PTC Announces Q4 Results, Initiates FY’11 Targets and Q1 Guidance

Targets 20% to 25% license revenue growth in FY’11

NEEDHAM, Mass. — (BUSINESS WIRE) — October 26, 2010 — PTC (Nasdaq: PMTC), The Product Development Company®, today reported results for its year end and fourth fiscal quarter ended September 30, 2010.

Highlights

  • Q4 Results: Revenue of $268 million and non-GAAP EPS of $0.32; GAAP EPS of ($0.11)
    • Non-GAAP operating margin of 17.8%; GAAP operating margin of 10.8%
    • Relative to Q4 guidance ($255 - $265 million in revenue with $0.30 to $0.32 non-GAAP EPS), currency fluctuations benefited revenue by $3.7 million and impacted expenses by $2 million for a net benefit to non-GAAP EPS of $0.01
  • FY’10 Results: Revenue of $1,010 million and non-GAAP EPS of $1.00; GAAP EPS of $0.20
    • Non-GAAP operating margin of 15.6%; GAAP operating margin of 7.4%
  • Q1 Guidance: Revenue of $255 to $265 million and non-GAAP EPS of $0.22 to $0.26
    • GAAP EPS of $0.11 to $0.15
    • Assumes $1.37 USD / EURO
  • FY’11 Targets: Revenue of $1,110 to $1,130 million and non-GAAP EPS of $1.20 to $1.25
    • GAAP EPS of $0.75 to $0.80
    • License revenue growth target of 20% to 25% year-over-year growth
    • Non-GAAP operating margin of 17% to 18%; GAAP operating margin of 11% to 12%

The Q4 non-GAAP results exclude $11.3 million of stock-based compensation expense, $7.6 million of acquisition- related intangible asset amortization, $9.0 million of other income resulting from resolution of a litigation matter, and $41.5 million of income tax adjustments. The Q4 non-GAAP results include a tax rate of 20% and 120 million diluted shares outstanding. The Q4 GAAP results include a tax rate of 135% and 115 million diluted shares outstanding.

Results Commentary

James Heppelmann, president and chief executive officer, commented, “Q4 was another solid quarter for PTC with total revenue up 9% year-over-year and license revenue up 26%. Importantly, our services and maintenance revenues were up on a year-over-year basis for the first time since Q2’09. Our PLM license revenue in Q4 was $44.3 million, up 27% year-over-year, continuing to highlight our leadership position in a large and growing segment of the enterprise software market. Our CAD license revenue was $44.7 million, up 25% year-over-year, with growth in every region.” On a constant currency basis total Q4 revenue was up 11% and license revenue was up 27% compared to the year ago period.

“Our continued revenue momentum in the PLM market is further bolstered by an additional 3 strategically important ‘domino’ account wins during Q4 and another one completed early in Q1,” Heppelmann continued. “Since 2009, we have won 19 domino accounts, all of which are large multinational companies who have chosen to standardize their PLM initiatives on our Windchill platform. Dominoes represent the largest of many competitive displacement opportunities, and we believe they are a clear indicator of our momentum in the PLM market. They also demonstrate that PTC is gaining share and becoming recognized as the industry leader for both our technology and product development process expertise. We are further engaged in more than 250 other opportunities world-wide with companies that are looking to replace their existing PLM solution to help improve their competitive position in their own markets.”

Heppelmann added, “Our pipeline for new business opportunities with new and existing customers remains strong. During the quarter we recognized revenue from leading organizations such as Bombardier, Bosch, Deere & Company, NASA, Raytheon, Steelcase, the US Army, the US Navy, and Whirlpool.”

Jeff Glidden, chief financial officer, commented, “From a profitability standpoint, while we outperformed our revenue targets, our EPS result was in line with our original guidance due to higher incentive compensation expense. As a result of our over performance, we elected to provide a profit sharing bonus to our employees, who have not received a merit increase in two years given the belt tightening we did as a result of the macro-economic environment.”

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