Strong ARR and Cash Flow Results; Raising
ARR and Cash Flow Guidance for FY'23
BOSTON, July 26,
2023 /PRNewswire/ -- PTC (NASDAQ: PTC)
today reported financial results for its third fiscal quarter ended
June 30, 2023.
"In our third fiscal quarter, we again delivered strong ARR and
cash flow results that exceeded our guidance ranges. On both a
reported and constant currency basis, our ARR growth was 25% – with
organic growth of 14% and our ServiceMax® business
contributing an additional 11 points of growth. In Q3, our cash
from operations was $169 million, up
45% year over year, and our free cash flow was $164 million, up 46% year over year," said
James Heppelmann, CEO, PTC.
"Our strong product portfolio, now increasingly differentiated
with the addition of ServiceMax, and our industry-leading SaaS
capabilities align well to the manufacturing industry's push for
digital transformation. Our strong market position and solid
execution, coupled with a subscription model, position PTC to
deliver ARR and cash flow growth at peer-leading levels," concluded
Heppelmann.
Third Quarter 2023 Highlights
Key operating and financial highlights are set forth below. For
additional details, please refer to the Q3'23 earnings presentation
and financial data tables that have been posted to the Investor
Relations section of our website at investor.ptc.com. 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.
$ in
millions
|
Q3'23
|
Q3'22
|
YoY
Change
|
|
Q3'23
Guidance
|
ARR as
reported
|
$1,929
|
$1,544
|
25 %
|
|
|
ARR at constant
currency
|
$1,868
|
$1,496
|
25 %
|
|
$1,845 -
$1,855
|
Organic ARR as
reported
|
$1,762
|
$1,544
|
14 %
|
|
|
Organic ARR at constant
currency
|
$1,703
|
$1,496
|
14 %
|
|
|
Cash from
operations
|
$169
|
$117
|
45 %
|
|
~$160
|
Free cash
flow
|
$164
|
$112
|
46 %
|
|
~$155
|
Revenue1
|
$542
|
$462
|
17 %
|
|
|
Operating
margin1
|
20 %
|
17 %
|
~300 bps
|
|
|
Non-GAAP operating
margin1
|
34 %
|
34 %
|
~40 bps
|
|
|
Earnings per
share1
|
$0.512
|
$0.602
|
-14%2
|
|
|
Non-GAAP earnings per
share1
|
$0.992
|
$0.972
|
2%2
|
|
|
Total cash and cash
equivalents
|
$282
|
$322
|
-13 %
|
|
|
Gross debt
|
$2,3653
|
$1,434
|
65 %
|
|
|
|
|
1
|
In Q3'23, revenue
growth was 21% year over year on a constant currency basis. Revenue
and, as a result, operating margin, operating profit, and earnings
per share are impacted by revenue recognition under ASC
606.
|
|
|
2
|
In Q3'23, both EPS and
non-GAAP EPS benefitted from higher revenue, partially offset by
higher cost of revenue, operating expenses, and interest expense.
Q3'22 EPS included a $0.28 positive impact due to non-operational
credits and a $0.13 positive impact due to a tax adjustment, both
of which were primarily related to the sale of a portion of our PLM
services business.
|
|
|
3
|
Q3'23 gross debt
includes a deferred acquisition payment related to ServiceMax of
$620 million, which will be paid in October 2023.
|
Fiscal 2023 and Q4'23 Guidance
"Despite a less than ideal macroeconomic backdrop, our financial
results in the first nine months of our fiscal year were solid,
driven by the resilience of our business model, consistent
execution, operational discipline, and the actions we have taken to
align our investments with our growth opportunities. Based on our
performance in the first nine months of FY'23 and outlook for
FY'23, we are raising our full year guidance midpoint for ARR and
our guidance for cash flow, while investing in long-term growth
opportunities," said Kristian
Talvitie, CFO, PTC.
