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8-K - FORM 8-K - PTC INC. | form8-kq42016earnings.htm |
EX-99.2 - PREPARED REMARKS - PTC INC. | a20161026q4preparedremark.htm |
PTC Announces Fourth Quarter and FY’16 Results
Bookings Exceed High End of Guidance; Business Model Transition
Accelerates with Subscription Bookings Mix Above
Guidance
NEEDHAM, MA, October 26, 2016 - PTC
(NASDAQ: PTC) today reported financial
results for the fourth quarter and fiscal year ended September 30,
2016.
Overview
Fourth quarter FY’16 GAAP revenue was $288 million; non-GAAP
revenue was $289 million. We recorded a GAAP net loss of $28
million or $0.25 per share and non-GAAP net income of $23 million
or $0.20 per share.
FY’16 GAAP revenue was $1,141 million; non-GAAP revenue was
$1,144 million. We recorded a GAAP net loss of $54 million or $0.48
per share and non-GAAP net income of $138 million or $1.19 per
share.
“This past year clearly marked a turning point for
PTC,” said James Heppelmann, President and CEO, PTC.
“We exceeded our key strategic objectives for bookings
growth, IoT market leadership, margin improvement, and subscription
transition. We now start fiscal 2017 more than a year ahead of the
objectives we outlined at our investor day last November. Our focus
on improved execution led to bookings growth, beating the high end
of our guidance for the quarter and for the fiscal year. We
continue to see increased demand for our subscription offering
across our business, resulting in a 70% subscription bookings mix
for the quarter and 56% for the fiscal year, both well ahead of our
guidance.”
Heppelmann added, “While our focus is on creating significant
long-term value for our customers and shareholders through the
transition to a subscription business model, it is important to
note that a higher subscription mix negatively impacts near-term
reported revenue and earnings.”
Operating and Financial Overview
Q4’16 and FY’16 operating and financial highlights are
set forth below. 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.
Information about our bookings and other reporting measures is
provided on page 5.
o
Q4’16
license and subscription bookings were $142 million, up 35% YoY, up
34% YoY in constant currency and significantly above the high end
of the guidance range of $111 million to $121 million. This result
was partially driven by the closing of two subscription mega deals
(bookings > $5 million) in the quarter, including a SLM booking
of approximately $20 million that was not included in our original
Q4’16 guidance due to timing uncertainty. FY’16 license
and subscription bookings were $401 million, up 16% YoY, up 18% YoY
in constant currency, and up 12% YoY in constant currency excluding
the $20 million SLM booking.
o
Q4’16
subscription annualized contract value (ACV) was $50 million, up
365% YoY and significantly above our guidance range of $25 to $28
million. This result was also partially driven by the two mega
deals in the quarter, including approximately $10 million in ACV
from the large SLM transaction. FY’16 ACV was $114 million,
up 281% YoY and up 283% YoY in constant currency.
o
Q4’16
subscription bookings were 70% of total bookings, and were 65% of
total bookings excluding the SLM transaction, above our guidance
assumption of 46% and up from 20% in Q4’15. FY’16
subscription bookings were 56% of total bookings, and were 54% of
total bookings excluding the SLM transaction, up from 17% in
FY’15. For Q4’16, we estimate that this higher than
guidance mix of subscription in the quarter, while positive in the
long-term, reduced revenue by approximately $35 million and reduced
non-GAAP EPS by approximately $0.29 as compared to our guidance,
and reduced non-GAAP EPS by approximately $0.61 as compared to
Q4’15 subscription mix.
o
GAAP
and non-GAAP Q4’16 software revenue were approximately $240
million, which reflects a higher mix of subscription than last
year, and were down 9% YoY and 10% YoY in constant currency. We
estimate that the higher mix of subscription than last year lowered
both GAAP and non-GAAP Q4’16 software revenue by
approximately $63 million. FY’16 GAAP software revenue of
$944 million and non-GAAP software revenue of $946 million, both of
which reflect a higher mix of subscription than last year, were
down 8% YoY and 6% YoY in constant currency. We estimate that the
higher mix of subscription than last year lowered FY’16
software revenue by approximately $134 million.
o
Annualized
recurring revenue (ARR) was approximately $806 million for
Q4’16.
