PTC Announces Third Quarter Fiscal 2017 Results

PTC also provides information on “free cash flow” and “adjusted free cash flow” to enable investors to assess our ability to generate cash without incurring additional external financings and to evaluate our performance against our announced long term goal of returning approximately 40% of our free cash flow to shareholders via stock repurchases. Free cash flow is net cash provided by (used in) operating activities less capital expenditures; adjusted free cash flow is free cash flow excluding restructuring payments and certain identified non-ordinary course payments. Free cash flow and adjusted free cash flow are not measures of cash available for discretionary expenditures.

Forward-Looking Statements
Statements in this press release that are not historic facts, including statements about our fourth quarter and full fiscal 2017 targets and other future financial and growth expectations and targets, and anticipated tax rates, are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected. These risks include: the macroeconomic and/or global manufacturing climates may not improve or may deteriorate; customers may not purchase our solutions when or at the rates we expect; our businesses, including our Internet of Things (IoT) business, may not expand and/or generate the revenue we expect; foreign currency exchange rates may vary from our expectations and thereby affect our reported revenue and expense; the mix of revenue between license & subscription solutions, support and professional services could be different than we expect, which could impact our EPS results; our customers may purchase more of our solutions as subscriptions than we expect, which would adversely affect near-term revenue, operating margins, and EPS; customers may not purchase subscriptions as we expect, which could impact our ability to achieve targeted subscription bookings and subscription mix; sales of our solutions as subscriptions may not have the longer-term effect on revenue that we expect; we may be unable to improve performance in Japan when or as we expect; we may be unable to generate sufficient operating cash flow to return 40% of free cash flow to shareholders and other uses of cash or our credit facility limits could preclude share repurchases; and any repatriation of cash held outside the U.S., which constitutes a significant portion of our cash, could be subject to significant taxes. 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 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 most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

PTC and the PTC logo are trademarks or registered trademarks of PTC Inc. or its subsidiaries in the United States and in other countries.

About PTC (NASDAQ: PTC)
PTC has the most robust Internet of Things technology in the world. In 1986 we revolutionized digital 3D design, and in 1998 were first to market with Internet-based PLM. Now our leading IoT and AR platform and field-proven solutions bring together the physical and digital worlds to reinvent the way you create, operate, and service products. With PTC, global manufacturers and an ecosystem of partners and developers can capitalize on the promise of the IoT today and drive the future of innovation.

PTC.com @PTC Blogs

 

PTC Inc.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

 
        Three Months Ended         Nine Months Ended
July 1,         July 2, July 1,         July 2,
2017 2016 2017 2016
 
Revenue:
Subscription $ 74,859 $ 31,822 $ 195,001 $ 77,657
Support   140,428     161,881     433,624     494,262  
Total recurring revenue 215,287 193,703 628,625 571,919
Perpetual license   32,348     44,648     94,099  

 

132,100  
Total subscription, support and license revenue 247,635 238,351 722,724 704,019
Professional services   43,658     50,301     134,936     148,277  
Total revenue   291,293     288,652     857,660     852,296  
 
Cost of revenue:
Cost of license and subscription revenue (1) (2) 21,648 17,809 62,333 50,621
Cost of support revenue (1) (2)   23,635     21,055     69,028     63,670  
Total cost of software revenue 45,283 38,864 131,361 114,291
Cost of professional services revenue (1)   36,985     43,606     114,852     128,518  
Total cost of revenue   82,268     82,470     246,213     242,809  
 
Gross margin   209,025     206,182     611,447     609,487  
 
Operating expenses:
Sales and marketing (1) 93,101 94,874 271,568 264,480
Research and development (1) 59,850 57,118 175,474 171,397
General and administrative (1) 35,294 35,485 108,789 107,968
Amortization of acquired intangible assets 7,973 8,294 23,986 25,040
Restructuring charges   1,551     2,815     8,300     44,541  
Total operating expenses   197,769     198,586     588,117     613,426  
 
Operating income (loss) 11,256 7,596 23,330 (3,939 )
Other expense, net   (10,557 )   (8,300 )   (30,190 )   (19,880 )
Income (loss) before income taxes 699 (704 ) (6,860 ) (23,819 )
Provision (benefit) for income taxes   1,650     (3,777 )   4,336     2,173  
Net income (loss) $ (951 ) $ 3,073   $ (11,196 ) $ (25,992 )
 
Earnings (loss) per share:
Basic $ (0.01 ) $ 0.03 $ (0.10 ) $ (0.23 )
Weighted average shares outstanding 115,615 114,795 115,511 114,499
 
Diluted $ (0.01 ) $ 0.03 $ (0.10 ) $ (0.23 )
Weighted average shares outstanding 115,615 115,698 115,511 114,499
 
 

(1) The amounts in the tables above include stock-based compensation as follows:

 
Three Months Ended Nine Months Ended
July 1, July 2, July 1, July 2,
2017 2016 2017 2016
Cost of license and subscription revenue $ 347 $ 195 $ 954 $ 552
Cost of support 1,139 963 3,638 3,611
Cost of professional services revenue 1,505 1,342 4,500 4,072
Sales and marketing 3,296 3,195 11,047 11,254
Research and development 2,805 2,531 9,753 7,578
General and administrative   7,482     5,570     26,247     24,754  
 
Total stock-based compensation $ 16,574   $ 13,796   $ 56,139   $ 51,821  

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