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EX-99.2 - PREPARED REMARKS - PTC INC. | preparedremarks.htm |
8-K - FORM 8-K - PTC INC. | form8-kq42017earnings_sig.htm |
PTC Announces Fourth Quarter and Fiscal Year 2017
Results
Fourth Quarter Bookings and Subscription Mix Both Exceed the High
End of Guidance
NEEDHAM, MA, October 25, 2017 -PTC
(NASDAQ: PTC) today reported financial
results for its fourth quarter and fiscal year ended September 30,
2017.
●
Fourth
quarter FY’17 GAAP revenue was $306 million;non-GAAP revenue
was $307 million
●
FY’17
GAAP revenue was $1,164 million; non-GAAP revenue was $1,167
million
●
Fourth
quarter GAAP net income was $17 million or $0.15 per diluted share;
non-GAAP net income was $40 million or $0.34 per diluted
share
●
FY’17
GAAP net income was $6 million or $0.05 per diluted share; non-GAAP
net income was $138 million or $1.17 per diluted share
●
Fourth
quarter license and subscription bookings were $144 million and
subscription mix was 72%
●
FY’17
license and subscription bookings were $419 million and
subscription mix was 69%.
●
Total
deferred revenue, billed and unbilled, was $1.1 billion, an
increase of 40% from the same period last year
●
Fourth
quarter subscription Annualized Recurring Revenue (ARR) was $339
million, an increase of $171 million or 102% from the same period
last year
“We are very pleased with our fourth quarter results and
strong finish to the fiscal year,” said James Heppelmann,
President and CEO, PTC. “New license and subscription
bookings of $144 million in the quarter were well above the high
end of our guidance range and set a new record for quarterly
bookings performance.
Both revenue and EPS were within or
above our guidance range, despite a subscription bookings mix in
the quarter that was higher than we guided to, which decreased
reported revenue in the current period as revenue is deferred and
recognized over future periods.”
Heppelmann continued, “Fiscal 2017 was another year of great
progress in our transformation to become a high-growth subscription
software company and industrial IoT leader. During the year, we
delivered strong results in our core CAD and PLM businesses, grew
bookings in our IoT business well above current market growth
rates, and exited the ‘subscription trough’, setting
the company up for strong revenue and EPS growth going
forward.”
Additional fourth 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.
●
Q4’17 license and subscription bookings were
$144 million, up 1% year-over-year. Please note that Q4’16
bookings included a $20 million booking from a mega-deal. Excluding
the mega-deal, fourth quarter bookings grew 18% year-over-year.
FY’17 license and subscription bookings were $419 million, an
increase of 4% year-over-year.
Excluding the $20 million booking from
a mega-deal from Q4’16, FY’17 bookings increased 10%
year-over-year.
●
Subscription
bookings in the fourth quarter comprised 72% of total bookings,
compared to our guidance of 68%. For the quarter, we estimate that
the higher-than-guidance mix of subscription reduced revenue by
approximately $6 million and reduced non-GAAP earnings per share by
approximately $0.05. We estimate that, at our guidance subscription
mix, both revenue and non-GAAP EPS would have been above the high
end of our guidance ranges. For the full year, subscription
bookings comprised 69% of total bookings, compared to 56%
in
the
prior fiscal year. We plan to discontinue new perpetual license
sales in the Americas and Western Europe as of January 1, 2018,
except for Kepware.
●
Total deferred revenue – billed and unbilled
- increased $310 million or 40% year-over-year and increased $184
million or 20% sequentially to $1.1 billion.
Billed deferred revenue increased 11%
year-over year and declined 1% sequentially to $459 million, due to
the timing of support 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 in the quarter
were both approximately $265 million, an increase of 10%
year-over-year,
despite a higher mix of subscription
bookings than last year. For the full year, GAAP software revenue
was $987 million and non-GAAP software revenue was $989 million,
each an increase of 5% year-over-year.
●
Approximately
85% of fourth quarter GAAP and non-GAAP software revenue came from
recurring revenue streams, up from 83% in the same period last
year. For the full year, approximately 86% of GAAP software revenue
and 87% of non-GAAP software revenue came from recurring revenue
streams, up from 82% for both GAAP and non-GAAP software revenue in
the prior fiscal year.
●
Annualized
recurring revenue (ARR) was approximately $905 million, an increase
of 12% year-over-year.