$ in
millions
|
FY'23
Previous
Guidance
|
FY'23
Guidance
|
FY'23 YoY
Growth
Guidance
|
Q4'23
Guidance
|
|
|
|
ARR at Constant
Currency
|
$1,925 -
$1,950
|
$1,935 -
$1,950
|
23% - 24%
|
$1,935 -
$1,950
|
|
|
Cash from
Operations
|
~$600
|
~$605
|
~39%
|
~$44
|
|
|
Free Cash
Flow
|
~$580
|
~$585
|
~41%
|
~$42
|
|
|
Revenue
|
$2,080 -
$2,140
|
$2,090 -
$2,120
|
8% - 10%
|
$540 - $570
|
|
|
Earnings per
share
|
|
$2.14 -
$2.45
|
(19%) - (7%)
|
$0.47 -
$0.77
|
|
|
Non-GAAP
earnings per share
|
|
$4.07 -
$4.38
|
(11%) - (4%)
|
$0.95 -
$1.25
|
|
|
Reconciliation of Cash from Operations Guidance to Free Cash
Flow Guidance
In
millions
|
FY'23
Guidance
|
Q4'23
Guidance
|
|
|
|
Cash from
Operations
|
~$605
|
~$44
|
|
|
Capital
expenditures
|
(~$20)
|
(~$2)
|
|
|
Free Cash
Flow
|
~$585
|
~$42
|
|
|
Reconciliation of EPS Guidance to Non-GAAP EPS
Guidance
|
FY'23
Guidance
|
Q4'23
Guidance
|
|
|
|
Earnings per
share
|
$2.14 -
$2.451
|
$0.47 -
$0.772
|
|
|
Stock-based
compensation expense
|
~$1.67
|
~$0.43
|
|
|
Intangible asset
amortization expense
|
~$0.64
|
~$0.18
|
|
|
Acquisition and
transaction-related expense
|
~$0.16
|
~$0.01
|
|
|
Other non-operating
expenses
|
~$0.04
|
~$0.00
|
|
|
Income tax adjustments
related to the reconciling items
|
~($0.58)
|
~($0.14)
|
|
|
Non-GAAP
Earnings per share
|
$4.07 -
$4.381
|
$0.95 -
$1.252
|
|
|
|
|
1
|
Our FY'23 EPS and
non-GAAP EPS guidance are both inclusive of an expected $120
million in interest expense ($95 million, net of tax) or $1.01 per
share ($0.80 per share, net of tax). This compares to interest
expense in FY'22 of $51 million ($40 million, net of tax) or $0.43
per share ($0.34 per share, net of tax) with the expected increase
in FY'23 primarily due to an increase in debt.
|
|
|
2
|
Our Q4'23 EPS and
non-GAAP EPS guidance are both inclusive of an expected $34 million
in interest expense ($27 million, net of tax) or $0.29 per share
($0.23 per share, net of tax). This compares to interest expense in
Q4'22 of $14 million ($11 million, net of tax) or $0.12 per share
($0.10 per share, net of tax) with the expected increase in Q4'23
primarily due to an increase in debt.
|
Our FY'23 and Q4'23 financial guidance include the
assumptions below:
- We provide ARR guidance on a constant currency basis, using our
FY'23 Plan foreign exchange rates (rates as of September 30, 2022) for all periods. Foreign
exchange fluctuations during the first nine months of FY'23 had a
favorable impact on our Q3'23 reported ARR, compared to our Q3'23
constant currency ARR. Using foreign exchange rates as of the end
of Q3'23 and assuming the midpoint of our constant currency
guidance ranges, FY'23 reported ARR guidance would be higher by
approximately $64 million, compared
to FY'23 constant currency ARR guidance.
- For cash flow, due to invoicing seasonality, and consistent
with the past 2 years, we expect Q4'23 to be our lowest cash flow
generation quarter.
- Compared to FY'22, at the midpoint of FY'23 ARR guidance, FY'23
GAAP operating expenses are expected to increase approximately 7%
to 8%, and FY'23 non-GAAP operating expenses are expected to
increase approximately 10% to 11%, primarily due to the acquisition
of ServiceMax, foreign exchange rate fluctuations, and incremental
investments in 2H'23.
- FY'23 GAAP P&L results are expected to include the items
below, totaling approximately $300
million, as well as their related tax effects:
-
- approximately $200 million of
stock-based compensation expense,
- approximately $76 million of
intangible asset amortization expense,
- approximately $19 million of
acquisition and transaction-related expense, and
- approximately $5 million of other
non-operating expenses, primarily financing charges associated with
a debt commitment agreement related to the ServiceMax
acquisition.
- Our FY'23 GAAP tax rate is expected to be approximately 20%,
and our non-GAAP tax rate is expected to be approximately 21%.
