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EX-99.2 - PREPARED REMARKS - PTC INC. | remarks.htm |
8-K - FORM 8-K - PTC INC. | form8-kq22017earnings_sig.htm |
PTC Announces Second Quarter FY’17 Results
Bookings and Subscription Mix Both Exceed the High End of
Guidance
NEEDHAM, MA, April 19, 2017 -PTC
(NASDAQ: PTC) today reported financial
results for the second quarter ended April 1,
2017.
Overview
Second quarter FY’17 GAAP revenue was $280 million; non-GAAP
revenue was $281 million. We recorded a GAAP net loss of $1 million
or $0.01 per share; non-GAAP net income was $35 million or $0.30
per share.
“We are very pleased with our second fiscal quarter
performance,” said James Heppelmann, President and CEO, PTC.
“Bookings of $95 million and subscription mix of 71% both
exceeded the high end of our guidance for the quarter. Bookings
growth of 11% year-over-year was driven by another strong quarter
in IoT, with new bookings growing faster than the estimated 40%
market growth rate; as well as solid bookings results in CAD and
core PLM, which both grew at or above the estimated market growth
rates.”
Heppelmann added, “Even with the higher than guidance
subscription mix in the quarter, which drove down reported revenue
in the current period as revenue is deferred and recognized over
future periods, revenue and non-GAAP EPS both fell within our
guidance ranges. Despite the higher subscription mix, revenue grew
year-over-year for the first time in nine quarters, evidencing that
we have exited the subscription trough. In addition, total deferred
revenue - billed and unbilled - grew $56 million over last quarter,
and billed deferred revenue grew $117 million over last
quarter.”
Heppelmann continued, “Our strong Q2 results are yet another
positive step along our journey to create significant long-term
value for our customers and shareholders through our transition to
a subscription business model. Due to the success of this
transition, we have separately announced today a plan to accelerate
our transition by offering our core Solutions products and
ThingWorx platform only by subscription in the Americas and Western
Europe beginning January 1, 2018.”
Operating and Financial Overview
Q2’17 operating and financial highlights are set forth below.
Information about our bookings and other reporting measures is
provided beginning on page 4.
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.
o
Q2’17
license and subscription bookings were $95 million, up 11% YoY,
both as reported and in constant currency, and above the high end
of the guidance range of $80 million to $90 million. On a YTD
basis, license and subscription bookings were $185 million, up 20%
YoY, both as reported and in constant currency;excluding Kepware,
YTD bookings were up 15% YoY as reported and 16% YoY in constant
currency.
o
Q2’17
subscription annualized contract value (ACV) was $34 million, up
43% YoY and above our guidance range of $24 million to $27 million.
On a YTD basis, ACV was $63 million, up 85% YoY.
o
Q2’17
subscription bookings were 71% of total bookings, above our
guidance assumption of 60% and up from 54% in Q2’16. For
Q2’17, we estimate that this higher-than-guidance mix of
subscription in the quarter reduced revenue by approximately $10
million and reduced non-GAAP EPS by approximately $0.08 as compared
to our guidance.
o
Strong
subscription results, as well as the timing of annual renewals of
recurring revenue contracts, contributed to a significant increase
in our total deferred revenue – billed plus unbilled - which
increased $56 million sequentially and $223 million year-over-year
to $881 million as of the end of Q2’17. Billed deferred
revenue increased $117 million sequentially and $45 million
year-over-year to $492 million. 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.
o
Q2’17 GAAP and non-GAAP software revenue
were both approximately $235 million. Despite a higher mix of
subscription than last year, both were up approximately 5%
year-over-year as reported and in constant currency. We estimate
that the higher-than-guidance mix of subscription in the quarter
reduced both GAAP and non-GAAP Q2’17 software revenue by
approximately $10 million as compared to
guidance.
o
Annualized
recurring revenue (ARR) was approximately $834 million for
Q2’17, an increase of 12% year-over-year.
o
Q2’17
GAAP operating expenses were approximately $191 million; non-GAAP
operating expenses were approximately $163 million. Both GAAP and
non-GAAP operating expenses were approximately flat
year-over-year.