o
Q4’16
GAAP operating expenses were approximately $238 million; non-GAAP
operating expenses were approximately $183 million. FY’16
GAAP operating expenses were $852 million; non-GAAP operating
expenses were $681 million. These amounts were above the GAAP and
non-GAAP guidance ranges primarily due to increased incentive
compensation related to the over performance in bookings and
subscription mix. In addition, GAAP operating expense was
negatively impacted by higher restructuring charges incurred in
support of continued realignment of resources toward higher growth
opportunities and driving long-term margin expansion.
o
Q4’16
GAAP operating margin was -11% and non-GAAP operating margin was
11%, which compares to Q4’15 GAAP operating margin of -7% and
non-GAAP operating margin of 28%. We estimate that the higher mix
of subscription in Q4’16 reduced operating margin by at least
950 basis points as compared to guidance mix, and reduced operating
margin by at least 1,765 basis points as compared to the
Q4’15 subscription mix. FY’16 GAAP operating margin was
-3% and non-GAAP operating margin was 15%, which compares to
FY’15 GAAP operating margin of 3% and non-GAAP operating
margin of 24%. We estimate that the higher mix of subscription in
FY’16 reduced operating margin by approximately 900 basis
points as compared to FY’15.
o
For
Q4’16, we recorded a GAAP income tax benefit of $15 million,
or $0.13 per share, and a non-GAAP income tax benefit of $2
million, or $0.01 per share. The GAAP tax rate for the quarter was
34% and the non-GAAP tax rate for the quarter was -7%. For
FY’16, we recorded a GAAP income tax benefit of $13 million,
or $0.11 per share, and a non-GAAP income tax expense of $7
million, or $0.06 per share. The GAAP tax rate for the year was 19%
and the non-GAAP tax rate for the year was 5%.
o
Cash
flow from operations for Q4’16 was $14 million, and free cash
flow was $4 million, both of which include cash payments for
restructuring of $5 million. Cash flow from operations for
FY’16 was $183 million, and free cash flow was $157 million,
both of which include cash payments for restructuring of $55
million.
o
We
ended the year with total cash, cash equivalents, and marketable
securities of $328 million and total debt of $758
million.
Workforce Realignment
In October 2015, reflecting a realignment of resources toward
higher growth opportunities and our commitment to operating margin
improvement, we announced a plan to repurpose or eliminate
approximately 8% of worldwide positions and to consolidate select
facilities. This is now expected to result in restructuring charges
of approximately $75 million to $80 million (which is an increase
from approximately 8% to approximately 13% of our total September
30, 2015 headcount in addition to consolidating select facilities),
above the $50 million to $70 million range included in the
company’s Q3’16 form 10-Q filed on August 11, 2016, as
well as the $40 million to $50 million range included in our
Q4’16 guidance on July 20, 2016. Of that amount, $37 million
was recorded in Q1’16, $5 million was recorded in
Q2’16, $3 million recorded in Q3’16 and $32 million was
recorded in Q4’16. We expect to complete facility-related
restructuring actions in the first quarter of FY’17 and
record approximately $3 million of charges associated with
consolidating excess facilities.
FY’17 Business Outlook
For the quarter ending December 31, 2016 and fiscal year 2017, the
company expects:
In millions except per share amounts
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|
|
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Operating Measures(1)
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Q1’17 Low
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Q1’17
High
|
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FY’17 Low
|
|
FY’17 High
|
|
|
|
|
|
|
|
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Subscription ACV
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$ 19
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$ 22
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$ 130
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$ 136
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License and Subscription Bookings
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$ 70
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$ 80
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$ 400
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$ 420
|
Subscription % of Bookings
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55%
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55%
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65%
|
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65%
|
(1) An explanation of the
metrics included in this table is provided
below.
