PTC Announces Third Quarter Fiscal 2017 Results

NEEDHAM, Mass. — (BUSINESS WIRE) — July 19, 2017PTC (NASDAQ: PTC) today reported financial results for its fiscal third quarter ended July 1, 2017.

  • Total GAAP revenue was $291 million; total non-GAAP revenue was $292 million
  • GAAP operating income was $11 million or 4% of revenue; non-GAAP operating income was $45 million or 15% of revenue
  • GAAP net loss was $1 million or $0.01 per diluted share; non-GAAP net income was $33 million or $0.28 per diluted share
  • License and subscription bookings were $90 million and subscription mix was 64%; Annual Contract Value (ACV) of new subscription contracts signed in the quarter was $29 million
  • Total deferred revenue, billed and unbilled, increased $251 million to $909 million from the same period last year
  • Subscription Annualized Recurring Revenue (ARR) increased $171 million or 131% to $302 million from the same period last year

“PTC delivered total revenue and earnings per share at or near the high-end of our guidance,” said James Heppelmann, President and CEO, PTC. “Led by subscription revenue growth of 135% and recurring software revenue growth of 11%, total software revenue grew 4% year-over-year, despite a higher mix of subscription bookings than last year. We remain focused on creating long-term shareholder value by driving growth, expanding margins and transitioning to a subscription-based business model.”

Heppelmann continued, “We are excited about both the transformation we are driving in our core business and our leadership position in IoT. In addition to attracting over 8,000 in-person and virtual attendees to LiveWorx, we recently received two 2017 Compass Intelligence IoT Awards, and our strong technology and market position received further validation in IDC’s MarketScape report, which placed PTC squarely in the IoT platform leadership category and also recognized PTC as the market share leader.”

Additional third quarter operating and financial highlights are set forth below. Information about our bookings and other reporting measures is provided beginning on page four. For additional details, please refer to the prepared remarks and financial data tables that have been posted to the Investor Relations section of our website at investor.ptc.com.

  • License and subscription bookings were $90 million. License and subscription bookings were below our expectations in the quarter due to sales execution issues in Japan. Actions to improve performance in Japan are underway. Compared to Q3’16, license and subscription bookings were down 14% as reported and 13% in constant currency due almost entirely to Japan. Q3’16 bookings also present a tough comparison, as bookings grew 32% over Q3’15 as reported and 31% in constant currency. On a year-to-date basis, bookings were $275 million, an increase of 6% year-over-year as reported and 7% in constant currency, despite a year-to-date decline in bookings in Japan of $20 million.
  • Subscription bookings comprised 64% of total bookings, modestly below our expectations primarily due to subscription bookings performance below our expectations, but also due to one large IoT deal that closed as a perpetual license. Subscription mix of 64% increased from 58% in the same period last year.
  • Total deferred revenue – billed and unbilled - increased $251 million or 38% year-over-year and 3% sequentially to $909 million. Billed deferred revenue increased 9% year-over year and declined 6% sequentially to $465 million, as expected, due to timing of support contract billings during the year. Billed deferred revenue can fluctuate quarterly based upon the contractual billings dates in our recurring revenue contracts as well as the timing of our fiscal reporting periods.
  • GAAP and non-GAAP software revenue were both approximately $248 million, an increase of 4% year-over-year as reported and 5% year-over-year in constant currency, despite a higher mix of subscription bookings than last year.
  • Approximately 87% of software revenue came from recurring revenue streams, up from 81% in the same period last year.
  • Annualized recurring revenue (ARR) was approximately $865 million, an increase of 11% year-over-year.
  • GAAP operating expenses were approximately $198 million, compared to $199 million in the same period last year; non-GAAP operating expenses were approximately $174 million, compared to $175 million in the same period last year.
  • Operating cash flows were $74 million, and free cash flow was $69 million, both of which include cash payments for restructuring of approximately $6 million and legal payments of approximately $2 million.
  • Total cash, cash equivalents, and marketable securities as of the end of the third quarter was $311 million and total debt, net of deferred issuance costs, was $712 million.
  • We resumed share buybacks in Q3’17 and repurchased $35 million worth of shares in the quarter, which represents more than 50% of free cash flow in the quarter.

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