o
Q2’17
GAAP operating margin was 3% and non-GAAP operating margin was 16%,
which compares to Q2’16 GAAP operating margin of 1% and
non-GAAP operating margin of 14%. We estimate that the
higher-than-guidance mix of subscription in Q2’17 reduced
non-GAAP operating margin by approximately 300 basis
points.
o
For
Q2’17, we recorded a GAAP income tax expense of $0.05
million, or less than $0.01 per share;non-GAAP income tax expense
was $3 million, or $0.02 per share. The GAAP tax rate for the
quarter was (5%) and the non-GAAP tax rate for the quarter was
8%.
o
Cash
flow from operations for Q2’17 was $76 million, and free cash
flow was $69 million, both of which include cash payments for
restructuring of $13 million.
o
We
ended the quarter with total cash, cash equivalents, and marketable
securities of $292 million and total debt, net of deferred issuance
costs, of $712 million.
FY’17 Business Outlook
For the third quarter ending July 1, 2017 and for fiscal year 2017,
the company expects:
In millions except per share amounts
|
|
|
|
|
|
|
|
|
Operating Measures(1)
|
|
Q3’17
Low
|
|
Q3’17
High
|
|
FY’17
Low
|
|
FY’17
High
|
|
|
|
|
|
|
|
|
|
Subscription ACV
|
|
$ 32
|
|
$ 36
|
|
$ 136
|
|
$ 143
|
License and Subscription Bookings
|
|
$ 95
|
|
$ 105
|
|
$ 400
|
|
$ 420
|
Subscription % of Bookings
|
|
68%
|
|
68%
|
|
68%
|
|
68%
|
(1) An explanation of the
metrics included in this table is provided
below.
|
||||||||
Financial Measures
|
|
Q3’17
Low
|
|
Q3’17
High
|
|
FY’17
Low
|
|
FY’17
High
|
Subscription Revenue
|
|
$ 74
|
|
$ 75
|
|
$ 275
|
|
$ 280
|
Support Revenue
|
|
140
|
|
140
|
|
575
|
|
575
|
Perpetual License Revenue
|
|
29
|
|
33
|
|
130
|
|
135
|
Total Software
Revenue(2)
|
|
243
|
|
248
|
|
980
|
|
990
|
Professional Services Revenue
|
|
45
|
|
45
|
|
182
|
|
182
|
Total Revenue(2)
|
|
$ 288
|
|
$ 293
|
|
$ 1,162
|
|
$ 1,172
|
|
|
|
|
|
|
|
|
|
Operating Expense (GAAP)
|
|
$ 195
|
|
$ 200
|
|
$ 780
|
|
$ 790
|
Operating Expense (Non-GAAP)
|
|
168
|
|
173
|
|
673
|
|
683
|
Operating Margin (GAAP)
|
|
2%
|
|
4%
|
|
4%
|
|
4%
|
Operating Margin (Non-GAAP)
|
|
15%
|
|
16%
|
|
16%
|
|
17%
|
Tax Rate (GAAP)
|
|
5%
|
|
5%
|
|
75%
|
|
75%
|
Tax Rate (Non-GAAP)
|
|
10%
|
|
8%
|
|
10%
|
|
8%
|
Shares Outstanding (GAAP)
|
|
116
|
|
117
|
|
116
|
|
117
|
Shares Outstanding (Non-GAAP)
|
|
117
|
|
117
|
|
117
|
|
117
|
EPS (GAAP)
|
|
$ (0.04)
|
|
$ 0.00
|
|
$ 0.00
|
|
$ 0.02
|
EPS (Non-GAAP) (2)
|
|
$ 0.24
|
|
$ 0.29
|
|
$ 1.13
|
|
$ 1.23
|
Free Cash Flow
|
|
|
|
|
|
$ 115
|
|
$ 125
|
Adjusted Free Cash
Flow(3)
|
|
|
|
|
|
$ 158
|
|
$ 168
|
(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 is
net cash provided by (used in) operating activities less capital
expenditures, excluding restructuring payments of approximately $40
million and legal payments of approximately $3
million.
