Market Snapshot
  • U.S.
  • Europe
  • Asia
Ticker Volume Price Price Delta
DJIA 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 2.54 0.14%
NASDAQ 4,095.52 9.29 0.23%
Ticker Volume Price Price Delta
STOXX 50 3,155.81 16.55 0.53%
FTSE 100 6,625.25 41.08 0.62%
DAX 9,409.71 91.89 0.99%
Ticker Volume Price Price Delta
NIKKEI 14,512.38 -3.89 -0.03%
TOPIX 1,171.40 -1.97 -0.17%
HANG SENG 22,760.24 64.23 0.28%

PTC Announces Q1 Results, Initiates Q2 Guidance and Updates



  PTC Announces Q1 Results, Initiates Q2 Guidance and Updates FY’10 Targets

   Targets 30% license revenue growth in FY’10 on strength of Windchill PLM
                                   solution

Business Wire

NEEDHAM, Mass. -- January 26, 2010

PTC (Nasdaq: PMTC), The Product Development Company®, today reported results
for its first fiscal quarter ended January 2, 2010.

Highlights

  * Q1 Results: Revenue of $258 million and non-GAAP EPS of $0.27; GAAP EPS of
    $0.15

       * Non-GAAP operating margin of 17.5%; GAAP operating margin of 8.6%
       * Relative to Q1 guidance, currency was favorable to revenue by $1.9
         million and unfavorable to expenses by $1.3 million

  * Q2 Guidance: Revenue of $235 to $245 million and non-GAAP EPS of $0.14 to
    $0.20

       * GAAP EPS of $0.02 to $0.07
       * Assumes $1.46 USD / EURO

  * FY 2010 Targets: Increasing revenue target to $1,015 million and non-GAAP
    EPS to $1.00

       * Non-GAAP operating margin of 16%; GAAP operating margin of 7.5%
       * GAAP EPS of $0.50
       * Assumes $1.46 USD / EURO

The Q1 non-GAAP results exclude $13.9 million of stock-based compensation
expense, $9.0 million of acquisition- related intangible asset amortization
and $7.4 million of income tax adjustments. The Q1 results include a non-GAAP
tax rate of 25% and a GAAP tax rate of 18%.

Results Commentary

C. Richard Harrison, chairman and chief executive officer, commented, “We
begin fiscal 2010 with strong performance in Q1: total revenue was up 8%
year-over-year with license revenue up 48%. Our better than expected
performance was driven by large enterprise PLM contracts in North America.” On
a constant currency basis total Q1 revenue was up 3% and license revenue was
up 43%.

“Our PLM license revenue was $45 million, up 143% year-over-year, highlighting
our leadership position in a large and growing segment of the enterprise
software market,” continued Harrison. “Our pipeline for new business
opportunities with new and existing customers remains strong. During the
quarter we recognized revenue from leading organizations such as Airbus, BAE
Systems, Bucyrus International, Cummins Inc., DRS Technologies, The Danfoss
Group, IKEA, Raytheon, Quanta Computer Inc., the United States Army and the
United States Navy.”

James Heppelmann, president and chief operating officer added, “Our ongoing
investment in technology leadership is clearly paying off and our market
momentum is becoming increasingly clear: our total PLM revenue is approaching
a $500 million per year revenue run rate, we are engaged in more than 200
active competitive displacement opportunities on a world-wide basis, and we
secured 4 additional strategically important “domino” account wins during the
quarter.”

“Our product portfolio has never been more compelling and we are continuing to
invest to extend our technology leadership position,” continued Heppelmann.
“We have significant new releases of Windchill, Pro/ENGINEER, Arbortext,
CoCreate and Mathcad coming out in FY’11, and we are progressing on our new
embedded software and program portfolio management initiatives. We also
continue to add to our product analytics platform; we recently acquired
leading technology in the fast-growing carbon information management market,
enhancing our “green product development” capabilities. Our product analytics
platform enables customers to perform business intelligence-like analytics on
their in-process product designs.”