●
GAAP
operating expenses in the quarter were approximately $206 million,
compared to $238 million in the same period last year; non-GAAP
operating expenses were approximately $181 million, compared to
$183 million in the same period last year. For the full year, GAAP
operating expenses were approximately $794 million, compared to
$852 million in the same period last year; non-GAAP operating
expenses were approximately $688 million, compared to $681 million
in the same period last year.
●
Operating
cash flows in the quarter were $33 million, and free cash flow was
$26 million, both of which include cash payments for restructuring
of approximately $2 million. For the full year, operating cash
flows were $135 million, and free cash flow was $109 million, both
of which include cash payments for restructuring of approximately
$37 million and legal payments of approximately $3
million.
●
Total
cash, cash equivalents, and marketable securities as of the end of
the fourth quarter was $330 million and total debt, net of deferred
issuance costs, was $712 million.
●
We repurchased $16 million worth of shares in
Q4’17, which represents approximately 61% of our free cash
flow in the quarter. Over the second half of the fiscal year,
following the resumption of the share repurchase program, we
repurchased $51 million worth of shares, representing approximately
47% of free cash flow for the full fiscal year.
●
Based
on our strong fiscal 2017 results and our positive outlook for
fiscal 2018, we are reaffirming our prior fiscal 2021 financial
targets, which call for $1.8 billion in total revenue, growing
double-digits;$1.6 billion in software revenue, growing double
digits;85% subscription mix, yielding 95% recurring software
revenue;non-GAAP operating margin in the low 30% range;non-GAAP EPS
of $4.15, and free cash flow of $525 million. Please note that
these future targets do not take into consideration the impact of
ASC 606, which PTC will adopt as of October 1, 2018 (fiscal year
2019). We have included a long term operating model presentation
with our earnings documents posted to our investor relations
website at investor.ptc.com.
Fiscal 2018 Business Outlook
For the first quarter and fiscal year ending September 30, 2018,
the company expects:
In millions except per share amounts
|
|
|
|
|
|
|
|
|
Operating Measures(1)
|
|
Q1’18 Low
|
|
Q1’18
High
|
|
FY’18 Low
|
|
FY’18 High
|
|
|
|
|
|
|
|
|
|
Subscription ACV
|
|
$ 28
|
|
$ 31
|
|
$ 178
|
|
$ 185
|
License and Subscription Bookings
|
|
$ 82
|
|
$ 92
|
|
$ 446
|
|
$ 464
|
Subscription % of Bookings
|
|
68%
|
|
68%
|
|
80%
|
|
80%
|
(1) An explanation of the
metrics included in this table is provided
below.
|
||||||||
Financial Measures
|
|
Q1’18 Low
|
|
Q1’18 High
|
|
FY’18 Low
|
|
FY’18 High
|
Subscription Revenue
|
|
$ 98
|
|
$ 100
|
|
$ 440
|
|
$ 450
|
Support Revenue
|
|
132
|
|
132
|
|
525
|
|
525
|
Perpetual License Revenue
|
|
27
|
|
30
|
|
90
|
|
95
|
Total Software Revenue
|
|
257
|
|
262
|
|
1,055
|
|
1,070
|
Professional Services Revenue
|
|
40
|
|
40
|
|
170
|
|
170
|
Total Revenue
|
|
$297
|
|
$ 302
|
|
$ 1,225
|
|
$ 1,240
|
|
|
|
|
|
|
|
|
|
Operating Expense (GAAP)
|
|
$ 199
|
|
$ 202
|
|
$ 814
|
|
$ 824
|
Operating Expense (Non-GAAP)
|
|
176
|
|
180
|
|
723
|
|
733
|
Operating Margin (GAAP)
|
|
5%
|
|
7%
|
|
7%
|
|
7%
|
Operating Margin (Non-GAAP)
|
|
16%
|
|
17%
|
|
17%
|
|
18%
|
Tax Rate (GAAP)
|
|
25%
|
|
25%
|
|
25%
|
|
25%
|
Tax Rate (Non-GAAP)
|
|
11%
|
|
9%
|
|
11%
|
|
9%
|
Shares Outstanding (GAAP)
|
|
117
|
|
117
|
|
117
|
|
117
|
Shares Outstanding (Non-GAAP)
|
|
117
|
|
117
|
|
117
|
|
117
|
EPS (GAAP)
|
|
$ 0.03
|
|
$ 0.05
|
|
$ 0.24
|
|
$ 0.30
|
EPS (Non-GAAP)
|
|
$ 0.28
|
|
$ 0.32
|
|
$ 1.27
|
|
$ 1.37
|
Free Cash Flow
|
|
|
|
|
|
$ 190
|
|
$ 200
|
The
first quarter and fiscal 2018 non-GAAP operating margin and
non-GAAP EPS guidance exclude the estimated items outlined in the
table below, as well as any tax effects and discrete tax items
(which are not known nor reflected).
