PTC Announces Q1 Results; Provides Q2 and Updated FY’14 Outlook

NEEDHAM, Mass. — (BUSINESS WIRE) — January 22, 2014PTC (Nasdaq: PTC) today reported results for its first fiscal quarter ended December 28, 2013.

Highlights

  • Q1 Results:
    • Revenue of $325 million, up 1% year over year on non-GAAP Q1’13 revenue and up 2% on a constant currency basis
    • Non-GAAP EPS of $0.50, up 37% year over year and on a constant currency basis
    • Non-GAAP operating margin of 25.3%, up 700 basis points year over year and on a constant currency basis
    • GAAP operating margin of 16.9% and GAAP EPS of $0.33, including a $1 million restructuring charge related to actions announced in Q4’13
    • Q1 revenue contribution from acquired businesses Enigma (acquired on July 11, 2013) and NetIDEAS (acquired on September 5, 2013) was $2 million
  • Q2 Guidance:
    • Revenue of $320 to $330 million and non-GAAP EPS of $0.43 to $0.48
    • License revenue of $75 to $90 million
    • GAAP EPS of $0.28 to $0.33 (excluding acquisition accounting for the ThingWorx transaction)
    • Assumes $1.36 USD / EURO and 104 YEN / USD
  • FY’14 Guidance:
    • Revenue of $1,330 to $1,345 million and non-GAAP EPS of $2.03 to $2.13
    • License revenue of $355 to $370 million
    • Non-GAAP operating margin of approximately 25%
    • GAAP EPS of $1.38 to $1.48 and GAAP operating margin of approximately 18% (excluding acquisition accounting for the ThingWorx transaction)
    • Assumes $1.36 USD / EURO and 104 YEN / USD

The Q1 non-GAAP results exclude $12.8 million of stock-based compensation expense, $12.3 million of acquisition-related intangible asset amortization, $1.1 million of restructuring charges, and $1.3 million of acquisition-related expense. The Q1 non-GAAP EPS results include a tax rate of 25% and 121 million diluted shares outstanding.

Results Commentary

James Heppelmann, president and chief executive officer, commented, “PTC’s revenue and non-GAAP EPS were above the high end of our guidance range, while license revenue was near the high end of the range with no mega deals (transactions resulting in recognized license revenue of over $5 million in the quarter). We believe our strong EPS performance, in particular, reflects our continued efforts to drive margin expansion and earnings growth. License revenue of $79 million was flat year over year and on a constant currency basis compared to a strong performance in Q1’13, which was the fiscal year end for Servigistics, and a period in which we recognized significant revenue from a mega deal in the Americas. On a constant currency basis we saw 8% year-over-year revenue growth in Japan, 4% year-over-year revenue growth in the Americas, 2% year-over-year revenue growth in Europe, and a 12% year-over-year revenue decline in the Pacific Rim. Reported revenue in Japan and the Pacific Rim was down 13% and 12%, respectively, and in the Americas and Europe was up 4% and 6%, respectively.“

Heppelmann added, “CAD license revenue grew 15% year over year on a constant currency and reported basis while total CAD revenue was up 4% on a constant currency basis and 3% on a reported basis. Our extended PLM business was up 1% year over year on a constant currency and reported basis compared to very strong performance in Q1’13, which included a mega deal. Our SLM business saw a 4% constant currency and reported revenue decline versus the year-ago period. Keep in mind that the Servigistics fiscal year ended in Q1’13; going forward, we expect seasonality in our SLM business to more closely resemble the rest of our business, and we continue to anticipate achieving strong SLM revenue growth in FY’14. We had 34 large deals (recognized license + services revenue of more than $1 million) in Q1’14, up from 27 in Q1’13. Similar to Q1’13, the mix of large deal revenue was skewed somewhat more heavily toward services. During the quarter we recognized revenue from leading organizations such as ABB Ltd, Air China, Airbus Helicopters, Brother Industries, DCNS, Embraer, HKMC, Liebherr, NVIDIA, Petrobras, Renault, and Volkswagen.”

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