- FY'23 capital expenditures are expected to be approximately
$20 million.
- 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.
-
- Given the current interest rate environment, we expect to
prioritize paying down our debt in FY'23 and FY'24.
- We expect gross debt of approximately $2.3 billion at the end of FY'23.
PTC's Fiscal Third Quarter Results Conference Call
The Company will host a conference call to discuss results at
5:00 pm ET on Wednesday, July 26,
2023. 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.
PTC Announces CEO Succession Plan
Concurrent with the release of its fiscal 2023 third quarter
results, PTC also announced its CEO succession plan. Neil Barua, President of PTC's Service Lifecycle
Management business, will succeed James
Heppelmann as Chief Executive Officer of PTC at the time of
the Company's annual shareholder meeting in February 2024. Please read today's press
release for additional information. Mr. Heppelmann and Mr.
Barua will address the succession plan during today's webcast and
conference call.
Important Information About Our Operating and Non-GAAP
Financial Measures
Non-GAAP Financial Measures
PTC provides supplemental non-GAAP financial measures to its
financial results. We use these non-GAAP financial measures, and we
believe that they assist our investors, to make period-to-period
comparisons of our operating performance because they provide a
view of our operating results without items that are not, in our
view, indicative of our operating results. These non-GAAP financial
measures should not be construed as an alternative to GAAP results
as the items excluded from the non-GAAP financial measures often
have a material impact on our operating results, certain of those
items are recurring, and others often recur. Management uses, and
investors should consider, our non-GAAP financial measures only in
conjunction with our GAAP results.
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: stock-based
compensation; amortization of acquired intangible assets;
acquisition and transaction-related charges included in general and
administrative expenses; restructuring and other charges, net;
certain non-operating charges and credits; and income tax
adjustments. Additional information about the items we exclude from
our non-GAAP financial measures and the reasons we exclude them can
be found in "Non-GAAP Financial Measures" in our Annual Report on
Form 10-K for the fiscal year ended September 30, 2022.
Free Cash Flow: PTC provides information on 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 goals and
intent to return approximately 50% of our free cash flow to
shareholders via stock repurchases. Free cash flow is cash provided
by (used in) operations net of capital expenditures. Free cash flow
is not a measure of cash available for discretionary
expenditures.
Constant Currency (CC): We present CC information to
provide a framework for assessing how our underlying business
performed excluding the effects of foreign currency rate
fluctuations. To present CC information, FY'23 and comparative
prior period results for entities reporting in currencies other
than United States dollars are
converted into United States
dollars using the foreign exchange rate as of September 30, 2022, rather than the actual
exchange rates in effect during that period. All discussion of
FY'23 and comparative prior period ARR results (including FY'22
baseline amounts) are reflected using the foreign exchange rates as
of September 30, 2022.
Operating Measures
ARR: ARR (Annual Run Rate) represents the annualized
value of our portfolio of active subscription software, cloud,
SaaS, and support contracts as of the end of the reporting period.
We calculate ARR as follows:
- We consider a contract to be active when the product or service
contractual term commences (the "start date") until the right to
use the product or service ends (the "expiration date"). Even if
the contract with the customer is executed before the start date,
the contract will not count toward ARR until the customer right to
receive the benefit of the products or services has commenced.
- For contracts that include annual values that increase over
time as there are additional deliverables in subsequent periods,
which we refer to as ramp contracts, we include in ARR only the
annualized value of components of the contract that are considered
active as of the date of the ARR calculation. We do not include the
future committed increases in the contract value as of the date of
the ARR calculation.
- As ARR includes only contracts that are active at the end of
the reporting period, ARR does not reflect assumptions or estimates
regarding future customer renewals or non-renewals.
- Active contracts are annualized by dividing the total active
contract value by the contract duration in days (expiration date
minus start date), then multiplying that by 365 days (or 366 days
for leap years).
We believe ARR is a valuable operating measure to assess the
health of a subscription business because it is aligned with the
amount that we invoice the customer on an annual basis. We invoice
customers annually for the current year of the contract. A customer
with a one-year contract will typically be invoiced for the total
value of the contract at the beginning of the contractual term,
while a customer with a multi-year contract will be invoiced for
each annual period at the beginning of each year of the
contract.
ARR increases by the annualized value of active contracts that
commence in a reporting period and decreases by the annualized
value of contracts that expire in the reporting period.