In millions
|
|
Q1’18
|
|
FY’18
|
|
|
|
|
|
Effect of acquisition accounting on fair value of acquired deferred
revenue
|
|
$ -
|
|
$ 1
|
Stock-based compensation expense
|
|
17
|
|
70
|
Intangible asset amortization expense
|
|
15
|
|
58
|
Total Estimated Pre-Tax GAAP adjustments
|
|
$ 32
|
|
$ 129
|
PTC’s Fiscal 2017 Fourth Quarter Results Conference Call,
Prepared Remarks and Financial Data Tables
Prepared remarks and financial data tables have been posted to the
Investor Relations section of our website at ptc.com. The Company
will host a management presentation to discuss results at 5:00 pm
ET on Wednesday, October 25, 2017. To access the live webcast,
please visit PTC’s Investor Relations website at
investor.ptc.com at least 15 minutes before the scheduled start
time to download any necessary audio or plug-in software. To participate in the live conference
call, dial 773-799-3757 or 800-857-5592 and provide the passcode
PTC. The call will be recorded and a replay will be available for
10 days following the call by dialing 888-568-0904 and entering the
pass code 7091. The archived webcast will also be available
on PTCs Investor
Relations website.
Bookings Metrics
We offer both perpetual and subscription licensing options to our
customers, as well as monthly software rentals for certain
products. Given the difference in revenue recognition between the
sale of a perpetual software license (revenue is recognized at the
time of sale) and a subscription (revenue is deferred and
recognized ratably over the subscription term), we use bookings for
internal planning, forecasting and reporting of new license and
cloud services transactions. In order to normalize between
perpetual and subscription licenses, we define subscription
bookings as the subscription annualized contract value
(subscription ACV) of new subscription bookings multiplied by a
conversion factor of 2. We arrived at the conversion factor of 2 by
considering a number of variables including pricing, support,
length of term, and renewal rates. We define subscription ACV as
the total value of a new subscription booking divided by the term
of the contract (in days) multiplied by 365. If the term of the
subscription contract is less than a year, the ACV is equal to the
total contract value.
License and subscription bookings equal subscription bookings (as
described above) plus perpetual license bookings plus any monthly
software rental bookings during the period. Total ACV equals
subscription ACV (as described above) plus the annualized value of
incremental monthly software rental bookings during the
period.
Because subscription bookings is a metric we use to approximate the
value of subscription sales if sold as perpetual licenses, it does
not represent the actual revenue that will be recognized with
respect to subscription sales or that would be recognized if the
sales were perpetual licenses, nor does the annualized value of
monthly software rental bookings represent the value of any such
booking.
Total Deferred Revenue
Total Deferred Revenue consists of Billed Deferred Revenue and
Unbilled Deferred Revenue. We define Unbilled Deferred Revenue as
contractually committed orders for license, subscription and
support with a customer for which the associated revenue has not
been recognized and the customer has not been invoiced. We do not
record Unbilled Deferred Revenue on our Consolidated Balance Sheet
until we invoice the customer. Billed Deferred Revenue primarily
relates to software agreements invoiced to customers for which the
revenue has not yet been recognized.
Software Revenue
Any reference to “total recurring software revenue” or
“recurring software revenue” means the sum of
subscription revenue and support revenue. Any reference to
“total software revenue” or “software
revenue” means the sum of subscription revenue, support
revenue and perpetual license revenue. “Subscription
revenue” includes cloud services revenue.
