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.
