Results Commentary
James Heppelmann, president and chief executive officer, commented, “PTC’s non-GAAP revenue and EPS exceeded the high end of our guidance range despite macroeconomic headwinds and with no mega deals in the quarter. Our results also demonstrate our continued efforts to drive margin expansion and earnings growth. License revenue of $105 million was up 5% year over year (5% on a constant currency basis) and slightly above our guidance range. From a geographic perspective, we saw a rebound in Europe and solid growth in Japan and the Pac Rim, which was offset by softer results in the Americas reflecting ongoing macroeconomic uncertainty and a comparison to very strong performance in the Americas in Q4’12.”
Heppelmann added, “We saw improvement in year-over-year performance within our CAD license business; however, performance in our extended PLM business was muted by the softer macroeconomic environment, most noticeably in the Americas. Our SLM business was up strongly on both an organic basis and including acquisitions. We had 45 large deals (recognized license + services revenue of more than $1 million) in Q4’13, up from 35 in Q4’12 and 33 in Q3’13. The mix of large deal revenue was skewed more heavily toward licenses reflecting more large license transactions. During the quarter we recognized revenue from leading organizations such as CNH Industrial, Cummins, Embraer, GKN plc, IMA S.p.A., Milacron, Raytheon, and TE Connectivity.”
Jeff Glidden, chief financial officer, commented, “From a profitability standpoint we had a very strong quarter; we delivered $0.59 non-GAAP EPS, above the high end of our guidance range, and achieved a 27.4% non-GAAP operating margin. Q4 GAAP EPS was $0.47 and GAAP operating margin was 14.2%. We generated $44 million in operating cash flow and used $25 million to complete the acquisitions of Enigma and NetIDEAS, $10 million for capital expenditures, $10 million to partially repay our credit facility, and $20 million for stock repurchases, resulting in an ending cash balance of $242 million. For the full year we increased our non-GAAP EPS by 20% to $1.81 and generated $225 million in operating cash flow.”
Outlook Commentary
“We remain excited about our long-term growth opportunity based on the strength of our pipeline, competitive wins in our core markets, and an expanding set of impact solutions that address key customer challenges. We remain committed to driving margin expansion and now expect to achieve our 25% non-GAAP operating margin target in FY’14, a year earlier than we had previously communicated. We are now establishing a new long-term non-GAAP operating margin target range of 28% to 30% by FY’17,” said Heppelmann.
Glidden added, “For Q1’14, we are providing guidance of $310 to $320 million in revenue with $70 to $80 million in license revenue, approximately $70 million in services revenue and approximately $170 million in support revenue. We are expecting Q1 non-GAAP EPS of $0.41 to $0.46 and GAAP EPS of $0.23 to $0.28.”.
The Q1 guidance assumes $1.35 USD / EURO, 98 YEN / USD, a non-GAAP tax rate of 25%, a GAAP tax rate of 30% and 122 million diluted shares outstanding. The Q1 non-GAAP guidance excludes $0.5 million of restructuring charges, $13 million of stock-based compensation expense, $12 million of intangible asset amortization expense, their related income tax effects, as well as any additional discrete tax items.
Glidden continued, “Based on our robust sales pipeline and increasing customer adoption of our broader solution set, but uncertain timing of global economic recovery, we are targeting revenue of $1,325 to $1,340 million, license revenue of $350 to $365 million, services revenue of approximately $300 million and support revenue of approximately $675 million. We expect to increase our full year FY’14 non-GAAP operating margin to 25%, driven by: (1) improvement in services non-GAAP net margin to approximately 15%; (2) increased sales productivity; and (3) continued vigilance on cost controls. We are guiding to non-GAAP EPS of $2.00 to $2.10 and GAAP EPS of $1.28 to $1.38 reflecting our continued commitment to improving profitability.”
The FY’14 targets assume a non-GAAP tax rate of 25%, a GAAP tax rate of 30% and 122 million diluted shares outstanding. The FY’14 non-GAAP guidance excludes $0.5 million of restructuring charges, $52 million of stock-based compensation expense, $49 million of intangible asset amortization expense, their related income tax effects, as well as any additional discrete tax items.
Ticker Symbol Change to PTC
PTC will change its NASDAQ ticker symbol to “PTC” effective at the start of trading on December 3 (prior NASDAQ common stock symbol: “PMTC”). All stock trading, filings and market related information will be reported under this new symbol. Along with changing its legal name to PTC Inc. on January 28, 2013, this ticker symbol change is another step in our effort to align with a broadened purpose of helping manufacturers transform the way products are created and serviced.
Q4 Earnings Conference Call and Webcast
Prepared remarks for the conference call have been posted to the investor relations section of our website. The prepared remarks will not be read live; the call will be primarily Q&A.
| What: | PTC Fiscal Q4 Conference Call and Webcast | ||
| When: | Thursday, November 7 th , 2013 at 8:30am (ET) | ||
| Dial-in: | 1-800-857-5592 or 1-773-799-3757 | ||
| Call Leader: James Heppelmann | |||
| Passcode: PTC | |||
| Webcast: | |||
| Replay: | The audio replay of this event will be archived for public replay until 10:59 pm (CT) on November 17th, 2013. | ||
| Dial-in: 800-839-2204 Passcode: 5689 | |||
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To access the replay via webcast, please visit www.ptc.com/for/investors.htm . |
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