As ARR is not annualized recurring revenue, it is not calculated
based on recognized or unearned revenue and is not affected by
variability in the timing of revenue under ASC 606, particularly
for on-premises license subscriptions where a substantial portion
of the total value of the contract is recognized at a point in time
upon the later of when the software is made available, or the
subscription term commences.
ARR should be viewed independently of recognized and unearned
revenue and is not intended to be combined with, or to replace,
either of those items. Investors should consider our ARR operating
measure only in conjunction with our GAAP financial results.
Organic Constant Currency ARR: We provide an organic
constant currency ARR measure to help investors understand and
assess the performance of our business without the distorting
effects of ARR from acquisitions in the comparative period and
foreign exchange rate fluctuations.
Forward-Looking Statements
Statements in this press release that are not historic facts,
including statements about our future financial and growth
expectations, guidance, and targets, and potential stock
repurchases, 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 deteriorate due to, among other
factors, supply chain disruptions, increasing interest rates and
inflation, volatile foreign exchange rates and the relative
strength of the U.S. dollar, tightening of credit standards and
availability, the effects of the Russia/Ukraine conflict, including the effect on
energy supplies to Europe, and
growing tensions with China, any
of which could cause customers to delay or reduce purchases of new
software, reduce the number of subscriptions they carry, or delay
payments to us, which would adversely affect ARR and/or our
financial results, including cash flow; our businesses, including
our ServiceMax and SaaS businesses, may not expand and/or generate
the ARR and/or cash flow we expect if customers are slower to adopt
those technologies than we expect or if they adopt competing
technologies; our strategic initiatives and investments, including
our accelerated investments in our transition to SaaS and the
acquisition of ServiceMax, may not deliver the results when or as
we expect; we may be unable to integrate the ServiceMax technology
when or as we expect; we may be unable to generate sufficient
operating cash flow to return 50% of free cash flow to shareholders
via share repurchases, and other uses of cash or our credit
facility limits could preclude such repurchases; and foreign
exchange rates may differ materially from those we expect. 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. 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 Reports on Form 10-Q.
About PTC (NASDAQ: PTC)
PTC (NASDAQ: PTC) is a global software company that enables
industrial and manufacturing companies to digitally transform how
they engineer, manufacture, and service the physical products that
the world relies on. Headquartered in Boston, Massachusetts, PTC employs over 7,000
people and supports more than 25,000 customers globally. For more
information, please visit www.ptc.com.
PTC.com @PTC
Blogs
PTC Investor Relations
Contact
Matt Shimao
SVP, Investor Relations
mshimao@ptc.com
investor@ptc.com
PTC Inc.
|
UNAUDITED CONSOLIDATED STATEMENTS OF
INCOME
|
(in thousands, except per share
data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
Recurring
revenue
|
$
|
498,410
|
|
|
$
|
415,197
|
|
|
$
|
1,407,662
|
|
|
