Canada Markets open in 7 hrs 18 mins

PTC's Earnings and Revenues Breeze Past Estimates in Q1

Zacks Equity Research

PTC Inc. PTC reported first-quarter fiscal 2020 non-GAAP earnings of 57 cents per share, up 1.8% on a year-over-year basis, beating the Zacks Consensus Estimate by 26.7%.

Revenues came in at $356.1 million, up 6.4% year over year, surpassing the Zacks Consensus Estimate of $346 million. Solid AR and IoT bookings and synergies from Onshape acquisition drove growth.

Top-Line in Detail

Recurring revenues of $305.4 million improved 21.4% year over year. Perpetual license of almost $9 million declined 78.5% from the year-ago quarter’s figure, owing to “end of perpetual license sales on Jan 1, 2019.”

Revenues by License, Support and Services

License revenues (34.7% of total revenues) were $123.4 million, up 17.2% over the year-ago quarter’s figure.

Support and cloud services revenues (53.6%) of $190.9 million, improved 1.6% year over year.

Professional services revenues (11.7%) of $41.7 million, increasing 0.7% year over year.

Revenues by Product Group

Revenues from Core Product Group, which includes computer-aided design (CAD) & Product Lifecycle Management (PLM) offerings, came in at $830 million, up 9% (up 10% at cc).

Revenues from Growth Product Group (which includes IoT, AR & Onshape) came in at $48 million, up 36% year over year (37% on a cc basis).

Revenues from Focused Solutions Group (FSG) came in at $45 million, down 6% year over year (5% on a cc basis).

ARR Performance

Annualized recurring revenues (ARR) were $1.16 billion, up 11% year over year, driven by strength in Core and Growth product groups.

ARR from Core Product Group (CAD & PLM) came in at $830 million, up 9% (up 10% at cc). Growth was driven by strength in PLM ad robust performance across China and Europe.

ARR from Growth Product Group (IoT, AR & Onshape) came in at $151 million, up 35% year over year, (36% on a cc basis). Year-over-year growth can be attributed to improvement in AR and IoT bookings and strength across Europe and APAC. Synergies from Onshape acquisition aided performance.

ARR from FSG came in at $178 million, up 1% year over year on a cc basis.
 

PTC Inc. Price, Consensus and EPS Surprise

PTC Inc. Price, Consensus and EPS Surprise

PTC Inc. price-consensus-eps-surprise-chart | PTC Inc. Quote

Operating Details

Non-GAAP gross margin contracted 160 basis points (bps) on a year-over-year basis to 78.2%.

Non-GAAP operating expenses came in at $185 million. GAAP operating expenses increased 4.8% year over year to $238.3 million. This can be attributed to higher research & development expenses, and general & administrative expenses, which increased 7.4% and 17.7%, respectively.  Moreover, Sales & marketing expenses surged 3.2% from the year-ago quarter.

Operating income on a non-GAAP basis increased 2.1% year over year to $93.1 million.

Operating margin on a non-GAAP basis contracted 110 bps to 26.1%.

Balance Sheet & Cash Flow

As of Dec 28, 2019, cash, cash equivalents and marketable securities were $294.5 million, compared with prior quarter’s figure of $327 million.

Total debt, net of deferred issuance costs, was $1.124 billion, up from prior quarter’s $669.1 million.

Cash provided by operating activities came in at $7.5 million, compared with prior-quarter figure of $55.2 million.

Promising Guidance

Management anticipates the first-quarter momentum to continue, and thereby raised fiscal 2020 revenue guidance.

Fiscal 2020 revenues are now projected between $1.445 billion and $1.525 billion, compared with the earlier guided range of $1.41-$1.51 billion. The mid-point of the guided range, $1.485 billion is above the current Zacks Consensus Estimate for the period of $1.45.

Further, non-GAAP earnings are now expected between $2.15 and $2.65 per share, compared with the prior range of $1.95-$2.60 per share. The mid-point of the guided range, $2.40, is above the current Zacks Consensus Estimate for the period of $2.16.

ARR is expected to be $1.270-$1.295 billion, up 14-16% year over year.

Adjusted free cash flow is projected to be $260-$280 million. Non-GAAP operating margin is expected to be 26-29%.

Zacks Rank & Stocks to Consider

PTC currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are SYNNEX Corporation SNX, Keysight Technologies KEYS and Garmin GRMN, each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for SYNNEX, Keysight and Garmin is currently pegged at 10.37%, 10% and 7.35%, respectively.

The Hottest Tech Mega-Trend of All

Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
SYNNEX Corporation (SNX) : Free Stock Analysis Report
 
PTC Inc. (PTC) : Free Stock Analysis Report
 
Keysight Technologies Inc. (KEYS) : Free Stock Analysis Report
 
Garmin Ltd. (GRMN) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research