Fiscal 2023 and Q1'23 Guidance
"PTC delivered solid fourth quarter results. With strong bookings performance and significantly improved churn, we beat our ARR and free cash flow guidance for the quarter and the year. Balancing our momentum and forecast with potential macro uncertainties, we are establishing ARR guidance for fiscal 2023 that represents 10% to 14% constant currency growth over fiscal 2022. We expect revenue, which is significantly impacted by both ASC606 revenue recognition and currency fluctuations, to be approximately flat on a year over year basis. Given the resilience of the business model, our consistent execution, operational discipline and the actions we have taken to align our investments with growth expectations, we expect free cash flow of approximately $560M in fiscal 2023," said Kristian Talvitie, EVP and CFO, PTC.
"For Q1'23, we are establishing ARR guidance of 14% to 15% constant currency growth compared to Q1'22, and free cash flow guidance of approximately $165 million," concluded Talvitie.
In millions except percentages | FY'22 Actual | FY'23
| FY'23 YoY Growth
| Q1'23
|
ARR at Constant Currency(1) | $1,572 | $1,730 - $1,790 | 10% - 14% | $1,580 - $1,600 |
Cash from Operations(2) | $435 | ~$580 | ~33% | ~$170 |
Free Cash Flow(2),(3) | $416 | ~$560 | ~35% | ~$165 |
Adjusted Free Cash Flow(2),(3) | $468 | ~$562 | ~20% | ~$166 |
Revenue | $1,933 | $1,910 - $1,990 | (1)% - 3% |
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(1) | On a constant currency basis, using our FY'23 Plan foreign exchange rates (rates as of September 30, 2022) for FY'22 actual ARR, FY'23 ARR guidance, and Q1'23 ARR guidance; FY'22 actual ARR at constant currency using our FY'22 Plan foreign exchange rates (rates as of September 30, 2021) was $1,706 million. |
(2) | FY'23 cash from operations and free cash flow guidance include restructuring payments of approximately $1 million and acquisition and transaction-related payments of approximately $1 million, both of which are excluded from FY'23 adjusted free cash flow guidance; Q1'23 cash from operations and free cash flow guidance include expected restructuring payments of approximately $1 million which is excluded from Q1'23 adjusted free cash flow guidance. |
(3) | Free cash flow and adjusted free cash flow guidance are net of expected capital expenditures of approximately $20 million in FY'23 and $5 million in Q1'23. |
Our FY'23 and Q1'23 financial guidance includes the assumptions below:
- We provide ARR guidance on a constant currency basis, using our FY'23 Plan foreign exchange rates (rates as of September 30, 2022) for all periods.
- We expect FY'23 organic churn to be ~5.5%.
- For cash flow, due to invoicing seasonality, and consistent with the past 2 years, we expect the majority of our collections to occur in the first half of our fiscal year and for Q4'23 to be our lowest cash flow generation quarter.
- At the mid-point of ARR guidance, we expect FY'23 GAAP operating expenses to decrease approximately 4% to 5% and non-GAAP operating expenses to increase approximately 0% to 1% compared to FY'22.
- FY'23 GAAP P&L results are expected to include the items outlined below, totaling $216 million to $231 million, as well as their related tax effects:
- $160 million to $175 million of stock-based compensation expense
- $56 million of intangible asset amortization expense
- Our FY'23 GAAP and non-GAAP tax rate is expected to be approximately 22%.
- FY'23 capital expenditures are expected to be approximately $20 million.
- Our long-term goal, assuming our Debt/EBITDA ratio is below 3x, is to return approximately 50% of our free cash flow to shareholders via share repurchases, while also taking into consideration the interest rate environment and strategic opportunities.
PTC's Fiscal Fourth Quarter Results Conference Call
The Company will host a conference call to discuss results at 5:00 pm ET on Wednesday, November 2, 2022. To participate in the live conference call, dial (888) 330-2508 or (240) 789-2735 and provide the passcode 7328695, or log in to the webcast, available on PTC's Investor Relations website. A replay will also be available.
Important Disclosures
Important Information About Our Non-GAAP Financial Measures
PTC provides supplemental non-GAAP financial measures to its financial results. We use these non-GAAP financial measures, and we believe that they assist our investors, to make period-to-period comparisons of our operating performance because they provide a view of our operating results without items that are not, in our view, indicative of our operating results. These non-GAAP financial measures should not be construed as an alternative to GAAP results as the items excluded from the non-GAAP financial measures often have a material impact on our operating results, certain of those items are recurring, and others often recur. Management uses, and investors should consider, our non-GAAP financial measures only in conjunction with our GAAP results.
Non-GAAP operating expense, non-GAAP operating margin, non-GAAP gross profit, non-GAAP gross margin, non-GAAP net income and non-GAAP EPS exclude the effect of the following items: stock-based compensation; amortization of acquired intangible assets; acquisition and transaction-related charges included in general and administrative expenses; restructuring and other charges, net; certain non-operating charges and credits; and income tax adjustments. Additional information about the items we exclude from our non-GAAP financial measures and the reasons we exclude them can be found in "Non-GAAP Financial Measures" on page 24 of our Annual Report on Form 10-K for the fiscal year ended September 30, 2021 .