Annualized Recurring Revenue (ARR)
To help investors understand and assess the success of our
subscription transition, we provide an Annualized Recurring Revenue
operating measure. Annualized Recurring Revenue (ARR) for a given
quarter is calculated by dividing the portion of non-GAAP software
revenue attributable to subscription and support for the quarter by
the number of days in the quarter and multiplying by 365. (A
related metric is Subscription ARR, which is calculated by dividing
the portion of non-GAAP revenue attributable to subscription for
the quarter by the number of days in the quarter and multiplying by
365.) ARR should be viewed independently of revenue and deferred
revenue as it is an operating measure and is not intended to be
combined with or to replace either of those items. ARR is not a
forecast of future revenue, which can be impacted by contract
expiration and renewal rates, and does not include revenue reported
as perpetual license or professional services revenue in our
consolidated statement of income. Subscription and support revenue
and ARR disclosed in a quarter can be impacted by multiple factors,
including but not limited to (1) the timing of the start of a
contract or a renewal, including the impact of on-time renewals,
support win-backs, and support conversions, which may vary by
quarter, (2) the ramping of committed monthly payments under a
subscription agreement over time, and (3) multiple other
contractual factors with the customer including other elements sold
with the subscription or support contract. These factors can result
in variability in disclosed ARR.
Navigate Allocation
In fiscal 2016, we launched Navigate, a ThingWorx-based IoT
solution for PLM. In fiscal 2017, revenue and bookings for Navigate
are being allocated 50% to Solutions and 50% to IoT. Fiscal 2016
reported amounts have been reclassified to conform with the current
presentation. The impact of the reclassification on fiscal 2016
revenue was immaterial.
Constant Currency Change Metric
Year-over-year changes in revenue and bookings on a constant
currency basis compare reported results excluding the effect of any
hedging converted into U.S. dollars based on the corresponding
prior year’s foreign currency exchange rates to reported
results for the comparable prior year period.
Important Information about Non-GAAP References
PTC provides non-GAAP supplemental information to its financial
results. We use these non-GAAP measures, and we believe that they
assist our investors, to make period-to-period comparisons of our
operational performance because they provide a view of our
operating results without items that are not, in our view,
indicative of our operating results. We believe that these non-GAAP
measures help illustrate underlying trends in our business, and we
use the measures to establish budgets and operational goals,
communicated internally and externally, for managing our business
and evaluating our performance. We believe that providing non-GAAP
measures affords investors a view of our operating results that may
be more easily compared to the results of peer companies. 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 and such items often recur. Management uses, and
investors should consider, non-GAAP measures in conjunction with
our GAAP results.
Non-GAAP revenue, non-GAAP operating expense, non-GAAP operating
margin, non-GAAP gross profit, non-GAAP gross margin, non-GAAP net
income and non-GAAP EPS exclude the effect of the following
items:
●
Fair value of acquired
deferred revenue is
a purchase accounting adjustment recorded to reduce acquired
deferred revenue to the fair value of the remaining obligation, so
our GAAP revenue after an acquisition does not reflect the full
amount of revenue that
would have been reported if the acquired deferred
revenue was not written down to fair value. We believe excluding
these adjustments to revenue from these contracts (and associated
costs in fair value adjustment to
deferred services cost) is
useful to investors as an additional means to assess revenue trends
of our business.
●
Stock-based
compensation is a non-cash
expense relating to stock-based awards issued to executive
officers, employees and outside directors and to our employee stock
purchase plan. We exclude this expense as it is a non-cash expense
and we assess our internal operations excluding this expense and
believe it facilitates comparisons to the performance of other
companies in our industry.
●
Amortization of acquired
intangible assets is
a non-cash expense that is impacted by the timing and magnitude of
our acquisitions. We believe the assessment of our operations
excluding these costs is relevant to our assessment of internal
operations and comparisons to the performance of other companies in
our industry.
●
Acquisition-related charges
included in general and administrative costs are direct costs of potential and completed
acquisitions and expenses related to acquisition integration
activities, including transaction fees, due diligence costs,
severance and professional fees. In addition, subsequent
adjustments to our initial estimated amount of contingent
consideration associated with specific acquisitions are included
within acquisition-related charges. These costs are not considered
part of our normal operations as the occurrence and amount will
vary depending on the timing and size of
acquisitions.
●
U.S. pension plan
termination-related costs include charges related to our plan that we began
terminating in the second quarter of 2014. Costs associated with
the termination are not considered part of our regular
operations.
●
Restructuring
charges include
excess facility restructuring charges and severance costs resulting
from reductions of personnel driven by modifications to our
business strategy and not considered part of our normal operations.
These costs may vary in size based on our restructuring
plan.
●
Non-operating credit facility
refinancing costs are
non-operating charges we record as a result of the refinancing of
our credit facility. We assess our internal operations excluding
these costs and believe it facilitates comparisons to the
performance of other companies in our industry.
