The EDA and MCAD/MCAE Almanac -Nominal Q3 2011

PTC Nominal Q3 2011 Results Commentary

James Heppelmann
, president and chief executive officer, commented, "PTC had a very strong finish to its fiscal year, which helped create record nominal Q3 2011 non-GAAP revenue and non-GAAP EPS both exceeding the high-end of our guidance range. Our license revenue of $111.0 million was up 25% on a year-over-year basis, driven by solid organic growth of 15% and better-than-expected performance from Integrity (MKS). In addition to continued momentum in our Desktop (MCAD) business, which experienced 17% year-over-year revenue growth, our Enterprise (PLM) business delivered very strong results. We also continue to see robust adoption of our PLM solutions, as is reflected in our 20% and 30% year-over-year increases in organic maintenance and services revenue, respectively. "On a constant currency basis, total non-GAAP revenue growth for nominal Q3 2011 was 20% and license revenue growth was 18% when compared to nominal Q3 2010.

"Our momentum in the PLM market continued with the addition of 3 new strategically important 'domino' accounts during the past quarter," Heppelmann continued. "Since 2009, we have won 30 domino accounts, meeting the target we had set at the beginning of the year. Dominoes represent the largest of many competitive displacement opportunities, and we believe they demonstrate that PTC is gaining share and becoming recognized as the industry leader for both our technology and product development process expertise."

Heppelmann added, "We had 30 large deals (recognized license + services revenue of more than $1 million) in nominal Q3 2010, capping off a strong fiscal year (Oct -Sept) in which we had 103 large deals, up from 70 in FY'10. We believe this is an indicator of the strength of our pipeline for business opportunities with new and existing customers. During the quarter we recognized revenue from leading organizations such as Asustek Computer, Caterpillar, Doosan Infracore America, SMS Siemag, Webasto and ZF Friedrichshafen."

Jeff Glidden
, chief financial officer, commented, "From a profitability standpoint we had a very strong quarter; we delivered $0.47 non-GAAP EPS, this despite a $0.02 headwind due to a higher-than-expected tax rate, other expense items and currency effects. Non-GAAP EPS was up 47% from $0.32 non-GAAP EPS in Q4'10. We ended Q4 with $168 million of cash down from $261 million at the end of Q3, reflecting in part $50 million used to repay our revolving credit facility, $15 million for stock repurchases, and $15 million for the acquisition of 4CS."

PTC Outlook Commentary

"Based on the market momentum we are seeing, the strength of our pipeline, our increasing sales capacity, major product releases in our core markets, as well as the significant interest we are seeing in our other products, such as Abortext and Integrity, we continue to be excited about our long-term growth opportunity," said Heppelmann. "While we acknowledge that there continues to be uncertainty about the strength of the global economy, we remain committed to achieving our goal of 20% non-GAAP EPS CAGR through 2014."

Glidden commented, "For nominal Q4 2011, we are providing guidance of $305 to $320 million in revenue, which includes approximately $20 million in revenue from the MKS and 4CS businesses, including $2 million in non-GAAP revenue. We are expecting non-GAAP EPS of $0.28 to $0.32, which at the mid-point is an increase of 36% from $0.22 non-GAAP EPS in Q1'11, reflecting our commitment to driving operating leverage in our model. From a revenue perspective, we are expecting approximately $80 to $95 million in license revenue in nominal Q4 2011, with combined services and non-GAAP maintenance revenue of approximately $225 million, resulting in approximately 14% to 20% year-over-year growth in total non-GAAP revenue." For nominal Q4 2011, the GAAP revenue target is $303 to $318 million and the GAAP EPS target is $0.14 to $0.18.

The Q1 guidance assumes a non-GAAP tax rate of 24%, a GAAP tax rate of 20% and 121 million diluted shares outstanding. The Q1 non-GAAP guidance excludes approximately $2 million for the effect of purchase accounting on acquired MKS deferred maintenance revenue, $13 million of stock-based compensation expense, $9 million of acquisition-related intangible asset amortization expense, any acquisition-related expenses, and their related income tax effects.

Glidden concluded, "Looking to the full year FY'12, we are targeting non-GAAP revenue growth of 14% to 15%. We expect MKS and 4CS to contribute approximately $90 to $100 million in revenue for the full year, including $3 million in non-GAAP revenue. We expect MKS and 4CS to be slightly accretive to FY'12 non-GAAP EPS. We are expecting license revenue growth of approximately 20%, services revenue growth of 14% and non-GAAP maintenance revenue growth of 11%. Our FY'12 non-GAAP EPS target of $1.48 to $1.52 reflects incremental sales expense as we continue to ramp sales capacity. We will continue to balance investments to support future growth with our commitment to 20% non-GAAP EPS growth." For FY'12, the GAAP EPS target is $0.94 to $0.98.

The FY'12 targets assume a non-GAAP tax rate of 24%, a GAAP tax rate of 20% and 121 million diluted shares outstanding. The FY'12 non-GAAP guidance excludes approximately $3 million for the effect of purchase accounting on acquired MKS deferred maintenance revenue, $51 million of stock-based compensation expense, $37 million of acquisition-related intangible asset amortization, any acquisition-related expenses, and their related income tax effects.

PTC self description

PTC (NASDAQ: PMTC) provides discrete manufacturers with software and services to meet the globalization, time-to-market and operational efficiency objectives of product development. Using the company's PLM and CAD and related solutions, organizations in the Industrial, High-Tech, Aerospace/Defense, Automotive, Retail/Consumer and Life Sciences industries are able to support key business objectives such as reducing costs and shortening lead times while creating innovative products that meet customer needs and comply with industry regulations. (

MCAD/MCAE Vendors' Summary Financials Q3 2011

Measured in $US except where indicated, Table 1 below reveals that the combined total revenue of the G5 MCAD/MCAE Vendors was US$1716.2 million in nominal Q3 2011, up 4.5% from the $1642.5 million total in the just prior Q2 2011, and a robust 20.22% above the total year-over-year figure of $1427.6 million for Q3 2010. That’s two quarters in a row that the G5 MCAD/MCAE vendors’ total revenue exceeded twenty percent sequential growth!

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