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Financial Measures
|
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Q1’17 Low
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Q1’17 High
|
|
FY’17 Low
|
|
FY’17 High
|
Subscription Revenue
|
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$ 54
|
|
$ 54
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|
$ 250
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$ 260
|
Support Revenue
|
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153
|
|
153
|
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605
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|
605
|
Perpetual License Revenue
|
|
32
|
|
37
|
|
140
|
|
150
|
Total Software
Revenue(2)
|
|
239
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|
244
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|
995
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|
1,015
|
Professional Services Revenue
|
|
46
|
|
46
|
|
195
|
|
195
|
Total Revenue(2)
|
|
$ 285
|
|
$ 290
|
|
$ 1,190
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|
$ 1,210
|
|
|
|
|
|
|
|
|
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Operating Expense (GAAP)
|
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$ 192
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|
$ 194
|
|
$ 765
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|
$ 775
|
Operating Expense (Non-GAAP)
|
|
169
|
|
171
|
|
680
|
|
690
|
Operating Margin (GAAP)
|
|
3%
|
|
4%
|
|
7%
|
|
7%
|
Operating Margin (Non-GAAP)
|
|
15%
|
|
16%
|
|
17%
|
|
18%
|
Tax Rate (GAAP)
|
|
25%
|
|
25%
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|
25%
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|
25%
|
Tax Rate (Non-GAAP)
|
|
12%
|
|
10%
|
|
12%
|
|
10%
|
Shares Outstanding
|
|
117
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|
117
|
|
116
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|
116
|
EPS (GAAP)
|
|
$ 0.06
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|
$ 0.08
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|
$ 0.51
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|
$ 0.58
|
EPS (Non-GAAP) (2)
|
|
$ 0.23
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|
$ 0.28
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$ 1.20
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$ 1.35
|
Free Cash Flow
|
|
|
|
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|
$ 131
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$ 141
|
Adjusted Free Cash
Flow(3)
|
|
|
|
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$ 170
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$ 180
|
(2) We estimate that, on an
annual basis, every 1% change in subscription mix will impact
annual revenue by $4 million, and annual non-GAAP EPS by $0.03. We
cannot estimate the effect on GAAP EPS due to the number of unknown
items, including tax items, included in GAAP
EPS.
(3) Adjusted Free Cash Flow
Guidance is net cash provided by (used in) operating activities
less capital expenditures, and excludes restructuring payments of
approximately $36 million and a legal accrual of approximately $3
million.
The
Q1’17 and full year FY’17 non-GAAP operating margin and
non-GAAP EPS guidance exclude the estimated items outlined in the
table below, as well as any tax effects and discrete tax items
(which are not known or reflected).
In millions
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Q1’17
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FY’17
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|
|
|
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|
Effect of acquisition accounting on fair value of acquired deferred
revenue
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$ 1
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$ 3
|
Stock-based compensation expense
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|
15
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|
62
|
Intangible asset amortization expense
|
|
14
|
|
58
|
Restructuring charges
|
|
3
|
|
3
|
Total Estimated Pre-Tax GAAP adjustments
|
|
$ 33
|
|
$ 126
|
PTC’s Fourth Quarter and FY’16 Results Conference Call,
Prepared Remarks and Financial Data Tables
Prepared remarks for the conference call 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 26, 2016. 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
800-857-5592 or 773-799-3757 and provide the passcode PTC. The call
will be recorded and a replay will be available for 10 days
following the call by dialing 866-566-0433 and entering the pass
code 3010. The archived webcast will also be available on
PTC’s 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.
Annualized Recurring Revenue (ARR)
We currently offer our solutions on premise, as a cloud service,
and as SaaS offerings. Our on-premise solutions can be licensed
either as perpetual with annual support contracts or through a
subscription, which is a combination of license and support.
Beginning in FY’16, we launched a number of initiatives
designed to incentivize more of our customers to purchase our
solutions on a subscription basis. If successful, these initiatives
will cause an increasing percentage of our revenue to come from
subscriptions, which is expected to grow our recurring software
revenue.
To help investors understand and assess the success of this
expected revenue transition, we are providing 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. 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, and these elements can
result in variability in disclosed ARR.
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 expenses, 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, consisting of restricted
stock, stock options and restricted stock units. 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.
●
Legal accrual
includes amounts accrued to settle our
SEC and DOJ FCPA investigation in China, which was ultimately
settled and paid in the second quarter of 2016 for $28.2 million,
and other amounts in respect of related regulatory and other
matters. We view these matters as non-ordinary course events and
exclude the amounts when reviewing our operating
performance.
●
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.