●
Income tax adjustments
include the tax impact of the items
above and assumes that we are profitable on a non-GAAP basis in the
U.S. and one foreign jurisdiction, and eliminates the effect of the
valuation allowance recorded against our net deferred tax assets in
those jurisdictions. Additionally, we exclude other material tax
items that we view as non-ordinary course.
A reconciliation of non-GAAP measures to GAAP results is provided
within this press release.
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 first quarter and full fiscal 2018
targets, our long-range targets for fiscal 2021, 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 and earnings that we
expect;we may be unable to expand our partner ecosystem as we
expect and our partners may not generate the revenue 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 Investor Relations Contacts
Tim Fox, 781-370-5961
tifox@ptc.com
Jason Howard, 781-370-5087
jahoward@ptc.com
PTC Inc.
|
|||||||
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
|
|||||||
(in thousands, except per share data)
|
|
Three Months Ended
|
Twelve Months Ended
|
||
|
September 30,
|
September 30,
|
September 30,
|
September 30,
|
|
2017
|
2016
|
2017
|
2016
|
|
|
|
|
|
Revenue:
|
|
|
|
|
Subscription
|
$84,245
|
$40,665
|
$279,246
|
$118,322
|
Support
|
141,056
|
157,545
|
574,680
|
651,807
|
Total
recurring revenue
|
225,301
|
198,210
|
853,926
|
770,129
|
Perpetual
license
|
39,291
|
41,367
|
133,390
|
173,467
|
Total
subscription, support and license revenue
|
264,592
|
239,577
|
987,316
|
943,596
|
Professional
services
|
41,787
|
48,660
|
176,723
|
196,937
|
Total
revenue
|
306,379
|
288,237
|
1,164,039
|
1,140,533
|
|
|
|
|
|
Cost
of revenue:
|
|
|
|
|
Cost of license and subscription
revenue (1)
(2)
|
23,713
|
19,089
|
86,047
|
69,710
|
Cost of support revenue
(1)
(2)
|
23,174
|
22,059
|
92,202
|
85,729
|
Total
cost of software revenue
|
46,887
|
41,148
|
178,249
|
155,439
|
Cost of professional services
revenue(1)
|
35,918
|
41,708
|
150,770
|
170,226
|
Total
cost of revenue
|
82,805
|
82,856
|
329,019
|
325,665
|
|
|
|
|
|
Gross
margin
|
223,574
|
205,381
|
835,020
|
814,868
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
Sales and marketing
(1)
|
101,378
|
102,985
|
372,946
|
367,465
|
Research and development
(1)
|
60,585
|
57,934
|
236,059
|
229,331
|
General and administrative
(1)
|
36,278
|
37,647
|
145,067
|
145,615
|
Amortization
of acquired intangible assets
|
8,122
|
8,158
|
32,108
|
33,198
|
Restructuring
charges (credits), net
|
(358)
|
31,732
|
7,942
|
76,273
|
Total
operating expenses
|
206,005
|
238,456
|
794,122
|
851,882
|
|
|
|
|
|
Operating
income (loss)
|
17,569
|
(33,075)
|
40,898
|
(37,014)
|
Other
expense, net
|
(12,114)
|
(10,298)
|
(42,304)
|
(30,178)
|
Income
(loss) before income taxes
|
5,455
|
(43,373)
|
(1,406)
|
(67,192)
|
Benefit for income taxes
(3)
|
(11,980)
|
(14,900)
|
(7,645)
|
(12,727)
|
Net
income (loss)
|
$17,435
|
$(28,473)
|
$6,239
|
$(54,465)
|
|
|
|
|
|
Earnings
(loss) per share:
|
|
|
|
|
Basic
|
$0.15
|
$(0.25)
|
$0.05
|
$(0.48)
|
Weighted
average shares outstanding
|
115,483
|
114,958
|
115,523
|
114,612
|
|
|
|
|
|
Diluted
|
$0.15
|
$(0.25)
|
$0.05
|
$(0.48)
|
Weighted
average shares outstanding
|
117,380
|
114,958
|
117,356
|
114,612
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The amounts in the tables above include stock-based compensation as
follows:
|
|
|
|
|
Three Months Ended
|
Twelve Months Ended
|
||
|
September 30,
|
September 30,
|
September 30,
|
September 30,
|
|
2017
|
2016
|
2017
|
2016
|
Cost
of license and subscription revenue
|
$425
|
$253
|
$1,379
|
$805
|
Cost
of support
|
1,478
|
982
|
5,116
|
4,593
|
Cost
of professional services revenue
|
1,616
|
1,321
|
6,116
|
5,393
|
Sales
and marketing
|
4,326
|
3,405
|
15,373
|
14,659
|
Research
and development
|
4,215
|
2,596
|
13,968
|
10,174
|
General
and administrative
|
8,509
|
5,618
|
34,756
|
30,372
|
Total
stock-based compensation
|
$20,569
|
$14,175
|
$76,708
|
$65,996
|
|
|
|
|
|
|
(2)
|
In the third quarter of 2017, PTC began reporting cost of support
revenue separate from cost of license and subscription revenue.
