PTC Announces Q2 Results and Initiates Q3 Guidance

NEEDHAM, Mass. — (BUSINESS WIRE) — April 27, 2011 — PTC (Nasdaq: PMTC), The Product Development Company®, today reported results for its second fiscal quarter ended April 2, 2011.

Highlights

  • Q2 Results: Revenue of $269.2 million and non-GAAP EPS of $0.26; GAAP EPS of $0.16
    • Non-GAAP operating margin of 15.7%; GAAP operating margin of 9.0%
    • Relative to Q2 guidance ($260 - $270 million in revenue with $0.22 to $0.26 non-GAAP EPS), currency fluctuations did not materially impact results
  • Q3 Guidance: Revenue of $275 to $285 million and non-GAAP EPS of $0.28 to $0.32
    • GAAP EPS of $0.16 to $0.20
    • Assumes $1.45 USD / EURO
  • FY’11 Targets: Revenue of $1,120 to $1,130 million and non-GAAP EPS of $1.20 to $1.25
    • GAAP EPS of $0.73 to $0.78
    • Expecting license revenue growth of 15% to 20%, low- to mid-teens services revenue growth, and high single-digit maintenance revenue growth
    • Non-GAAP operating margin of 17% to 18%; GAAP operating margin of 11% to 12%
    • Assumes $1.45 USD / EURO for H2’11

The Q2 non-GAAP results exclude $9.9 million of stock-based compensation expense, $7.6 million of acquisition- related intangible asset amortization, $0.6 million of acquisition-related expense, and $5.8 million of income tax adjustments. The Q2 non-GAAP results include a tax rate of 25% and 122 million diluted shares outstanding. The Q2 GAAP results include a tax rate of 19% and 122 million diluted shares outstanding.

Results Commentary

James Heppelmann, president and chief executive officer, commented, “PTC had a strong Q2, with revenue and EPS at the high-end of our guidance range. Our license revenue of $74.2 million was up 15% on a year-over-year basis, and included 40% year-over-year growth in Desktop license revenue. This was our 5th consecutive quarter of year-over-year improvement in Desktop license revenue and in our Channel business. Our Enterprise license revenue was down 15% year-over-year, and was significantly impacted by lower than expected Federal, Aerospace & Defense revenue in North America, as well as the dilutive effect of the strong Desktop revenue on PLM sales capacity. Overall, we delivered 12% total growth compared to the year ago period.” On a constant currency basis, total growth was 11% and license growth was 13% compared to Q2’10.

“Our momentum in the PLM market continued with the announcement of 3 new strategically important ‘domino’ accounts during Q2,” Heppelmann continued. “Since 2009, we have won 25 domino accounts and we continue to expect to win a cumulative total of 30 domino accounts by the end of FY’11. 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 24 large deals (license + services revenue of more than $1 million) in Q2’11, compared to 22 last quarter and 18 in Q2’10. 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 ITT Corporation, Liebherr, Bandai Co. Ltd., Target Corporation, Tata Motors Limited, TJX Companies, Toyota Motor Corporation, and Volkswagen.”

Jeff Glidden, chief financial officer, commented, “From a profitability standpoint we had a very strong quarter; we delivered $0.26 of non-GAAP EPS, up 30% from $0.20 per share in Q2 ‘10. Our Q2 non-GAAP result includes approximately $3 million of severance expenses related to a strategic reprioritization effort to support our long-term market opportunity in the Automotive vertical. We delivered $78 million in cash flow from operations during the quarter, and we ended Q2 with $260 million of cash, up from $183 million in Q1.”

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