The
Q3’17 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
|
|
Q3’17
|
|
FY’17
|
|
|
|
|
|
Effect of acquisition accounting on fair value of acquired deferred
revenue
|
|
$ 1
|
|
$ 3
|
Stock-based compensation expense
|
|
18
|
|
76
|
Intangible asset amortization expense
|
|
14
|
|
57
|
Restructuring
charges(4)
|
|
3
|
|
10
|
Acquisition-related charges
|
|
0
|
|
1
|
Non-operating credit facility refinancing charges
|
|
0
|
|
1
|
Total Estimated Pre-Tax GAAP adjustments
|
|
$ 36
|
|
$ 148
|
(4) We expect to record
approximately $3 million in restructuring charges in the third
quarter of 2017 related to the closure of a leased
facility.
PTC’s Second Quarter FY’17 Results Conference Call,
Prepared Remarks and Financial Data Tables
Prepared remarks 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, April 19, 2017. 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 888-566-0398 and entering the
pass code 7021. The archived webcast will also be available
on PTCs Investor
Relations website.
Software Revenue
Any reference to “total recurring software revenue” or
“recurring software revenue” means the sum of
subscription revenue and support revenue. Any reference to
“total software revenue” or “software
revenue” means the sum of subscription revenue, support
revenue and perpetual license revenue. References to
“software revenue” include cloud services
revenue.
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)
To help investors understand and assess the success of our
subscription transition, we provide 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.
Navigate Allocation
In FY’16, we launched Navigate, a ThingWorx-based IoT
solution for PLM. In FY’17, revenue and bookings for Navigate
are being allocated 50% to Solutions and 50% to IoT. FY’16
reported amounts have been reclassified to conform with the current
presentation. The impact of the reclassification on FY’16
revenue was immaterial.
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 expense, 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 and to our employee stock
purchase plan. 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.
●
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” and
“adjusted free cash flow” 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 payments and certain identified non-ordinary course
payments. 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 third quarter and full fiscal 2017
targets and other future financial and growth expectations and
targets, 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 as we expect,
which could impact our ability to achieve targeted subscription
bookings and subscription mix; sales of our solutions as
subscriptions may not have the longer-term effect on revenue that
we expect; 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 (NASDAQ: PTC)
PTC has the most robust Internet of Things technology in the world.
In 1986 we revolutionized digital 3D design, and in 1998 were first
to market with Internet-based PLM. Now our leading IoT and AR
platform and field-proven solutions bring together the physical and
digital worlds to reinvent the way you create, operate, and service
products. With PTC, global manufacturers and an ecosystem of
partners and developers can capitalize on the promise of the IoT
today and drive the future of innovation.
PTC.com @PTC Blogs
PTC Investor Relations Contacts
Tim Fox, 781-370-5961
tifox@ptc.com
Jason Howard, 781-370-5087
jahoward@ptc.com
PTC Inc.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
|
Three Months Ended
|
Six Months Ended
|
||
|
April 1,
|
April 2,
|
April 1,
|
April 2,
|
|
2017
|
2016
|
2017
|
2016