Heppelmann concluded, “We are very optimistic about the long-term opportunity
for PTC and will continue to make strategic investments that we believe are
critical to delivering value to our customers and gaining market share. We
expect these investments to enable us to achieve our goal of 20% non-GAAP EPS
CAGR over the next 5 years.”

Neil Moses, chief financial officer, commented, “Our strong license revenue
was, as expected, partly offset by a slight year-over-year decline in our
maintenance and services revenue as we continue to work through the impact of
soft license sales in 2009. Our CAD and SMB-related businesses were down
modestly on a year-over-year basis, as expected, given the maturity of the CAD
market and the ongoing impact of the global economy on the SMB space.
Importantly, however, we are beginning to see signs of improvement in the SMB
market and in the European and Asian markets as well. Our balance sheet
remains solid with $231 million of cash.”

Outlook Commentary

“Looking forward to the remainder of FY’10, we are increasing our full-year
revenue target to $1,015 million and non-GAAP EPS target to $1.00,” continued
Moses. “We are now expecting 30% year over year license revenue growth, with
our maintenance and services business flat to modestly up on a year over year
basis. We are increasing our non-GAAP operating margin target to 16%, but also
intend to continue to invest in our business to leverage our technology
leadership position and capitalize on our long-term growth opportunity. We
expect to pay down the remaining $57 million on our revolving credit facility
and repurchase $60 million worth of shares during FY’10.” For FY’10 the GAAP
operating margin target is 7.5% and the GAAP EPS target is $0.50.

The FY’10 targets assume a non-GAAP tax rate of 25%, a GAAP tax rate of 17%
and 120 million diluted shares outstanding. The FY’10 non-GAAP guidance
excludes approximately $49 million of stock-based compensation expense, $35
million of acquisition-related intangible asset amortization and the related
income tax effects.

“For Q2 we are initiating guidance of $235 to $245 million in revenue with
non-GAAP EPS of $0.14 to $0.20, Moses added. “We are again expecting
approximately 50% year-over-year growth in our license revenue in Q2. We
expect our maintenance and services lines of business to be down slightly in
Q2, but we expect to see growth in these businesses in the second half of
FY’10.”

The Q2 guidance assumes a non-GAAP tax rate of 28%, a GAAP tax rate of 25% and
120 million diluted shares outstanding. The Q2 non-GAAP guidance excludes
approximately $12 million of stock-based compensation expense, $9 million of
acquisition-related intangible asset amortization expense and the related
income tax effects.

Q1 Earnings Conference Call and Webcast

Supplemental financial and operating metric information and prepared remarks
for the conference call have been posted to the investor relations section of
our website. The prepared remarks will not be read live; the call will be
primarily Q&A.

What:      PTC Fiscal Q1 Conference Call and Webcast
            
When:      Wednesday, January 27, 2010 at 8:30 a.m. Eastern Time
            
Dial-in:   1-888-566-8560 or 1-517-623-4768
           Call Leader: Richard Harrison
           Passcode: PTC
            
Webcast:   www.ptc.com/for/investors.htm
            
           The audio replay of this event will be archived for public replay
Replay:    until 4:00 pm (CT) on February 1, 2010 at 1-866-373-4992 or
           203-369-0272. To access the replay via webcast, please visit
           www.ptc.com/for/investors.htm.

Important Information About Non-GAAP References

PTC provides non-GAAP supplemental information to its financial results.
Non-GAAP operating expenses, margin and EPS exclude stock-based compensation
expense, amortization of acquired intangible assets, acquired in-process
research and development expense, restructuring charges, and the related tax
effects of the preceding items and any one-time tax items. PTC provides this
non-GAAP information to facilitate period-to-period comparisons of its
operational performance by adjusting for certain non-cash and certain episodic
expenses. We believe that providing non-GAAP measures affords investors a view
of our operating results that may be more easily compared to peer companies.
PTC management also uses this and other non-GAAP financial information to
evaluate, manage and plan our business because the information provides
additional insight into ongoing financial performance. In addition,
compensation of our executives is based in part on the performance of our
business based on these non-GAAP measures. However, non-GAAP information
should not be construed as an alternative to GAAP information as the items
excluded from the non-GAAP measures often have a material impact on PTC’s
financial results. Management uses, and investors should use, non-GAAP
measures in conjunction with our GAAP results. We calculate revenue and
expenses on a constant currency basis to obtain a view of the performance of
our business without the effect of differences in foreign currency exchange
rates used for translation. We calculate these measures by applying the
applicable prior period exchange rates to current period revenues and
expenses.