Costs for previous periods have also been separately reported to
conform to the current period presentation.
|
|||||||
|
(3)
|
In Q4’17 our effective tax rate was lower than the 35%
statutory federal income tax rate due, in large part, to our
corporate structure in which our foreign taxes are at an effective
tax rate lower than the U.S. Additionally, our rate includes a
benefit of $8.2M relating to a release of a valuation allowance in
a foreign jurisdiction recorded in the quarter.
|
PTC Inc.
|
||||||||||
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (UNAUDITED)
|
||||||||||
(in thousands, except per share data)
|
|
Three Months Ended
|
Twelve Months Ended
|
||
|
September 30,
|
September 30,
|
September 30,
|
September 30,
|
|
2017
|
2016
|
2017
|
2016
|
|
|
|
|
|
GAAP
revenue
|
$306,379
|
$288,237
|
$1,164,039
|
$1,140,533
|
Fair
value adjustment of acquired deferred subscription
revenue
|
240
|
619
|
1,670
|
2,330
|
Fair
value adjustment of acquired deferred services revenue
|
255
|
266
|
1,043
|
1,139
|
Non-GAAP
revenue
|
$306,874
|
$289,122
|
$1,166,752
|
$1,144,002
|
|
|
|
|
|
GAAP
gross margin
|
$223,574
|
$205,381
|
$835,020
|
$814,868
|
Fair
value adjustment of acquired deferred revenue
|
495
|
885
|
2,713
|
3,469
|
Fair
value adjustment to deferred services cost
|
(108)
|
(114)
|
(437)
|
(492)
|
Stock-based
compensation
|
3,519
|
2,556
|
12,611
|
10,791
|
Amortization
of acquired intangible assets included in cost of
revenue
|
7,327
|
6,369
|
26,621
|
24,604
|
Non-GAAP
gross margin
|
$234,807
|
$215,077
|
$876,528
|
$853,240
|
|
|
|
|
|
GAAP
operating income (loss)
|
$17,569
|
$(33,075)
|
$40,898
|
$(37,014)
|
Fair
value adjustment of acquired deferred revenue
|
495
|
885
|
2,713
|
3,469
|
Fair
value adjustment to deferred services cost
|
(108)
|
(114)
|
(437)
|
(492)
|
Stock-based
compensation
|
20,569
|
14,175
|
76,708
|
65,996
|
Amortization
of acquired intangible assets included in cost of
revenue
|
7,327
|
6,369
|
26,621
|
24,604
|
Amortization
of acquired intangible assets
|
8,122
|
8,158
|
32,108
|
33,198
|
Acquisition-related
charges included in general and administrative costs
|
600
|
281
|
1,587
|
3,496
|
US
pension plan termination-related costs
|
-
|
-
|
285
|
-
|
Legal
settlement accrual
|
-
|
3,199
|
-
|
3,199
|
Restructuring
charges (credits), net
|
(358)
|
31,732
|
7,942
|
76,273
|
Non-GAAP operating income
(1)
|
$54,216
|
$31,610
|
$188,425
|
$172,729
|
|
|
|
|
|
GAAP
net income (loss)
|
$17,435
|
$(28,473)
|
$6,239
|
$(54,465)
|
Fair
value adjustment of acquired deferred revenue
|
495
|
885
|
2,713
|
3,469
|
Fair
value adjustment to deferred services cost
|
(108)
|
(114)
|
(437)
|
(492)
|
Stock-based
compensation
|
20,569
|
14,175
|
76,708
|
65,996
|
Amortization
of acquired intangible assets included in cost of
revenue
|
7,327
|
6,369
|
26,621
|
24,604
|
Amortization
of acquired intangible assets
|
8,122
|
8,158
|
32,108
|
33,198
|
Acquisition-related
charges included in general and administrative costs
|
600
|
281
|
1,587
|
3,496
|
US
pension plan termination-related costs
|
-
|
-
|
285
|
-
|
Legal
settlement accrual
|
-
|
3,199
|
-
|
3,199
|
Restructuring
charges (credits), net
|
(358)
|
31,732
|
7,942
|
76,273
|
Non-operating
credit facility refinancing costs
|
-
|
-
|
1,152
|
2,359
|
Income tax adjustments
(2)
|
(14,546)
|
(13,328)
|
(17,357)
|
(19,809)
|
Non-GAAP
net income
|
$39,536
|
$22,884
|
$137,561
|
$137,828
|
|
|
|
|
|
PTC Inc.
