Yahoo Finance Why Is PTC Inc. (PTC) Up 6.2% Since Last Earnings Report?
A month has gone by since the last earnings report for PTC Inc. (PTC). Shares have added about 6.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is PTC Inc. due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
PTC's Q2 Earnings Beat Estimates, Revenues Increase Y/Y
PTC reported second-quarter fiscal 2023 non-GAAP earnings of $1.16 per share, down 17% on a year-over-year basis. However, the figure surpassed the Zacks Consensus Estimate by 8.4%.
Revenues came in at $542 million, up 7% year over year (up 13% at constant currency or cc). The top line beat the Zacks Consensus Estimate by 0.7%.
The year-over-year improvement in the top line was driven by steady demand for its product lifecycle management (PLM) and computer-aided design (CAD) solutions. Continued momentum in Onshape and Arena will further assist the company in the SaaS transition
Top Line in Detail
Recurring revenues of $492.1 million rose 8.7% year over year. Perpetual licenses decreased 6.5% to $8.9 million. The downtick in Perpetual licenses is due to the company's intention to gradually convert Kepware to a subscription model.
Revenues by License, Support and Services
License revenues (36.3% of total revenues) were $196.9 million, down 9.8% from the year-ago quarter’s figure.
Support and cloud services revenues (56.1%) of $304.1 million increased 24.7% year over year.
Professional services revenues (7.6%) were $41.2 million, down 4.3% year over year. The downtick was caused by the company’s strategy to transfer some of its professional services to DXP services, its partner Windchill plus lift and shift projects
Revenues by Product Group
PLM and CAD businesses continue to witness healthy growth. In the second quarter, PLM and CAD revenues were $344 million and $198 million, rising 18% and declining 8% year over year, respectively.
ARR Performance
Annualized recurring revenues (ARR) were $1.882 billion, up 23% year over year (up 26% at cc). The uptick was driven by strong performance across all divisions and geographies.
In the first quarter, PLM and CAD ARR were $1,134 million and $748 million, rising 36% and 7% year over year, respectively
Operating Details
Non-GAAP gross margin decreased 160 basis points (bps) on a year-over-year basis at 81.9%.
Total operating expenses increased $53 million year over year at $306 million.Operating income on a non-GAAP basis decreased 3.3% year over year to $207 million. Operating margin on a non-GAAP basis contracted 410 bps on a year-over-year basis to 38%.
Balance Sheet & Cash Flow
As of Mar 31, 2023, cash, cash equivalents and marketable securities were $320.4 million compared with $387.6 million as of Dec 31, 2022.
Total debt, net of deferred issuance costs, was $1.917 billion as of Mar 31, 2023, compared with $1.351 billion as of Dec 31, 2022.
Cash provided by operating activities came in at $210.9 million compared with the prior-year quarter figure of $142.3 million. The free cash flow was $207 million compared with $140 million reported in the previous year’s quarter.
Fiscal 2023 Guidance
For fiscal 2023, ARR is now expected to be $1.925-$1.950 billion compared with the previous guidance of $1.910-$1.960 billion, which indicates a rise of 22-24% year over year at cc.
Revenues for fiscal 2023 are projected in the range of $2.080-$2.1540 billion compared with the previous guidance of $2.070-$2.150 billion, indicating a rise of 8-11% year over year.
For fiscal 2023, cash from operations is projected to be $600 million, indicating a rise of 38% on a year-over-year basis. The free cash flow is forecasted to be $580 million, suggesting a 39% increase.
For the fiscal third quarter, PTC expects ARR to be between $1.845 and $1.855 billion. Cash from operations is projected to be $160 million, and free cash flow is forecasted to be $155 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, PTC Inc. has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, PTC Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
PTC Inc. is part of the Zacks Computer - Software industry. Over the past month, Microsoft (MSFT), a stock from the same industry, has gained 6.9%. The company reported its results for the quarter ended March 2023 more than a month ago.
Microsoft reported revenues of $52.86 billion in the last reported quarter, representing a year-over-year change of +7.1%. EPS of $2.45 for the same period compares with $2.22 a year ago.
Microsoft is expected to post earnings of $2.56 per share for the current quarter, representing a year-over-year change of +14.8%. Over the last 30 days, the Zacks Consensus Estimate has changed +3.5%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Microsoft. Also, the stock has a VGM Score of D.
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
PTC Inc. (PTC) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