|
|
|
|
|
|
Revenue:
|
|
|
|
|
Subscription
|
$65,780
|
$23,659
|
$120,142
|
$45,835
|
Support
|
141,718
|
160,625
|
293,196
|
332,381
|
Total
recurring revenue
|
207,498
|
184,284
|
413,338
|
378,216
|
Perpetual
license
|
27,372
|
39,689
|
61,751
|
87,452
|
Total
subscription, support and license revenue
|
234,870
|
223,973
|
475,089
|
465,668
|
Professional
services
|
45,170
|
48,654
|
91,278
|
97,976
|
Total
revenue
|
280,040
|
272,627
|
566,367
|
563,644
|
|
|
|
|
|
Cost
of revenue:
|
|
|
|
|
Cost of subscription, support and
license revenue (1)
|
43,131
|
38,613
|
86,078
|
75,427
|
Cost of professional services
revenue(1)
|
38,699
|
41,578
|
77,867
|
84,912
|
Total
cost of revenue
|
81,830
|
80,191
|
163,945
|
160,339
|
|
|
|
|
|
Gross
margin
|
198,210
|
192,436
|
402,422
|
403,305
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
Sales and marketing
(1)
|
87,777
|
87,177
|
178,467
|
169,606
|
Research and development
(1)
|
57,710
|
56,610
|
115,624
|
114,279
|
General and administrative
(1)
|
36,800
|
33,916
|
73,495
|
72,483
|
Amortization
of acquired intangible assets
|
7,946
|
8,396
|
16,013
|
16,746
|
Restructuring
charges
|
464
|
4,579
|
6,749
|
41,726
|
Total
operating expenses
|
190,697
|
190,678
|
390,348
|
414,840
|
|
|
|
|
|
Operating
income (loss)
|
7,513
|
1,758
|
12,074
|
(11,535)
|
Other
expense, net
|
(8,569)
|
(5,327)
|
(19,633)
|
(11,580)
|
Loss
before income taxes
|
(1,056)
|
(3,569)
|
(7,559)
|
(23,115)
|
Provision
for income taxes
|
48
|
1,604
|
2,686
|
5,950
|
Net
loss
|
$(1,104)
|
$(5,173)
|
$(10,245)
|
$(29,065)
|
|
|
|
|
|
Loss
per share:
|
|
|
|
|
Basic
|
$(0.01)
|
$(0.05)
|
$(0.09)
|
$(0.25)
|
Weighted
average shares outstanding
|
115,709
|
114,563
|
115,498
|
114,354
|
|
|
|
|
|
Diluted
|
$(0.01)
|
$(0.05)
|
$(0.09)
|
$(0.25)
|
Weighted
average shares outstanding
|
115,709
|
114,563
|
115,498
|
114,354
|
|
(1)
|
The amounts in the tables above include stock-based compensation as
follows:
|
|
Three Months Ended
|
Six Months Ended
|
||
|
April 1,
|
April 2,
|
April 1,
|
April 2,
|
|
2017
|
2016
|
2017
|
2016
|
Cost
of subscription, support and license revenue
|
$1,669
|
$1,100
|
$3,106
|
$3,005
|
Cost
of professional services revenue
|
1,538
|
1,279
|
2,995
|
2,730
|
Sales
and marketing
|
4,130
|
3,777
|
7,751
|
8,059
|
Research
and development
|
3,951
|
2,534
|
6,948
|
5,047
|
General
and administrative
|
10,289
|
6,146
|
18,765
|
19,184
|
Total
stock-based compensation
|
$21,577
|
$14,836
|
$39,565
|
$38,025
|
|
|
|
|
|
PTC
Inc.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
(UNAUDITED)
(in thousands,
except per share data)
|
Three Months Ended
|
Six Months Ended
|
||
|
April 1,
|
April 2,
|
April 1,
|
April 2,
|
|
2017
|
2016
|
2017
|
2016
|
|
|
|
|
|
GAAP
revenue
|
$280,040
|
$272,627
|
$566,367
|
$563,644
|
Fair
value adjustment of acquired deferred subscription
revenue
|
411
|
777
|
1,057
|
965
|
Fair
value adjustment of acquired deferred services revenue
|
262
|
286
|
530
|
595
|
Non-GAAP
revenue
|
$280,713
|
$273,690
|
$567,954
|
$565,204
|
|
|
|
|
|
GAAP
gross margin
|
$198,210
|
$192,436
|
$402,422
|
$403,305
|
Fair
value adjustment of acquired deferred revenue
|
673
|
1,063
|
1,587
|
1,560
|
Fair
value adjustment to deferred services cost
|
(108)
|
(125)
|
(221)
|
(257)
|
Stock-based
compensation
|
3,207
|
2,379
|
6,101
|
5,735
|
Amortization
of acquired intangible assets included in cost of
revenue
|
6,389
|
6,725
|
12,777
|
11,852
|
Non-GAAP
gross margin
|
$208,371
|
$202,478
|
$422,666
|
$422,195
|
|
|
|
|
|
GAAP
operating income (loss)
|
$7,513
|
$1,758
|
$12,074
|
$(11,535)
|
Fair
value adjustment of acquired deferred revenue
|
673
|
