PTC Announces Second Quarter Fiscal Year 2019 Results

Revenue, Operating Margin and EPS at or Above the High End of Guidance

BOSTON — (BUSINESS WIRE) — April 24, 2019 — PTC (NASDAQ: PTC) today reported financial results for its fiscal second quarter 2019.

Financial Summary - ASC 606 (1)

  • Revenue of $290 million
  • GAAP net loss was $44 million or ($0.37) per diluted share; non-GAAP net income was $26 million or $0.22 per diluted share
  • GAAP operating margin of (8%); non-GAAP operating margin of 15%

Financial Summary ASC 605 (1)

  • Revenue of $315 million
  • GAAP net loss was $12 million or ($0.10) per diluted share; non-GAAP net income was $45 million or $0.38 per diluted share
  • GAAP operating margin of 0%; non-GAAP operating margin of 21%

(1) We adopted ASC 606 on October 1, 2018, which impacted our reported financial results, including the timing and classification of revenue. For comparability purposes, and unless otherwise specified, the amounts included in the commentary below refer to results under ASC 605, as shown in our financial statements, including the notes thereto.

“We are pleased with our second quarter financial performance with revenue, margin and EPS at or above the high end of our guidance range,” said James Heppelmann, President and CEO, PTC. “Bookings growth of 18% year over year in constant currency was driven by a strong quarter for IoT, with IoT bookings growth well above the estimated 30-40% market growth rate. With our subscription business model transition complete, we were pleased to deliver Subscription bookings mix above 90%.”

Other second quarter 2019 results:
Additional operating and financial highlights are set forth below. Information about our bookings and other reporting measures (as updated) is provided below. 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.

Additional Operating Highlights:

License and subscription bookings: Q2’19 license and subscription bookings were $112 million, an increase of 18% on a constant currency basis, driven by a strong quarter for IoT; for the first time IoT bookings surpassed both CAD and PLM in the quarter.

Software revenue: Q2’19 software revenue was $277 million, an increase of 6% year over year or 8% in constant currency.

Recurring Software revenue: Q2’19 software recurring revenue was $266 million, an increase of 11% year over year or 14% in constant currency.

IoT software revenue: Q2’19 IoT software revenue was $37 million, up 27% year over year or 30% on a constant currency basis, driven by 48% constant currency growth in subscription revenue.

Annualized recurring revenue (ARR): Q2’19 ARR was $1,065 million, a constant currency increase of 15% year over year and the ninth consecutive quarter of double-digit year-over-year growth.

Deferred revenue: Billed deferred revenue increased 11% year over year to $554 million. Total deferred revenue – billed and unbilled - increased $61 million year over year, despite a 400-basis point currency headwind. Billed deferred revenue primarily relates to software agreements invoiced to customers for which the revenue has not yet been recognized. Billed deferred revenue fluctuates quarterly based upon the contractual billing dates in our recurring revenue contracts, and the timing of our fiscal reporting periods. Additionally, total deferred revenue is impacted by changes in FX rates and the length of new and renewal contracts.

Operating margin: GAAP operating margin in the second quarter was 0%, compared to 7% in the same period last year driven by restructuring charges associated with the relocation of our headquarters; non-GAAP operating margin was 21%, compared to 18% in the same period last year.

Operating cash flow and free cash flow: Operating cash flow in the second quarter was $141 million, up 27% over Q2’18, and free cash flow was $120 million, up 13% over Q2’18. Free cash flow in Q2’19 includes cash payments of approximately $10 million related to our restructuring plan, including the relocation of our headquarters.

Total cash, cash equivalents, and marketable securities: As of the end of the second quarter total cash, cash equivalents, and marketable securities was $351 million and total debt, net of deferred issuance costs, was $739 million. During the second quarter we used $65 million to repurchase 725,000 shares.

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