PTC
also provides information on “free cash flow”,
“adjusted free cash flow”, and “free cash flow
return” 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 expenses and
certain legal accruals, free cash flow return is the value of
shares repurchased divided by free cash flow. 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 2017
targets and other future financial and growth expectations, 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 at the rate we expect, which could impact
our ability to achieve expected subscription bookings and delay our
exit from the subscription trough; sales of our solutions as
subscriptions may not have the longer-term effect on revenue that
we expect; our workforce realignment may not achieve the expense
savings we expect and may adversely affect our operations; 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 Report 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
PTC (NASDAQ: PTC)
is a global provider of technology
platforms and solutions that transform how companies create,
operate, and service the “things” in the Internet of
Things (IoT). The company’s next-generation ThingWorx®
technology platform gives developers the tools they need to
capture, analyze, and capitalize on the vast amounts of data being
generated by smart, connected products and systems. The
company’s field-proven solutions are deployed in more than
26,000 businesses worldwide to generate a product or service
advantage. PTC’s award-winning CEO, considered an industry
thought leader, co-authored the definitive guides to the impact of
the IoT on business in the Harvard Business
Review.
PTC Investor Relations Contacts
Tim Fox, 781-370-5961
tifox@ptc.com
Jason Howard, 781-370-5087
jahoward@ptc.com
PTC Inc.
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UNAUDITED CONSOLIDATED STATEMENTS OF
INCOME
|
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(in thousands, except per share data)
|
|
|
|
||||
|
September 30,
|
September 30,
|
September 30,
|
September 30,
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||
|
2016
|
2015
|
2016
|
2015
|
||
|
|
|
|
|
||
Revenue:
|
|
|
|
|
||
Subscription
|
$40,665
|
$18,096
|
$118,322
|
$65,239
|
||
Support
|
157,545
|
165,482
|
651,807
|
681,524
|
||
Total
recurring software
|
198,210
|
183,578
|
770,129
|
746,763
|
||
Perpetual
license
|
41,367
|
81,053
|
173,467
|
282,760
|
||
Total
software
|
239,577
|
264,631
|
943,596
|
1,029,523
|
||
Professional
services
|
48,660
|
47,937
|
196,937
|
225,719
|
||
Total
revenue
|
288,237
|
312,568
|
1,140,533
|
1,255,242
|
||
|
|
|
|
|
||
Cost
of revenue:
|
|
|
|
|
||
Cost of software revenue
(1)
|
41,148
|
33,467
|
155,439
|
135,992
|
||
Cost of professional services
revenue(1)
|
41,708
|
42,895
|
170,226
|
198,742
|
||
Total
cost of revenue
|
82,856
|
76,362
|
325,665
|
334,734
|
||
|
|
|
|
|
||
Gross
margin
|
205,381
|
236,206
|
814,868
|
920,508
|
||
|
|
|
|
|
||
Operating
expenses:
|
|
|
|
|
||
Sales and marketing
(1)
|
102,985
|
85,092
|
367,465
|
346,794
|
||
Research and development
(1)
|
57,934
|
52,180
|
229,331
|
227,513
|
||
General and administrative
(1)
|
37,647
|
44,990
|
145,615
|
158,715
|
||
U.S.
pension settlement loss
|
-
|
66,332
|
-
|
66,332
|
||
Amortization
of acquired intangible assets
|
8,158
|
8,438
|
33,198
|
36,129
|
||
Restructuring
charges
|
31,732
|
784
|
76,273
|
43,409
|
||
Total
operating expenses
|
238,456
|
257,816
|
851,882
|
878,892
|
||
|
|
|
|
|
||
Operating
income (loss)
|
(33,075)
|
(21,610)
|
(37,014)
|