|
||||||||||
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (UNAUDITED),
CONT'D.
|
||||||||||
(in thousands, except per share data)
|
|
Three Months Ended
|
Twelve Months Ended
|
||
|
September 30,
|
September 30,
|
September 30,
|
September 30,
|
|
2017
|
2016
|
2017
|
2016
|
|
|
|
|
|
GAAP
diluted earnings (loss) per share
|
$0.15
|
$(0.25)
|
$0.05
|
$(0.48)
|
Fair
value adjustment of acquired deferred revenue
|
-
|
0.01
|
0.02
|
0.03
|
Stock-based
compensation
|
0.18
|
0.12
|
0.65
|
0.57
|
Amortization
of acquired intangibles
|
0.13
|
0.12
|
0.50
|
0.50
|
Acquisition-related
charges
|
0.01
|
-
|
0.01
|
0.03
|
Legal
settlement accrual
|
-
|
0.03
|
-
|
0.03
|
Restructuring
charges (credits), net
|
-
|
0.27
|
0.07
|
0.66
|
Non-operating
credit facility refinancing costs
|
-
|
-
|
0.01
|
0.02
|
Income
tax adjustments
|
(0.12)
|
(0.11)
|
(0.15)
|
(0.17)
|
Non-GAAP
diluted earnings per share
|
$0.34
|
$0.20
|
$1.17
|
$1.19
|
|
|
|
|
|
GAAP
diluted weighted average shares outstanding
|
117,380
|
114,958
|
117,356
|
114,612
|
Dilutive
effect of stock-based compensation plans
|
-
|
1,522
|
-
|
985
|
Non-GAAP
diluted weighted average shares outstanding
|
117,380
|
116,480
|
117,356
|
115,597
|
|
|
|
|
|
|
(1)
|
Operating margin impact of non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
Three Months Ended
|
Twelve Months Ended
|
||
|
September 30,
|
September 30,
|
September 30,
|
September 30,
|
|
2017
|
2016
|
2017
|
2016
|
GAAP
operating margin
|
5.7%
|
-11.5%
|
3.5%
|
-3.2%
|
Fair
value of acquired deferred revenue
|
0.2%
|
0.3%
|
0.2%
|
0.3%
|
Fair
value adjustment to deferred services cost
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
Stock-based
compensation
|
6.7%
|
4.9%
|
6.6%
|
5.8%
|
Amortization
of acquired intangibles
|
5.0%
|
5.0%
|
5.0%
|
5.1%
|
Acquisition-related
charges
|
0.2%
|
0.1%
|
0.1%
|
0.3%
|
US
pension plan termination-related costs
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
Legal
settlement accrual
|
0.0%
|
1.1%
|
0.0%
|
0.3%
|
Restructuring
charges (credits), net
|
-0.1%
|
11.0%
|
0.7%
|
6.7%
|
Non-GAAP
operating margin
|
17.7%
|
10.9%
|
16.1%
|
15.1%
|
|
(2)
|
We have recorded a full valuation allowance against our U.S. net
deferred tax assets and a valuation allowance against net deferred
tax assets in certain foreign jurisdictions. As we are profitable
on a non-GAAP basis, the 2017 and 2016 non-GAAP tax provisions are
being calculated assuming there is no valuation allowance. Income
tax adjustments reflect the tax effects of non-GAAP adjustments
which are calculated by applying the applicable tax rate by
jurisdiction to the non-GAAP adjustments listed above.