$
|
1,273,032
|
Perpetual
license
|
|
8,251
|
|
|
|
8,203
|
|
|
|
30,417
|
|
|
|
26,211
|
Professional
services
|
|
35,681
|
|
|
|
39,074
|
|
|
|
112,354
|
|
|
|
126,179
|
Total revenue
(1)
|
|
542,342
|
|
|
|
462,474
|
|
|
|
1,550,433
|
|
|
|
1,425,422
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
(2)
|
|
115,854
|
|
|
|
101,995
|
|
|
|
325,150
|
|
|
|
290,450
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
|
|
426,488
|
|
|
|
360,479
|
|
|
|
1,225,283
|
|
|
|
1,134,972
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
(2)
|
|
145,083
|
|
|
|
124,325
|
|
|
|
392,673
|
|
|
|
366,209
|
Research and
development (2)
|
|
103,819
|
|
|
|
88,170
|
|
|
|
292,345
|
|
|
|
250,639
|
General and
administrative (2)
|
|
57,055
|
|
|
|
54,618
|
|
|
|
173,949
|
|
|
|
154,027
|
Amortization of
acquired intangible assets
|
|
10,670
|
|
|
|
8,931
|
|
|
|
29,352
|
|
|
|
25,865
|
Restructuring and
other charges (credits), net
|
|
(39)
|
|
|
|
4,458
|
|
|
|
(376)
|
|
|
|
36,887
|
Total operating
expenses
|
|
316,588
|
|
|
|
280,502
|
|
|
|
887,943
|
|
|
|
833,627
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
109,900
|
|
|
|
79,977
|
|
|
|
337,340
|
|
|
|
301,345
|
Other income
(expense), net
|
|
(33,374)
|
|
|
|
20,801
|
|
|
|
(93,321)
|
|
|
|
(41,625)
|
Income before income
taxes
|
|
76,526
|
|
|
|
100,778
|
|
|
|
244,019
|
|
|
|
259,720
|
Provision for income
taxes
|
|
15,128
|
|
|
|
30,302
|
|
|
|
44,082
|
|
|
|
53,476
|
Net income
|
$
|
61,398
|
|
|
$
|
70,476
|
|
|
$
|
199,937
|
|
|
$
|
206,244
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.52
|
|
|
$
|
0.60
|
|
|
$
|
1.69
|
|
|
$
|
1.76
|
Weighted average
shares outstanding
|
|
118,483
|
|
|
|
117,073
|
|
|
|
118,186
|
|
|
|
117,114
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
$
|
0.51
|
|
|
$
|
0.60
|
|
|
$
|
1.68
|
|
|
$
|
1.75
|
Weighted average
shares outstanding
|
|
119,392
|
|
|
|
117,968
|
|
|
|
119,072
|
|
|
|
118,097
|
|
|
|
|
|
|
|
|
|
|
|
(1) See supplemental
financial data for revenue by license, support and cloud services,
and professional services.
|
(2) See supplemental
financial data for additional information about stock-based
compensation.
|
PTC Inc.
|
SUPPLEMENTAL FINANCIAL DATA FOR REVENUE AND
STOCK-BASED COMPENSATION
|
(in thousands, except per share
data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue by license,
support and services is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
License revenue
(1)
|
$
|
192,940
|
|
|
$
|
175,163
|
|
|
$
|
562,631
|
|
|
$
|
562,646
|
Support and cloud
services revenue
|
|
313,721
|
|
|
|
248,237
|
|
|
|
875,448
|
|
|
|
736,597
|
Professional services
revenue
|
|
35,681
|
|
|
|
39,074
|
|
|
|
112,354
|
|
|
|
126,179
|
Total
revenue
|
$
|
542,342
|
|
|
$
|
462,474
|
|
|
$
|
1,550,433
|
|
|
$
|
1,425,422
|
|
|
|
|
|
|
|
|
|
|
|
(1) License revenue
includes the portion of subscription revenue allocated to
license.
|
|
|
|
|
|
|
|
|
|
|
|
The amounts in the
income statement include stock-based compensation as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
Cost of
revenue
|
$
|
5,847
|
|
|
$
|
8,429
|
|
|
$
|
15,668
|
|
|
$
|
18,665
|
Sales and
marketing
|
|
14,513
|
|
|
|
14,029
|
|
|
|
39,554
|
|
|
|
38,556
|
Research and
development
|
|
14,801
|
|
|
|
11,002
|
|
|
|
41,839
|
|
|
|
30,682
|
General and
administrative
|
|
18,657
|
|
|
|
15,960
|
|
|
|
50,507
|
|
|
|
45,380
|
Total stock-based
compensation
|
$
|
53,818
|
|
|
$
|
49,420
|
|
|
$
|
147,568
|
|
|
$
|
133,283
|
PTC Inc.