41,616
|
||
Other
expense, net
|
(10,298)
|
(4,598)
|
(30,178)
|
(15,091)
|
||
Income
(loss) before income taxes
|
(43,373)
|
(26,208)
|
(67,192)
|
26,525
|
||
Provision
(benefit) for income taxes
|
(14,900)
|
(20,655)
|
(12,727)
|
(21,032)
|
||
Net
income (loss)
|
$(28,473)
|
$(5,553)
|
$(54,465)
|
$47,557
|
||
|
|
|
|
|
||
Earnings
(loss) per share:
|
|
|
|
|
||
Basic
|
$(0.25)
|
$(0.05)
|
$(0.48)
|
$0.41
|
||
Weighted
average shares outstanding
|
114,958
|
113,999
|
114,612
|
114,775
|
||
|
|
|
|
|
||
Diluted
|
$(0.25)
|
$(0.05)
|
$(0.48)
|
$0.41
|
||
Weighted
average shares outstanding
|
114,958
|
113,999
|
114,612
|
116,012
|
||
|
|
|
|
|
||
|
|
|
|
|
||
|
|
|
|
|
||
(1)
The amounts in the tables above include stock-based compensation as
follows:
|
|
|
|
|||
|
|
|
|
|
||
|
|
|
Three Months Ended
|
|
||
|
|
|
September 30,
|
September 30,
|
September 30,
|
September 30,
|
|
|
|
2016
|
2015
|
2016
|
2015
|
Cost
of software revenue
|
$1,235
|
$1,138
|
$5,398
|
$4,296
|
||
Cost
of professional services revenue
|
1,321
|
1,361
|
5,393
|
5,871
|
||
Sales
and marketing
|
3,405
|
3,368
|
14,659
|
14,189
|
||
Research
and development
|
2,596
|
2,608
|
10,174
|
11,623
|
||
General
and administrative
|
5,618
|
3,572
|
30,372
|
14,203
|
||
Total
stock-based compensation
|
$14,175
|
$12,047
|
$65,996
|
$50,182
|
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,
|
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
GAAP
software revenue
|
$239,577
|
$264,631
|
$943,596
|
$1,029,523
|
Fair
value adjustment of acquired deferred subscription
revenue
|
619
|
207
|
2,330
|
1,831
|
Fair
value adjustment of acquired deferred support revenue
|
-
|
43
|
-
|
898
|
Non-GAAP
software revenue
|
$240,196
|
$264,881
|
$945,926
|
$1,032,252
|
|
|
|
|
|
GAAP
revenue
|
$288,237
|
$312,568
|
$1,140,533
|
$1,255,242
|
Fair
value adjustment of acquired deferred subscription
revenue
|
619
|
207
|
2,330
|
1,831
|
Fair
value adjustment of acquired deferred support revenue
|
-
|
43
|
-
|
898
|
Fair
value adjustment of acquired deferred services revenue
|
266
|
296
|
1,139
|
1,140
|
Non-GAAP
revenue
|
$289,122
|
$313,114
|
$1,144,002
|
$1,259,111
|
|
|
|
|
|
GAAP
gross margin
|
$205,381
|
$236,206
|
$814,868
|
$920,508
|
Fair
value adjustment of acquired deferred revenue
|
885
|
546
|
3,469
|
3,869
|
Fair
value adjustment to deferred services cost
|
(114)
|
(134)
|
(492)
|
(526)
|
Stock-based
compensation
|
2,556
|
2,499
|
10,791
|
10,167
|
Amortization
of acquired intangible assets included in cost of software
revenue
|
6,369
|
4,964
|
24,604
|
19,402
|
Non-GAAP
gross margin
|
$215,077
|
$244,081
|
$853,240
|
$953,420
|
|
|
|
|
|
GAAP
operating income (loss)
|
$(33,075)
|
$(21,610)
|
$(37,014)
|
$41,616
|
Fair
value adjustment of acquired deferred revenue
|
885
|
546
|
3,469
|
3,869
|
Fair
value adjustment to deferred services cost
|
(114)
|
(134)
|
(492)
|
(526)
|
Stock-based
compensation
|
14,175
|
12,047
|
65,996
|
50,182
|
Amortization
of acquired intangible assets included in cost of software
revenue
|
6,369
|
4,964
|
24,604
|
19,402
|
Amortization
of acquired intangible assets
|
8,158
|
8,438
|
33,198
|
36,129
|
Acquisition-related
charges included in general and administrative costs
|
281
|
210
|
3,496
|
8,913
|
US
pension plan termination-related costs
|
-
|
67,779
|
-
|
73,171
|
Legal
accrual
|
3,199
|
14,540
|
3,199
|
28,162
|
Restructuring
charges
|
31,732
|
784
|
76,273
|
43,409
|
Non-GAAP operating income
(2)
|
$31,610
|
$87,564
|
$172,729
|
$304,327
|
|
|
|
|
|
