Industry Summary Articles

PTC reported financial results for its first fiscal quarter ended December 31, 2023.

"In our first fiscal quarter, we again delivered solid ARR and cash flow results. I am confident that PTC is well positioned to continue delivering durable and consistent ARR and cash flow growth under the leadership of Neil Barua," said James Heppelmann, CEO, PTC.

Neil Barua, CEO-elect, added, "We have a differentiated strategy that leverages our unique product portfolio to help our customers along their digital transformation journeys. I am looking forward to working with the team to continue enhancing PTC's already strong market position and execution by continuing to invest significantly in technologies that meet the evolving needs of our customers."

First Quarter 2024 Highlights

Key operating and financial highlights are set forth below. The definitions of our operating and non-GAAP financial measures and reconciliations of non-GAAP financial measures to comparable GAAP measures are included below and in the reconciliation tables at the end of this press release.

Fiscal 2024 and Q2'24 Guidance

"Our ARR and free cash flow results in Q1'24 were solid, driven by the resilience of our subscription license business model, consistent execution, operational discipline, and the actions we have taken over time to align our investments with market opportunities. We continue to rapidly de-lever, with our debt to EBITDA ratio back under 3.0x at the end of Q1. Despite the ongoing challenging macro backdrop, our full year guidance for ARR and FCF remains unchanged, and we believe we have set our Q2 guidance prudently," said Kristian Talvitie, CFO.

FY'24 financial guidance includes the following assumptions:

• We provide ARR guidance on a constant currency basis, using our FY'24 Plan foreign exchange rates (rates as of September 30, 2023) for all periods. Foreign exchange rate fluctuations during Q1'24 had a $41 million favorable impact on our Q1'24 reported ARR, compared to our Q1'24 constant currency ARR. Using foreign exchange rates as of the end of Q1'24 and assuming the midpoint of our constant currency guidance ranges:
• Q2'24 reported ARR would be higher by approximately $42 million, compared to Q2'24 constant currency ARR guidance; and
• FY'24 reported ARR would be higher by approximately $46 million, compared to FY'24 constant currency ARR guidance.
• We expect churn to remain low.
• For cash flow, due to invoicing and payments seasonality, and consistent with the past 3 years, we expect the majority of our collections to occur in the first half of our fiscal year and for fiscal Q4 to be our lowest cash flow generation quarter.
• Compared to FY'23, at the midpoint of FY'24 ARR guidance, FY'24 GAAP operating expenses are expected to increase approximately 5% to 6%, and FY'24 non-GAAP operating expenses are expected to increase approximately 8% to 9%, primarily due to investments to drive future growth, the acquisition of ServiceMax, and foreign exchange rate fluctuations.
• FY'24 GAAP P&L results are expected to include the items below, totaling approximately $284 million to $314 million, as well as their related tax effects:
• approximately $200 million to $230 million of stock-based compensation expense,
• approximately $82 million of intangible asset amortization expense, and
• approximately $2 million, net, related to acquisition and transaction-related expense and a restructuring credit.
• Our FY'24 GAAP and non-GAAP tax rates are expected to be approximately 20%.
• Cash tax payments are expected to be approximately $80 million in FY'24.
• Capital expenditures are expected to be approximately $20 million in FY'24.
• Cash interest payments are expected to be approximately $135 million in FY'24.
• Our long-term goal, assuming our Debt/EBITDA ratio is below 3x, is to return approximately 50% of our free cash flow to shareholders via share repurchases, while also taking into consideration the interest rate environment and strategic opportunities.
• We expect to prioritize paying down our debt in FY'24.
• We expect gross debt of approximately $1.7 billion at the end of FY'24.
• We expect our fully diluted share count to increase by approximately 1 million in FY'24.

PTC's Fiscal First Quarter Conference Call

The Company will host a conference call to discuss results at 5:00 pm ET on Wednesday, January 31, 2024. To participate in the live conference call, dial (888) 330-2508 or (240) 789-2735 and provide the passcode 7328695, or log in to the webcast, available on PTC's Investor Relations website. A replay will also be available.

To view the original press release, please click here.

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