|
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
(UNAUDITED)
|
(in thousands, except per share
data)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
GAAP gross
margin
|
$
|
426,488
|
|
|
$
|
360,479
|
|
|
$
|
1,225,283
|
|
|
$
|
1,134,972
|
Stock-based
compensation
|
|
5,847
|
|
|
|
8,429
|
|
|
|
15,668
|
|
|
|
18,665
|
Amortization of
acquired intangible assets included in cost of revenue
|
|
9,841
|
|
|
|
6,596
|
|
|
|
25,817
|
|
|
|
19,010
|
Non-GAAP gross
margin
|
$
|
442,176
|
|
|
$
|
375,504
|
|
|
$
|
1,266,768
|
|
|
$
|
1,172,647
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
income
|
$
|
109,900
|
|
|
$
|
79,977
|
|
|
$
|
337,340
|
|
|
$
|
301,345
|
Stock-based
compensation
|
|
53,818
|
|
|
|
49,420
|
|
|
|
147,568
|
|
|
|
133,283
|
Amortization of
acquired intangible assets
|
|
20,511
|
|
|
|
15,527
|
|
|
|
55,169
|
|
|
|
44,875
|
Acquisition and
transaction-related charges
|
|
795
|
|
|
|
6,355
|
|
|
|
18,484
|
|
|
|
11,308
|
Restructuring and other
charges (credits), net
|
|
(39)
|
|
|
|
4,458
|
|
|
|
(376)
|
|
|
|
36,887
|
Non-GAAP operating
income (1)
|
$
|
184,985
|
|
|
$
|
155,737
|
|
|
$
|
558,185
|
|
|
$
|
527,698
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net
income
|
$
|
61,398
|
|
|
$
|
70,476
|
|
|
$
|
199,937
|
|
|
$
|
206,244
|
Stock-based
compensation
|
|
53,818
|
|
|
|
49,420
|
|
|
|
147,568
|
|
|
|
133,283
|
Amortization of
acquired intangible assets
|
|
20,511
|
|
|
|
15,527
|
|
|
|
55,169
|
|
|
|
44,875
|
Acquisition and
transaction-related charges
|
|
795
|
|
|
|
6,355
|
|
|
|
18,484
|
|
|
|
11,308
|
Restructuring and other
charges (credits), net
|
|
(39)
|
|
|
|
4,458
|
|
|
|
(376)
|
|
|
|
36,887
|
Non-operating charges
(credits), net (2)
|
|
-
|
|
|
|
(32,801)
|
|
|
|
5,147
|
|
|
|
2,046
|
Income tax adjustments
(3)
|
|
(18,830)
|
|
|
|
1,052
|
|
|
|
(52,506)
|
|
|
|
(43,617)
|
Non-GAAP net
income
|
$
|
117,653
|
|
|
$
|
114,487
|
|
|
$
|
373,423
|
|
|
$
|
391,026
|
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted earnings
per share
|
$
|
0.51
|
|
|
$
|
0.60
|
|
|
$
|
1.68
|
|
|
$
|
1.75
|
Stock-based
compensation
|
|
0.45
|
|
|
|
0.42
|
|
|
|
1.24
|
|
|
|
1.13
|
Amortization of
acquired intangibles
|
|
0.17
|
|
|
|
0.13
|
|
|
|
0.46
|
|
|
|
0.38
|
Acquisition and
transaction-related charges
|
|
0.01
|
|
|
|
0.05
|
|
|
|
0.16
|
|
|
|
0.10
|
Restructuring and other
charges (credits), net
|
|
(0.00)
|
|
|
|
0.04
|
|
|
|
(0.00)
|
|
|
|
0.31
|
Non-operating charges
(credits), net (2)
|
|
-
|
|
|
|
(0.28)
|
|
|
|
0.04
|
|
|
|
0.02
|
Income tax adjustments
(3)
|
|
(0.16)
|
|
|
|
0.01
|
|
|
|
(0.44)
|
|
|
|
(0.37)
|
Non-GAAP diluted
earnings per share
|
$
|
0.99
|
|
|
$
|
0.97
|
|
|
$
|
3.14
|
|
|
$
|
3.31
|
|
|
|
|
|
|
|
|
|
|
|
(1) Operating margin
impact of non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
GAAP operating
margin
|
|
20.3
|
%
|
|
|
17.3
|
%
|
|
|
21.8
|
%
|
|
|
21.1
|
Stock-based
compensation
|
|
9.9
|
%
|
|
|
10.7
|
%
|
|
|
9.5
|
%
|
|
|
9.4
|
Amortization of
acquired intangibles
|
|
3.8
|
%
|
|
|
3.4
|
%
|
|
|
3.6
|
%
|
|
|
3.1
|
Acquisition and
transaction-related charges
|
|
0.1
|
%
|
|
|
1.4
|
%
|
|
|
1.2
|
%
|
|
|
0.8
|
Restructuring and
other charges (credits), net
|
|
0.0
|
%
|
|
|
1.0
|
%
|
|
|
0.0
|
%
|
|
|
2.6
|
Non-GAAP operating
margin
|
|
34.1
|
%
|
|
|
33.7
|
%
|
|
|
36.0
|
%
|
|
|
37.0
|
|
|
|
|
|
|
|
|
|
|
|
(2) In the nine months
ended June 30, 2023, we recognized $4.2 million of financing
charges for a debt commitment agreement associated with our
acquisition of ServiceMax. Credits for Q3'22 include a $29.8
million gain on the sale of a portion of our PLM services business,
and a $3.0 million gain on sale of an investment. Net charges for
the nine months ended June 30, 2022 include a $34.8 million expense
recognized due to the reduction in value of an equity investment in
a publicly-traded company, offset by a $29.8 million gain on the
sale of a portion of our PLM services business, and a $3.0 million
gain on sale of an investment.