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,
|
|
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
|
GAAP net income (loss)
|
$(28,473)
|
$(5,553)
|
$(54,465)
|
$47,557
|
|
Fair value adjustment of acquired deferred revenue
|
885
|
546
|
3,469
|
3,869
|
|
Fair value adjustment to deferred services cost
|
(114)
|
(134)
|
(492)
|
(526)
|
|
Stock-based compensation
|
14,175
|
12,047
|
65,996
|
50,182
|
|
Amortization of acquired intangible assets included in cost of
software revenue
|
6,369
|
4,964
|
24,604
|
19,402
|
|
Amortization of acquired intangible assets
|
8,158
|
8,438
|
33,198
|
36,129
|
|
Acquisition-related charges included in general and administrative
costs
|
281
|
210
|
3,496
|
8,913
|
|
US pension plan termination-related costs
|
-
|
67,779
|
-
|
73,171
|
|
Legal accrual
|
3,199
|
14,540
|
3,199
|
28,162
|
|
Restructuring charges
|
31,732
|
784
|
76,273
|
43,409
|
|
Non-operating credit facility refinancing costs
|
-
|
-
|
2,359
|
-
|
|
Income tax
adjustments (3)
|
(13,328)
|
(26,537)
|
(19,809)
|
(51,088)
|
|
Non-GAAP net income
|
$22,884
|
$77,084
|
$137,828
|
$259,180
|
|
|
|
|
|
|
|
GAAP diluted earnings (loss) per share
|
$(0.25)
|
$(0.05)
|
$(0.48)
|
$0.41
|
|
Fair value of acquired deferred revenue
|
0.01
|
0.00
|
0.03
|
0.03
|
|
Stock-based compensation
|
0.12
|
0.10
|
0.57
|
0.43
|
|
Amortization of acquired intangibles
|
0.12
|
0.12
|
0.50
|
0.48
|
|
Acquisition-related charges
|
-
|
0.00
|
0.03
|
0.08
|
|
US pension plan termination-related costs
|
-
|
0.59
|
-
|
0.63
|
|
Legal accrual
|
0.03
|
0.13
|
0.03
|
0.24
|
|
Restructuring charges
|
0.27
|
0.01
|
0.66
|
0.37
|
|
Non-operating credit facility refinancing costs
|
-
|
-
|
0.02
|
-
|
|
Income tax adjustments
|
(0.11)
|
(0.23)
|
(0.17)
|
(0.44)
|
|
Non-GAAP diluted earnings per share
|
$0.20
|
$0.67
|
$1.19
|
$2.23
|
|
|
|
|
|
|
|
GAAP diluted weighted average shares outstanding
|
114,958
|
113,999
|
114,612
|
116,012
|
|
Dilutive effect of stock based compensation plans
|
1,522
|
1,026
|
985
|
-
|
|
Non-GAAP diluted weighted average shares outstanding
|
116,480
|
115,025
|
115,597
|
116,012
|
|
|
|
|
|
|
|
(2)
|
Operating margin impact of non-GAAP adjustments:
|
|
|
|
|
|
|
Three Months Ended
|
Twelve Months Ended
|
||
|
|
September 30,
|
September 30,
|
September 30,
|
September 30,
|
|
|
2016
|
2015
|
2016
|
2015
|
GAAP operating margin
|
-11.5%
|
-6.9%
|
-3.2%
|
3.3%
|
|
|
Fair value of acquired deferred revenue
|
0.3%
|
0.2%
|
0.3%
|
0.3%
|
|
Fair value adjustment to deferred services cost
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
|
Stock-based compensation
|
4.9%
|
3.9%
|
5.8%
|
4.0%
|
|
Amortization of acquired intangibles
|
5.0%
|
4.3%
|
5.1%
|
4.4%
|
|
Acquisition-related charges
|
0.1%
|
0.1%
|
0.3%
|
0.7%
|
|
US pension plan termination-related costs
|
0.0%
|
21.7%
|
0.0%
|
5.8%
|
|
Legal accrual
|
1.1%
|
4.7%
|
0.3%
|
2.2%
|
|
Restructuring charges
|
11.0%
|
0.3%
|
6.7%
|
3.5%
|
Non-GAAP operating margin
|
10.9%
|
28.0%
|
15.1%
|
24.2%
|
|
|
|
|
|
|
|
(3)
|
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 2016 and 2015 non-GAAP tax provisions are
being calculated assuming there is no valuation allowance. Income
tax adjustments for the three and twelve months ended September 30,
2016 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, for the three
months and twelve months ended September 30, 2016, we recorded a
tax benefit for the writeoff of a deferred tax liability that
resulted from the change in tax status of a foreign subsidiary.