Additionally, we recorded a tax benefit in 2016 for the write-off
of a deferred tax liability that resulted from the change in tax
status of a foreign subsidiary. This tax benefit has been excluded
from non-GAAP tax expense.
|
PTC Inc.
|
|||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
|
|||
(in thousands)
|
|
September 30,
|
September 30,
|
|
2017
|
2016
|
|
|
|
ASSETS
|
|
|
|
|
|
Cash
and cash equivalents
|
$280,003
|
$277,935
|
Marketable
securities
|
50,315
|
49,616
|
Accounts
receivable, net
|
152,299
|
161,357
|
Property
and equipment, net
|
63,600
|
67,113
|
Goodwill
and acquired intangible assets, net
|
1,440,680
|
1,480,118
|
Other
assets
|
373,487
|
309,590
|
|
|
|
Total
assets
|
$2,360,384
|
$2,345,729
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Deferred
revenue
|
$458,907
|
$413,657
|
Debt,
net of deferred issuance costs
|
712,406
|
751,601
|
Other
liabilities
|
303,635
|
337,805
|
Stockholders'
equity
|
885,436
|
842,666
|
|
|
|
Total
liabilities and stockholders' equity
|
$2,360,384
|
$2,345,729
|
|
|
|
PTC Inc.
|
||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
(in thousands)
|
|
Three Months Ended
|
Twelve Months Ended
|
||
|
September 30,
|
September 30,
|
September 30,
|
September 30,
|
|
2017
|
2016
|
2017
|
2016
|
|
|
|
|
|
Cash
flows from operating activities:
|
|
|
|
|
Net
income (loss)
|
$17,435
|
$(28,473)
|
$6,239
|
$(54,465)
|
Stock-based
compensation
|
20,569
|
14,175
|
76,708
|
65,996
|
Depreciation
and amortization
|
22,555
|
21,833
|
86,742
|
86,554
|
Accounts
receivable
|
(22,081)
|
(5,882)
|
12,832
|
52,617
|
Accounts
payable and accruals
|
33,393
|
56,620
|
(14,531)
|
46,759
|
Deferred
revenue
|
(40,177)
|
(28,360)
|
5,808
|
16,232
|
Income
taxes
|
(11,255)
|
(19,963)
|
(29,087)
|
(37,433)
|
Excess
tax benefits from stock-based awards
|
(247)
|
1
|
(644)
|
(93)
|
Other
|
12,332
|
3,621
|
(9,477)
|
7,001
|
Net
cash provided by operating activities
|
32,524
|
13,572
|
134,590
|
183,168
|
|
|
|
|
|
Capital
expenditures
|
(6,111)
|
(9,557)
|
(25,444)
|
(26,189)
|
Acquisitions of businesses, net
of cash acquired (1)
|
-
|
(1,611)
|
(4,960)
|
(165,802)
|
Proceeds
(payments) on debt, net
|
-
|
(20,000)
|
(40,000)
|
90,000
|
Proceeds
from issuance of common stock
|
6,800
|
2
|
10,778
|
21
|
Payments of withholding taxes in connection with
|
|
|
|
|
vesting
of stock-based awards
|
(410)
|
(303)
|
(26,654)
|
(20,939)
|
Excess
tax benefits from stock-based awards
|
247
|
(1)
|
644
|
93
|
Proceeds
(purchases) of investments
|
-
|
(560)
|
15,218
|
(560)
|
Contingent
consideration
|
-
|
-
|
(11,054)
|
(10,621)
|
Proceeds
(purchases) of marketable securities, net
|
(208)
|
-
|
(941)
|
(44,605)
|
Repurchases
of common stock
|
(15,997)
|
-
|
(50,991)
|
-
|
Other
financing & investing activities
|
-
|
(96)
|
(184)
|
(6,855)
|
Foreign
exchange impact on cash
|
2,463
|
1,863
|
1,066
|
6,807
|
|
|
|
|
|
Net
change in cash and cash equivalents
|
19,308
|
(16,691)
|
2,068
|
4,518
|
Cash
and cash equivalents, beginning of period
|
260,695
|
294,626
|
277,935
|
273,417
|
Cash
and cash equivalents, end of period
|
$280,003
|
$277,935
|
$280,003
|
$277,935
|
|
|
|
|
|
(1)
|
We acquired a company on April 5, 2017 for $5.0 million (net of
cash acquired). We aquired Kepware, Inc. on January 11, 2016 for
$99 million (net of cash acquired) and Vuforia on November 3, 2015
for $65 million (net of cash acquired).
|