|
|
(3) 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. In Q3'22, adjustments
include tax expense of $15.5 million related to the sale of a
portion of our PLM service business, of which $8.1 million pertains
to the basis difference on goodwill.
|
|
PTC Inc.
|
UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
September 30,
|
|
2023
|
|
|
2022
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
281,513
|
|
|
$
|
272,182
|
Accounts receivable,
net
|
|
625,471
|
|
|
|
636,556
|
Property and equipment,
net
|
|
89,180
|
|
|
|
98,101
|
Goodwill and acquired
intangible assets, net
|
|
4,336,439
|
|
|
|
2,736,372
|
Lease assets,
net
|
|
144,860
|
|
|
|
137,780
|
Other assets
|
|
730,186
|
|
|
|
806,277
|
|
|
|
|
|
Total assets
|
$
|
6,207,649
|
|
|
$
|
4,687,268
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
|
Deferred
revenue
|
$
|
650,427
|
|
|
$
|
520,333
|
Debt, net of deferred
issuance costs
|
|
1,738,241
|
|
|
|
1,350,628
|
Deferred acquisition
payments (1)
|
|
620,040
|
|
|
|
-
|
Lease
obligations
|
|
194,819
|
|
|
|
189,575
|
Other
liabilities
|
|
405,458
|
|
|
|
330,698
|
Stockholders'
equity
|
|
2,598,664
|
|
|
|
2,296,034
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
$
|
6,207,649
|
|
|
$
|
4,687,268
|
|
|
|
|
|
(1) Deferred
acquisition payments represent the fair value of the $650 million
payment to be made in Q1'24 associated with
the ServiceMax,
Inc. acquisition.
|
PTC Inc.
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
61,398
|
|
|
$
|
70,476
|
|
|
$
|
199,937
|
|
|
$
|
206,244
|
Stock-based
compensation
|
|
53,818
|
|
|
|
49,420
|
|
|
|
147,568
|
|
|
|
133,283
|
Depreciation and
amortization
|
|
27,906
|
|
|
|
21,987
|
|
|
|
76,943
|
|
|
|
65,456
|
Amortization of
right-of-use lease assets
|
|
8,141
|
|
|
|
8,612
|
|
|
|
24,705
|
|
|
|
26,149
|
Loss (gain) on
investment
|
|
-
|
|
|
|
(2,993)
|
|
|
|
-
|
|
|
|
31,854
|
Gain on divestiture of
business
|
|
-
|
|
|
|
(29,808)
|
|
|
|
-
|
|
|
|
(29,808)
|
Operating lease
liability
|
|
(6,345)
|
|
|
|
(7,184)
|
|
|
|
(1,360)
|
|
|
|
(10,544)
|
Accounts
receivable
|
|
13,043
|
|
|
|
12,918
|
|
|
|
99,521
|
|
|
|
25,228
|
Accounts payable and
accruals
|
|
18,726
|
|
|
|
23,165
|
|
|
|
11,368
|
|
|
|
(16,768)
|
Deferred
revenue
|
|
(17,396)
|
|
|
|
(28,975)
|
|
|
|
18,696
|
|
|
|
18,038
|
Income
taxes
|
|
2,259
|
|
|
|
12,403
|
|
|
|
(9,910)
|
|
|
|
6,124
|
Other
|
|
7,673
|
|
|
|
(13,255)
|
|
|
|
(6,376)
|
|
|
|
(58,429)
|
Net cash provided by
operating activities
|
|
169,223
|
|
|
|
116,766
|
|
|
|
561,092
|
|
|
|
396,827
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
(5,085)
|
|
|
|
(4,470)
|
|
|
|
(18,035)
|
|
|
|
(9,979)
|
Acquisition of
businesses, net of cash acquired (1)
|
|
-
|
|
|
|
(274,974)
|
|
|
|
(828,271)
|
|
|
|
(274,974)
|
Purchase of intangible
assets
|
|
-
|
|
|
|
(999)
|
|
|
|
-
|
|
|
|
(5,453)
|
Borrowings (payments)
on debt, net (2)
|
|
(180,000)
|
|
|
|
159,000
|
|
|
|
386,000
|
|
|
|
(16,000)
|
Repurchases of common
stock
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(125,000)
|
Net proceeds associated
with issuance of common stock
