CIMdata PLM Industry Summary Online Archive

28 January 2009

Financial News

PTC Announces Q1 Results Issues Q2 Guidance and Full Fiscal Year 2009 Targets

PTC reported results for its fiscal first quarter ended January 3, 2009.

Highlights

• Q1 Results: Revenue of $240.4 million and non-GAAP EPS of $0.15
• GAAP EPS of $0.04

• Q2 Guidance: Revenue of $220 to $230 million and non-GAAP EPS of $0.04 to $0.10
• GAAP EPS loss of $0.10 to $0.19
• Includes $15 to $20 million restructuring charge to reduce operating expenses

• FY 2009 Targets: Revenue of $960 million with non-GAAP EPS of $0.90
• GAAP EPS of $0.43 to $0.49
• 20% non-GAAP operating margin for H2’09

The Q1 non-GAAP results exclude $10.5 million of stock-based compensation expense, $8.5 million of acquisition-related intangible asset amortization expenses and $6.2 million of related income tax effects. The Q1 results include a non-GAAP tax rate of 19%, a GAAP tax benefit rate of 89% and approximately 117 million diluted shares outstanding.

Computer-Based Training Product Reclassification

Beginning in FY2009, PTC is reclassifying its computer-based training product related sales previously recorded as Services revenue to License and Maintenance revenue to better align with how these training products are sold to customers. This will not affect total revenue, operating margin or net income. However, the reclassification will result in a shift of approximately $20 million of revenue annually from Services to License and Maintenance (primarily License). Revised historical results which reflect this reclassification are included in the Financial and Operating Metrics document available on our website. All results and forward-looking comments provided in this document are in accordance with the reclassified reporting structure.

Q1 Results & Outlook

C. Richard Harrison, president and chief executive officer, commented, “We delivered $240 million of revenue in Q1 compared to $241 million in the year ago period. This performance reflects a $20 million, or 29%, decrease in license revenue compared to Q1’08 inclusive of a $2 million unfavorable currency impact. Our total revenue was up 2% on a constant currency basis, reflecting the growth of our maintenance and services businesses as well as 2 months of additional revenue contribution from CoCreate, which we acquired on November 30, 2007. On an organic constant currency basis, our total revenue was down 3%, or approximately $8 million, compared to last year.”

“Our pipeline for new business opportunities remains strong,” continued Harrison. “We are, however, experiencing lengthening lead times and reduced spending on large deals and our reseller channel is also being impacted by softening end-market demand. Recognizing that the margin for error is greater than it has historically been due to the uncertainties of the current environment, we are currently expecting FY’09 revenue of approximately $960 million, with Q2 revenue in the range of $220 million to $230 million.”

Harrison added, “Our technology is winning in significant competitive benchmarks and we remain very optimistic about the long-term opportunity for PTC. We intend to continue to make strategic investments we believe are critical to gaining market share and improving operating profitability over the longer-term, including improving the breadth and competitiveness of our product portfolio, expanding our reseller channel and developing an ecosystem of strategic services partners.”

Neil Moses, chief financial officer, commented, “Balancing the long-term market opportunity with the severity of the global economic situation, we began to take actions in Q1 to reduce our operating expenses, including reducing our rate of hiring, postponing annual merit increases and reducing travel expenses. In Q2 we will be taking a $15 million to $20 million restructuring charge as we continue to take actions to reduce our operating expenses. We expect all of these actions to reduce our original operating expense plan for FY’09 by approximately $50 million and are currently expecting to deliver 15% non-GAAP operating margins for the full fiscal year.”

Moses concluded, “We are well positioned to weather this economic storm with $227 million of cash and an additional $156 million available on our revolving credit facility. In addition, we expect to generate more than $100 million in operating cash flow this year which we intend to use to pay down our outstanding debt of $74 million by the end of FY’09 and to buy back our stock. We remain committed to accelerating our organic growth rate and expanding our non-GAAP operating margins into the mid-twenty percent range over the longer-term.”

The Q2 guidance assumes a non-GAAP tax rate of 25% and a GAAP tax provision of 30%, which is a benefit on a loss before tax that includes a one-time tax benefit of approximately $7 million. The Q2 non-GAAP guidance excludes approximately $10 million of stock-based compensation expense, $9 million of acquisition-related intangible asset amortization expenses, $15 million to $20 million of restructuring related expense and the related income tax effects.

The FY’09 guidance assumes a non-GAAP tax rate of 25% and a GAAP tax benefit rate of 30%. The FY’09 non-GAAP guidance excludes approximately $46 million of stock-based compensation expense, $35 million of acquisition-related intangible asset amortization expense, $15 million to $20 million of restructuring related expense and the related income tax effects.

Q1 Earnings Conference Call and Webcast

NOTE: Supplemental financial and operating metric information and prepared remarks for the conference call will be posted to the investor relations section of our website simultaneous to the press release after the market closes on Tuesday, January 27. The prepared remarks will not be read live; the call will be primarily Q&A.

When: Wednesday, January 28, 2009 at 8:30 a.m. Eastern Time

Dial-in: 1-888-566-8560 or 1-517-623-4768

Call Leader: Richard Harrison with Passcode: PTC

Webcast: http://www.ptc.com/for/investors.htm

Replay: The audio replay of this event will be archived for public replay until 4:00 p.m. on February 2, 2009 at 1-866-434-5264 or 1-203-369-1006. To access the replay via webcast, please visit http://www.ptc.com/for/investors.htm.

Additional financial information:

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