This tax benefit has been excluded for non-GAAP tax
expense
|
PTC Inc.
|
|||
UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS
|
|||
(in thousands)
|
|||
|
|
|
|
|
|
|
|
|
|
September 30,
|
September 30,
|
|
|
2016
|
2015
|
ASSETS
|
|
|
|
Cash and cash equivalents (4)
|
$277,935
|
$273,417
|
|
Marketable securities (4)
|
49,616
|
-
|
|
Accounts
receivable, net
|
161,357
|
197,275
|
|
Property
and equipment, net
|
67,113
|
65,162
|
|
Goodwill
and acquired intangible assets, net
|
1,480,118
|
1,360,342
|
|
Other
assets
|
316,114
|
313,717
|
|
|
|
|
|
Total
assets
|
$2,352,253
|
$2,209,913
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Deferred
revenue
|
$413,657
|
$386,850
|
|
Debt
|
758,125
|
668,125
|
|
Other
liabilities
|
337,805
|
294,767
|
|
Stockholders'
equity
|
842,666
|
860,171
|
|
|
|
|
|
Total
liabilities and stockholders' equity
|
$2,352,253
|
$2,209,913
|
|
|
|
|
|
|
|
|
|
(4)
In the third quarter of 2016, we began a fixed income investment
plan for a portion of our offshore cash. In connection with the
plan, we invested $50 million in investment grade securities with a
weighted average maturity
of
less than 18 months.
|
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,
|
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
Cash
flows from operating activities:
|
|
|
|
|
Net
income (loss)
|
$(28,473)
|
$(5,553)
|
$(54,465)
|
$47,557
|
Stock-based
compensation
|
14,175
|
12,047
|
65,996
|
50,182
|
Depreciation
and amortization
|
21,833
|
20,978
|
86,554
|
84,433
|
Accounts
receivable
|
(5,882)
|
(15,183)
|
52,617
|
29,723
|
Accounts
payable and accruals
|
56,620
|
(15,787)
|
46,759
|
(25,816)
|
Deferred
revenue
|
(28,360)
|
(42,541)
|
16,232
|
8,852
|
Pension
settlement loss
|
-
|
66,332
|
-
|
66,332
|
Income
taxes
|
(19,963)
|
(27,289)
|
(37,433)
|
(52,897)
|
Excess
tax benefits from stock-based awards
|
1
|
(95)
|
(93)
|
(24)
|
Other
|
3,621
|
(5,469)
|
7,001
|
(28,439)
|
Net cash provided by operating
activities (5)
|
13,572
|
(12,560)
|
183,168
|
179,903
|
|
|
|
|
|
Capital
expenditures
|
(9,557)
|
(9,991)
|
(26,189)
|
(30,628)
|
Acquisitions of businesses, net
of cash acquired (6)
|
(1,611)
|
-
|
(165,802)
|
(98,411)
|
Proceeds
(payments) on debt, net
|
(20,000)
|
43,750
|
90,000
|
56,250
|
Proceeds
from issuance of common stock
|
2
|
3
|
21
|
41
|
Payments
of withholding taxes in connection with
|
|
|
|
|
vesting
of stock-based awards
|
(303)
|
(90)
|
(20,939)
|
(29,207)
|
Repurchases
of common stock
|
-
|
(14,978)
|
-
|
(64,940)
|
Excess
tax benefits from stock-based awards
|
(1)
|
95
|
93
|
24
|
Purchase
of investments
|
(560)
|
-
|
(45,165)
|
(11,000)
|
Contingent
consideration
|
-
|
(4,323)
|
(10,621)
|
(4,323)
|
Other
financing & investing activities
|
(96)
|
-
|
(6,855)
|
-
|
Foreign
exchange impact on cash
|
1,863
|
(3,549)
|
6,807
|
(17,946)
|
|
|
|
|
|
Net
change in cash and cash equivalents
|
(16,691)
|
(1,643)
|
4,518
|
(20,237)
|
Cash
and cash equivalents, beginning of period
|
294,626
|
275,060
|
273,417
|
293,654
|
Cash
and cash equivalents, end of period
|
$277,935
|
$273,417
|
$277,935
|
$273,417
|
|
|
|
|
|
|
|
|
|
|
(5)
The twelve months ended September 30, 2016 include a $28 million
legal settlement payment. The three and twelve months ended
September 30, 2016 include $5 million and $55 million in
restructuring payments, respectively. The three and twelve months
ended September 30, 2015 include $6 million and $54 million in
restructuring payments, respectively. The three and twelve months
ended September 30, 2015 includes $26 million and $46 million of
voluntary contribution funding payments to pension plans,
respectively.
|
||||
|
|
|
|
|
(6)
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). We acquired ColdLight on May 7, 2015 for
$99 million (net of cash acquired).
|