|
|
-
|
|
|
|
-
|
|
|
|
10,592
|
|
|
|
10,857
|
Payments of withholding
taxes in connection with vesting of stock-based awards
|
|
(19,467)
|
|
|
|
(12,261)
|
|
|
|
(75,489)
|
|
|
|
(62,856)
|
Net proceeds from
marketable securities
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
Net proceeds from sale
(purchases) of investments (3)
|
|
349
|
|
|
|
4,213
|
|
|
|
(5,474)
|
|
|
|
46,906
|
Credit facility
origination costs
|
|
-
|
|
|
|
-
|
|
|
|
(13,355)
|
|
|
|
-
|
Divestiture of
business, net (4)
|
|
-
|
|
|
|
32,518
|
|
|
|
(154)
|
|
|
|
32,518
|
Other financing &
investing activities
|
|
(1,660)
|
|
|
|
6,736
|
|
|
|
(14,421)
|
|
|
|
17,804
|
Foreign exchange impact
on cash
|
|
(2,346)
|
|
|
|
(10,915)
|
|
|
|
6,835
|
|
|
|
(14,654)
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash,
cash equivalents, and restricted cash
|
|
(38,986)
|
|
|
|
15,614
|
|
|
|
9,320
|
|
|
|
(4,004)
|
Cash, cash equivalents,
and restricted cash, beginning of period
|
|
321,194
|
|
|
|
307,428
|
|
|
|
272,888
|
|
|
|
327,046
|
Cash, cash equivalents,
and restricted cash, end of period
|
$
|
282,208
|
|
|
$
|
323,042
|
|
|
$
|
282,208
|
|
|
$
|
323,042
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow
information:
|
|
|
|
|
|
|
|
|
|
|
Cash paid for
interest
|
$
|
22,576
|
|
|
$
|
2,079
|
|
|
$
|
51,946
|
|
|
$
|
25,907
|
|
|
|
|
|
|
|
|
|
|
|
(1) In Q2'23, we
acquired ServiceMax Inc. for $1,448 million, net of cash acquired.
We paid $828 million in Q2'23 with the remaining $650 million to be
paid in Q1'24. Of the $650 million to be paid, $620 million will be
a financing outflow and $30 million of imputed interest will be an
operating cash outflow. In Q3'22, we acquired Intland for
approximately $275.0 million, net of cash acquired.
|
|
(2) In FY'23, net
borrowings were related to funds borrowed under our credit facility
to fund the ServiceMax acquisition.
|
|
(3) In Q2'22, we sold
an equity investment in a publicly-traded company for $42.7
million.
|
|
(4) In Q3'22, we sold a
portion of our PLM services business.
|
|
PTC Inc.
|
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
(UNAUDITED)
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
Cash provided by
operating activities (1)
|
$
|
169,223
|
|
|
$
|
116,766
|
|
|
$
|
561,092
|
|
|
$
|
396,827
|
Capital
expenditures
|
|
(5,085)
|
|
|
|
(4,470)
|
|
|
|
(18,035)
|
|
|
|
(9,979)
|
Free cash flow
(1)
|
$
|
164,138
|
|
|
$
|
112,296
|
|
|
$
|
543,057
|
|
|
$
|
386,848
|
|
|
|
|
|
|
|
|
|
|
|
(1) In the three and
nine months ended June 30, 2023, we made $2.8 million and $9.3
million of acquisition and transaction-related payments,
respectively, and $0.0 million and $1.4 million of restructuring
payments, respectively. In the three and nine months ended June 30,
2022, we made $9.7 million and $10.1 million acquisition and
transaction-related payments, respectively, and $10.2 million and
$38.5 million of restructuring payments, respectively. These
payments are included within cash provided by operating activities
and free cash flow.
|
|
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SOURCE PTC Inc.