Forward-Looking Statements

Statements in this press release that are not historic facts, including
statements about our fiscal 2010 and other future financial expectations,
anticipated tax rates, the expected impact of our planned strategic
investments on our future success, and the long-term prospects for PTC are
forward-looking statements that involve risks and uncertainties that could
cause actual results to differ materially from those projected. These risks
include the possibility that customers may not resume purchases of our
solutions when or at the rates we expect, the possibility that our customers
may not renew maintenance or enter into services engagements at historic rates
and that our maintenance and services businesses may not recover when we
expect, the possibility that strategic customer wins may not generate the
revenue we expect, the possibility that our strategic investments may not have
the effects we expect, the possibility that we will experience a shortfall in
revenue that causes us to decrease or eliminate planned strategic investments
in our business or planned share repurchases and debt repayments, the
possibility that our efforts to contain our operating expenses may not have
the effects we expect and could harm our operations, the possibility that we
may be unable to attain or maintain a technology leadership position or that
any such leadership position may not generate the revenue we expect, and the
possibility that planned product releases may be delayed. In addition, our
assumptions concerning our future GAAP and non-GAAP effective income tax rates
are based on estimates and other factors that could change, including the
geographic mix of our revenue, expenses (including restructuring charges) and
profits and loans and cash repatriations from foreign subsidiaries. Other
risks and uncertainties that could cause actual results to differ materially
from those projected are detailed from time to time in reports we file with
the Securities and Exchange Commission, including our Annual Report on
Form 10-K.

PTC, The Product Development Company, and all other PTC product names and
logos are trademarks or registered trademarks of Parametric Technology
Corporation or its subsidiaries in the United States and in other countries.
All other companies referenced herein are trademarks or registered trademarks
of their respective holders.

About PTC (www.ptc.com)

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.

PARAMETRIC TECHNOLOGY CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
 
                                               Three Months Ended
                                               January 2,        January 3,
                                               2010              2009
                                                                              
Revenue:
License                                    $   74,816         $  50,502
Service                                        183,613           189,889
Total revenue                                  258,429           240,391
                                                                              
Costs and expenses:
Cost of license revenue^(1)                    8,147             7,584
Cost of service revenue^(1)                    70,524            75,741
Sales and marketing^(1)                        78,598            79,862
Research and development^(1)                   50,690            48,361
General and administrative^(1)                 24,071            21,437
Amortization of acquired intangible assets     4,058             3,868
Total costs and expenses                       236,088           236,853
                                                                              
Operating income                               22,341            3,538
Other expense, net                             (524        )     (1,071      )
Income before income taxes                     21,817            2,467
Provision for (benefit from) income taxes      3,954             (2,192      )
Net income                                 $   17,863         $  4,659
Earnings per share:
Basic                                      $   0.15           $  0.04
Weighted average shares outstanding            116,253           114,555
Diluted                                    $   0.15           $  0.04
Weighted average shares outstanding            121,113           117,356
                                                                              
(1) The amounts in the tables above include stock-based compensation as
follows:
                                                                              
                                               Three Months Ended
                                               January 2,        January 3,
                                               2010              2009
                                                                              
Cost of license revenue                    $   17             $  14
Cost of service revenue                        2,580             2,255
Sales and marketing                            3,074             2,908
Research and development                       2,659             2,258
General and administrative                     5,525             3,096
Total stock-based compensation             $   13,855         $  10,531

PARAMETRIC TECHNOLOGY CORPORATION
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (UNAUDITED)
(in thousands, except per share data)
 
