CIMdata PLM Industry Summary Online Archive
25 April 2012
Financial News
PTC Announces Q2 FY’12 Results, Issues Q3 Guidance and Revised FY’12 Targets
PTC today reported financial results for its fiscal quarter ended March 31, 2012.
Highlights
- Q2 Non-GAAP revenue of $302 million and non-GAAP EPS of $0.30
- Q2 GAAP revenue of $301 million and GAAP EPS of $0.03
- Q2 license revenue of $75 million
- Q2 revenue contribution from MKS (acquired on May 31, 2011) and 4CS Solutions (acquired on September 2, 2011) was $23 million on a non-GAAP basis and $22 million on a GAAP basis
- Non-GAAP operating margin of 16.8%; GAAP operating margin of 2.3%
- No material impact from currency effects relative to Q2 guidance assumptions
- Q3 Guidance: Revenue of $300 to $315 million and non-GAAP EPS of $0.28 to $0.32
- GAAP EPS of $0.15 to $0.20
- Assumes $1.30 USD / EURO. Revenue guidance assumes approximately $22 million contribution from MKS and 4CS, including $0.2 million in non-GAAP revenue
- FY'12 Targets: Non-GAAP revenue of $1,265 to $1,285 million and non-GAAP EPS of $1.42 to $1.50
- Non-GAAP operating margin of approximately 19%
- GAAP revenue of $1,262 to $1,282 million and GAAP EPS of $0.76 to $0.84
- Assumes $1.30 USD / EURO. Revenue guidance assumes approximately $90 million contribution from MKS and 4CS, including $3 million in non-GAAP revenue
The Q2 non-GAAP revenue results exclude a $1 million effect of purchase accounting on the fair value of the acquired deferred maintenance balance of MKS Inc. The Q2 non-GAAP EPS results also exclude $13 million of stock-based compensation expense, $9 million of acquisition-related intangible asset amortization, $21 million of restructuring expense and acquisition-related expense, and related income tax adjustments. The Q2 results include a non-GAAP tax rate of approximately 25%, an immaterial GAAP tax provision and 121 million diluted shares outstanding.
Results Commentary
James Heppelmann, president and chief executive officer, commented, "For the second quarter, our total non-GAAP revenue was $302 million and our non-GAAP EPS was $0.30. As we discussed on our April 5, 2012 conference call, Q2 financial results were below expectations due to reduced license sales, impacted primarily by a large transaction in Europe that did not close and lower than expected performance in North America. Total license revenue of $75 million increased 1% year over year and on an organic basis decreased 10% year over year. Our total revenue was up 12%, reflecting contribution from MKS and 4CS as well as the growth of our maintenance and services business. On an organic constant currency basis, our total revenue was up 4% year over year."
Heppelmann added, "While we are disappointed with our Q2 results, our market momentum and competitive positioning remain strong and we expect our pipeline to benefit over time from our focus on increasing sales capacity. Our organizational realignment around five market segments is progressing on plan and, importantly, we remain committed to driving long-term operating margin improvement."
Jeff Glidden, chief financial officer, commented, "We delivered $0.30 of non-GAAP EPS in part due to better than anticipated services margins and continued discipline on operating expenses. We ended Q2'12 with $224 million of cash, up from $187 million at the end of Q1'12, reflecting strong operating cash flow, $40 million used to repay our revolving credit facility and $15 million for stock repurchases."
Outlook Commentary
Glidden continued, "Looking to the full year FY'12, we are now targeting non-GAAP revenue growth of 8% to 10%. We are targeting license revenue growth of approximately 5%, services growth of approximately 14% and non-GAAP maintenance growth of approximately 9%. We expect MKS and 4CS to contribute approximately $90 million in revenue for the full year, including $3 million in non-GAAP revenue. We continue to anticipate significant improvement in services non-GAAP net margins with a target of approximately 10% to 11% for the year. Even with lower license revenue expectations for FY'12, we are targeting approximately 130bps of non-GAAP operating margin improvement, which reflects our focus on improving profitability. Our new FY'12 non-GAAP EPS target is $1.42 to $1.50."
The FY'12 targets assume a non-GAAP tax rate of 25%, a GAAP tax rate of 20% and 121 million diluted shares outstanding. The FY'12 non-GAAP targets exclude approximately $21 million in restructuring charges, $3 million for the effect of purchase accounting on acquired MKS deferred maintenance revenue, $51 million of stock-based compensation expense, $36 million of acquisition-related intangible asset amortization, $1 million of other expense, $3 million of acquisition-related expenses, and their related income tax effects.
Glidden added, "For Q3, we are providing guidance of $300 to $315 million in non-GAAP revenue, which includes approximately $22 million in non-GAAP revenue from the MKS and 4CS businesses. We are expecting approximately $75 to $85 million in license revenue in Q3, services revenue growth of approximately 12%, and non-GAAP maintenance revenue growth of approximately 7%. We are expecting non-GAAP EPS of $0.28 to $0.32." For Q3, the GAAP EPS target is $0.15 to $0.20.
The Q3 guidance assumes a non-GAAP tax rate of 25%, a GAAP tax rate of 20% and 121 million diluted shares outstanding. The Q3 non-GAAP guidance excludes $0.2 million for the effect of purchase accounting on acquired MKS deferred maintenance revenue, $12 million of stock-based compensation expense, $9 million of acquisition-related intangible asset amortization expense, and their related income tax effects.
Senior management will host a live webcast and conference call on Thursday, April 26, 2012 at 8:30 am Eastern Time to discuss Q2 results.
Q2 Final Results Conference Call and Webcast
The earnings press release and accompanying prepared remarks will be accessible prior to the conference call and webcast on the Investor Relations section of the Company's web site at www.ptc.com.
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