1,063
|
1,587
|
1,560
|
Fair
value adjustment to deferred services cost
|
(108)
|
(125)
|
(221)
|
(257)
|
Stock-based
compensation
|
21,577
|
14,836
|
39,565
|
38,025
|
Amortization
of acquired intangible assets included in cost of
revenue
|
6,389
|
6,725
|
12,777
|
11,852
|
Amortization
of acquired intangible assets
|
7,946
|
8,396
|
16,013
|
16,746
|
Acquisition-related
charges included in general and administrative costs
|
554
|
1,071
|
723
|
2,278
|
Restructuring
charges
|
464
|
4,579
|
6,749
|
41,726
|
Non-GAAP operating income
(1)
|
$45,008
|
$38,303
|
$89,267
|
$100,395
|
|
|
|
|
|
GAAP
net loss
|
$(1,104)
|
$(5,173)
|
$(10,245)
|
$(29,065)
|
Fair
value adjustment of acquired deferred revenue
|
673
|
1,063
|
1,587
|
1,560
|
Fair
value adjustment to deferred services cost
|
(108)
|
(125)
|
(221)
|
(257)
|
Stock-based
compensation
|
21,577
|
14,836
|
39,565
|
38,025
|
Amortization
of acquired intangible assets included in cost of
revenue
|
6,389
|
6,725
|
12,777
|
11,852
|
Amortization
of acquired intangible assets
|
7,946
|
8,396
|
16,013
|
16,746
|
Acquisition-related
charges included in general and administrative costs
|
554
|
1,071
|
723
|
2,278
|
Restructuring
charges
|
464
|
4,579
|
6,749
|
41,726
|
Non-operating
credit facility refinancing costs
|
1,152
|
-
|
1,152
|
2,359
|
Income tax adjustments
(2)
|
(2,787)
|
(5,208)
|
(2,639)
|
(279)
|
Non-GAAP
net income
|
$34,756
|
$26,164
|
$65,461
|
$84,945
|
PTC
Inc.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (UNAUDITED),
CONT'D.
(in thousands,
except per share data)
|
Three Months Ended
|
Six Months Ended
|
||
|
April 1,
|
April 2,
|
April 1,
|
April 2,
|
|
2017
|
2016
|
2017
|
2016
|
GAAP
diluted loss per share
|
$(0.01)
|
$(0.05)
|
$(0.09)
|
$(0.25)
|
Fair
value of acquired deferred revenue
|
0.01
|
0.01
|
0.01
|
0.01
|
Stock-based
compensation
|
0.18
|
0.13
|
0.34
|
0.33
|
Amortization
of acquired intangibles
|
0.12
|
0.13
|
0.25
|
0.25
|
Acquisition-related
charges
|
-
|
0.01
|
0.01
|
0.02
|
Restructuring
charges
|
-
|
0.04
|
0.06
|
0.36
|
Non-operating
credit facility refinancing costs
|
0.01
|
-
|
0.01
|
0.02
|
Income
tax adjustments
|
(0.02)
|
(0.05)
|
(0.02)
|
-
|
Non-GAAP
diluted earnings per share
|
$0.30
|
$0.23
|
$0.56
|
$0.74
|
|
|
|
|
|
GAAP
diluted weighted average shares outstanding
|
115,709
|
114,563
|
115,498
|
114,354
|
Dilutive
effect of stock based compensation plans
|
1,737
|
428
|
1,736
|
758
|
Non-GAAP
diluted weighted average shares outstanding
|
117,446
|
114,991
|
117,234
|
115,112
|
|
(1)
|
Operating margin impact of non-GAAP adjustments:
|
|
Three Months Ended
|
Six Months Ended
|
||
|
April 1,
|
April 2,
|
April 1,
|
April 2,
|
|
2017
|
2016
|
2017
|
2016
|
GAAP
operating margin
|
2.7%
|
0.6%
|
2.1%
|
-2.0%
|
Fair
value of acquired deferred revenue
|
0.2%
|
0.4%
|
0.3%
|
0.3%
|
Fair
value adjustment to deferred services cost
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
Stock-based
compensation
|
7.7%
|
5.4%
|
7.0%
|
6.7%
|
Amortization
of acquired intangibles
|
5.1%
|
5.5%
|
5.1%
|
5.1%
|
Acquisition-related
charges
|
0.2%
|
0.4%
|
0.1%
|
0.4%
|
Restructuring
charges
|
0.2%
|
1.7%
|
1.2%
|
7.4%
|
Non-GAAP
operating margin
|
16.0%
|
14.0%
|
15.7%
|
17.8%
|
|
(2)
|
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 2017 and 2016 non-GAAP tax provisions are
being calculated assuming there is no valuation allowance. Income
tax adjustments 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. For the
three and six months ended April 1, 2017 and April 2, 2016 our
non-GAAP tax provision is based on our annual expected non-GAAP tax
rate applied to our year-to-date non-GAAP earnings.
|
PTC
Inc.
UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS
(in
thousands)
|
April 1,
|
September 30,
|
|
2017
|
2016
|
|
|
|
ASSETS
|
|
|
|
|
|
Cash
and cash equivalents
|
$243,316
|
$277,935
|
Marketable
securities
|
48,191
|
49,616
|
Accounts
receivable, net
|
142,620
|
161,357
|
Property
and equipment, net
|
63,429
|
67,113
|
Goodwill
and acquired intangible assets, net
|
1,441,577
|
1,480,118
|
Other
assets
|
394,615
|
309,590
|
|
|
|
Total
assets
|
$2,333,748
|
$2,345,729
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Deferred
revenue
|
$492,472
|
$413,657
|
Debt,
net of deferred issuance costs
|
711,976
|
751,601
|
Other
liabilities
|
281,956
|
337,805
|
Stockholders'
equity
|
847,344
|
842,666
|
|
|
|
Total
liabilities and stockholders' equity
|
$2,333,748
|
$2,345,729
|
PTC
Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
(in
thousands)
|
Three Months Ended
|
Six Months Ended
|
||
|
April 1,
|
April 2,
|
April 1,
|
April 2,
|
|
2017
|
2016
|
2017
|
2016
|
|
|
|
|
|
Cash
flows from operating activities:
|
|
|
|
|
Net
loss
|
$(1,104)
|
$(5,173)
|
$(10,245)
|
$(29,065)
|
Stock-based
compensation
|
21,577
|
14,836
|
39,565
|
38,025
|
Depreciation
and amortization
|
21,229
|
22,291
|
42,683
|
42,904
|
Accounts
receivable
|
(5,811)
|
28,398
|
15,373
|
63,617
|
Accounts
payable and accruals
|
13,022
|
(28,067)
|
(40,586)
|
(17,692)
|
Deferred
revenue
|
39,183
|
22,757
|
27,457
|
24,019
|
Income
taxes
|
(8,584)
|
(5,471)
|
(14,680)
|
(8,826)
|
Excess
tax benefits from stock-based awards
|
(37)
|
-
|
(139)
|
(56)
|
Other
|
(3,086)
|
(686)
|
(31,017)
|
(2,787)
|
Net
cash provided by operating activities
|
76,389
|
48,885
|
28,411
|
110,139
|
|
|
|
|
|
Capital
expenditures
|
(7,689)
|
(4,681)
|
(14,789)
|
(8,866)
|
Acquisitions of businesses, net
of cash acquired (1)
|
-
|
(99,411)
|
-
|
(164,191)
|
Proceeds
(payments) on debt, net
|
(20,000)
|
120,000
|
(40,000)
|
170,000
|
Proceeds
from issuance of common stock
|
3,978
|
-
|
3,978
|
1
|
Payments of withholding taxes in connection with
|
|
|
|
|
vesting
of stock-based awards
|
(543)
|
(638)
|
(19,166)
|
(15,471)
|
Excess
tax benefits from stock-based awards
|
37
|
-
|
139
|
56
|
Proceeds
from sales of investments
|
13,716
|
-
|
15,218
|
-
|
Net
proceeds from marketable securities
|
1,280
|
-
|
1,280
|
-
|
Other
financing & investing activities
|
(184)
|
-
|
(2,895)
|
(2,300)
|
Foreign
exchange impact on cash
|
2,965
|
7,504
|
(6,795)
|
5,671
|
|
|
|
|
|
Net
change in cash and cash equivalents
|
69,949
|
71,659
|
(34,619)
|
95,039
|
Cash
and cash equivalents, beginning of period
|
173,367
|
296,797
|
277,935
|
273,417
|
Cash
and cash equivalents, end of period
|
$243,316
|
$368,456
|
$243,316
|
$368,456
|
(1)
|
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).
|