                                                   Three Months Ended
                                                   January 2,     January 3,
                                                   2010           2009        
                                                                              
GAAP operating income                            $ 22,341       $ 3,538
Stock-based compensation                           13,855         10,531
Amortization of acquired intangible assets         4,898          4,668
included in cost of license revenue
Amortization of acquired intangible assets         --             8
included in cost of service revenue
Amortization of acquired intangible assets         4,058          3,868
Non-GAAP operating income                        $ 45,152       $ 22,613
                                                                              
GAAP net income                                  $ 17,863       $ 4,659
Stock-based compensation                           13,855         10,531
Amortization of acquired intangible assets         4,898          4,668
included in cost of license revenue
Amortization of acquired intangible assets         --             8
included in cost of service revenue
Amortization of acquired intangible assets         4,058          3,868
Income tax adjustments ^(2)                        (7,377     )   (6,202     )
Non-GAAP net income                              $ 33,297       $ 17,532
                                                                              
GAAP diluted earnings per share                  $ 0.15         $ 0.04
Stock-based compensation                           0.11           0.09
All other items identified above                   0.01           0.02
Non-GAAP diluted earnings per share              $ 0.27         $ 0.15
                                                                              
                                                                              
Weighted average shares outstanding – diluted      121,113        117,356

(2) Reflects the tax effects of non-GAAP adjustments for the first quarter of
2010 and 2009, which are calculated by applying the applicable tax rate by
jurisdiction to the non-GAAP adjustments listed above.

PARAMETRIC TECHNOLOGY CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
                                               January 2,   September 30,
                                               2010         2009
                                                             
ASSETS
                                                             
Cash and cash equivalents                    $ 231,144    $ 235,122
Accounts receivable, net                       160,536      166,591
Property and equipment, net                    58,901       58,105
Goodwill and acquired intangibles, net         582,422      596,517
Other assets                                   314,683      293,877
                                                             
Total assets                                 $ 1,347,686  $ 1,350,212
                                                             
LIABILITIES AND STOCKHOLDERS' EQUITY
                                                             
Deferred revenue                             $ 243,160    $ 234,270
Borrowings under revolving credit facility     56,622       57,880
Other liabilities                              275,990      296,481
Stockholders' equity                           771,914      761,581
                                                             
Total liabilities and stockholders' equity   $ 1,347,686  $ 1,350,212

PARAMETRIC TECHNOLOGY CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
 
                                                   Three Months Ended
                                                   January 2,     January 3,
                                                   2010           2009        
                                                                              
Cash flows from operating activities:
Net income                                       $ 17,863       $ 4,659
Stock-based compensation                           13,855         10,531
Depreciation and amortization                      15,923         14,795
Accounts receivable                                4,211          23,439
Accounts payable and accruals ^ (3)                (15,076    )   (26,033    )
Deferred revenue                                   (15,987    )   (8,730     )
Income taxes                                       (2,805     )   (11,187    )
Other                                              4,776          6,950
Net cash provided by operating activities          22,760         14,424
                                                                              
Capital expenditures                               (7,877     )   (8,172     )
Acquisitions of businesses, net of cash            (582       )   (8,362     )
acquired
Payments on debt, net                              --             (13,265    )
Repurchases of common stock                        (5,072     )   (9,581     )
Other investing and financing activities^(4)       (11,441    )   (491       )
Foreign exchange impact on cash                    (1,766     )   (4,561     )
                                                                              
Net change in cash and cash equivalents            (3,978     )   (30,008    )
Cash and cash equivalents, beginning of period     235,122        256,941
Cash and cash equivalents, end of period         $ 231,144      $ 226,933

(3) Includes accounts payable, accrued expenses, and accrued compensation and
benefits.

(4) The first quarter of 2010 and 2009 includes $15.6 million and $2.5
million, respectively, for payments of withholding taxes in connection with
vesting of restricted stock units and restricted stock.

Contact:

PTC
Kristian P. Talvitie, 781-370-6151
ktalvitie@ptc.com
Sponsored Links
Advertisement
Advertisements
Sponsored Links
Advertisement