 to $80 million in services revenue and approximately $160 million in non-GAAP support revenue. We are expecting Q2 non-GAAP EPS of $0.32 to $0.39.” The GAAP revenue target is $304 to $324 million, the target GAAP support revenue is $159 million, and the GAAP EPS target range is $0.03 to $0.10.

The Q2 guidance assumes $1.33 USD / EURO, 90.0 YEN / USD, a non-GAAP tax rate of 18% reflecting the extension of the federal R&D tax credit, a GAAP tax rate of 30% and 122 million diluted shares outstanding. The Q2 non-GAAP guidance excludes $1 million of the effect of purchase accounting on deferred maintenance revenue from Servigistics, $12 million of stock-based compensation expense, $15 million of restructuring costs, $2 million of acquisition related expenses, $11 million of acquisition-related intangible asset amortization expense, their related income tax effects, as well as any discrete tax items.

Glidden continued, “Looking to the full year FY’13, we are targeting non-GAAP revenue of $1,340 to $1,370 million, reflecting a wider range on our license guidance given the macroeconomic environment, as well as a $10 million reduction to our previous Services revenue guidance. We are, however, increasing our non-GAAP gross margin target for FY’13 by 100 bps reflecting continued improvements in our Services business. We are targeting license revenue of $360 to $380 million, services revenue of $320 to $330 million and non-GAAP support revenue of approximately $660 million. Our commitment to profitability remains on track, and we believe that vigilance on cost controls position us to achieve our non-GAAP FY’13 EPS target. We continue to target approximately 200 basis points of non-GAAP operating margin improvement during FY’13. Our FY’13 non-GAAP EPS target remains $1.70 to $1.80.” We are targeting GAAP revenue of $1,337 to $1,367 million (including GAAP support revenue of $597 million) and GAAP EPS of $0.95 to $1.05.

The FY’13 targets assume a non-GAAP tax rate of 22%, a GAAP tax rate of 12% and 122 million diluted shares outstanding. The FY’13 non-GAAP targets exclude approximately $30 million in restructuring charges, $3 million of the effect of purchase accounting on acquired Servigistics deferred revenue, $50 million of stock-based compensation expense, $45 million of acquisition-related intangible asset amortization, $7 million of acquisition-related expenses, their related income tax effects, as well as any discrete tax items.

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.

 
What: PTC Fiscal Q1 Conference Call and Webcast
 
When: Thursday, January 24 th , 2013 at 8:30am (ET)
 
Dial-in:

1-800-857-5592 or 1-773-799-3757
Call Leader: James Heppelmann
Passcode: PTC

 
Webcast:

www.ptc.com/for/investors.htm

 
Replay:

The audio replay of this event will be archived for public replay until 4:00 pm (CT) on February 3 rd , 2013.
Dial-in: 866-484-4215 Passcode: 5689
To access the replay via webcast, please visit www.ptc.com/for/investors.htm .

 

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