Solid ARR and Cash Flow in Q2 of Fiscal 2024
Updating Fiscal 2024 and Mid-Term Targets
BOSTON, May 1, 2024 /PRNewswire/ — PTC (NASDAQ: PTC) today reported financial results for its second fiscal quarter ended March 31, 2024.
“In our second fiscal quarter, we again delivered solid results. We have a differentiated strategy that leverages our unique product portfolio to enable our customers with their digital transformation journeys. Our consistent ARR and free cash flow growth continues to highlight the value we are bringing to our customers and the stability of our business model,” said Neil Barua, CEO, PTC.
“We are updating our mid-term ARR targets to low double-digit ARR growth, which is consistent with our track record of ARR growth over the past 5 years. Importantly, we are reiterating our mid-term cash flow targets as we remain confident in our ability to expand our operating efficiency while continuing to invest in the business to deliver increasing value to our customers,” concluded Barua.
Second Quarter 2024 Highlights
Key operating and financial highlights are set forth below. 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 |
Q2’24 |
Q2’23 |
YoY Change |
Q2’24 |
|
|
ARR as reported |
$2,088 |
$1,882 |
11 % |
||
|
Constant currency ARR |
$2,075 |
$1,850 |
12 % |
$2,050 – $2,065 |
|
|
Operating cash flow |
$251 |
$211 |
19 % |
~$245 |
|
|
Free cash flow |
$247 |
$207 |
19 % |
~$240 |
|
|
Revenue1 |
$603 |
$542 |
11%2 |
$560 – $590 |
|
|
Operating margin1 |
30 % |
23%3 |
~720bps |
||
|
Non-GAAP operating margin1 |
42 % |
38 % |
~390bps |
||
|
Earnings per share1 |
$0.95 |
$0.533 |
78 % |
$0.57 – $0.80 |
|
|
Non-GAAP earnings per share1 |
$1.46 |
$1.16 |
26 % |
$1.10 – $1.30 |
|
|
Total cash and cash equivalents |
$249 |
$320 |
(22 %) |
||
|
Gross debt4 |
$2,011 |
$2,5455 |
(21 %) |
|
1 |
Revenue and, as a result, operating margin, operating profit, and earnings per share are impacted under ASC 606. |
|
2 |
In Q2’24, revenue growth was 11% year over year on a constant currency basis. |
|
3 |
In Q2’23, operating margin and EPS included a negative impact due to acquisition and transaction-related charges for the ServiceMax acquisition of $12 million or $0.10. |
|
4 |
Gross debt excludes unamortized debt issuance costs. |
|
5 |
Q2’23 gross debt included a deferred acquisition payment related to ServiceMax of $620 million, which was paid in October 2023. |
Fiscal 2024 and Q3’24 Guidance and Mid-Term Targets
“Our ARR and free cash flow results in Q2’24 were solid in a challenging selling environment, driven by the resilience of our subscription business model, consistent execution, operational discipline, and the actions we have taken over time to align our investments with market opportunities. We continue to rapidly de-lever, and our debt to EBITDA ratio was 2.3x at the end of Q2’24,” said Kristian Talvitie, CFO.
“Reflecting our year-to-date performance and our outlook for the second half, we are narrowing the range of our FY’24 constant currency ARR guidance and maintaining our FY’24 free cash flow guidance. For Q3, the ARR guidance range is 11 to 12 percent growth, with free cash flow of approximately $220 million. It’s worth noting that we are updating our FY’24 revenue and EPS guidance consistent with our updated ARR guidance range and also due to the impact of FX. We believe we have set our Q3’24 and FY’24 guidance appropriately,” concluded Talvitie.
|
$ in millions |
FY’24 Previous |
FY’24 |
FY’24 YoY |
Q3’24 |
|
|
Constant currency ARR |
$2,190 – $2,250 |
$2,200 – $2,240 |
11% – 13% |
$2,115 – $2,130 |
|
|
Operating cash flow |
~$745 |
~$745 |
~22% |
~$225 |
|
|
Free cash flow |
~$725 |
~$725 |
~23% |
~$220 |
|
|
Revenue |
$2,270 – $2,360 |
$2,270 – $2,340 |
8% – 12% |
$525 – $540 |
|
|
Earnings per share |
$2.42 – $3.32 |
$2.52 – $3.22 |
22% – 56% |
$0.41 – $0.54 |
|
|
Non-GAAP earnings per share |
$4.50 – $5.20 |
$4.60 – $5.10 |
6% – 18% |
$0.90 – $1.00 |
Reconciliation of Operating Cash Flow Guidance to Free Cash Flow Guidance
|
In millions |
FY’24 |
Q3’24 |
||
|
Operating Cash Flow |
~$745 |
~$225 |
||
|
Capital expenditures |
(~$20) |
(~$5) |
||
|
Free Cash Flow |
~$725 |
~$220 |
Reconciliation of EPS Guidance to Non-GAAP EPS Guidance
|
FY’24 |
Q3’24 |
||
|
Earnings per share |
$2.52 – $3.22 |
$0.41 – $0.54 |
|
|
Stock-based compensation expense |
$1.91 – $1.66 |
$0.44 – $0.40 |
|
|
Intangible asset amortization expense |
~$0.68 |
~$0.17 |
|
|
Acquisition and transaction-related expense |
~$0.01 |
~$0.00 |
|
|
Income tax adjustments related to the reconciling items |
($0.52) – ($0.47) |
~($0.12) |
|
|
Non-GAAP Earnings per share |
$4.60 – $5.10 |
$0.90 – $1.00 |
Mid-Term Targets
|
FY’25 Previous |
FY’26 Previous |
Target Growth Rate |
||
|
Constant currency ARR growth |
Mid-teens % |
Mid-teens % |
Low double-digit % |
|
|
$ in millions |
FY’25 Previous |
FY’26 Previous |
FY’25 |
FY’26 |
|
Operating cash flow |
$850 – $900 |
~$1,025 |
$850 – $900 |
~$1,025 |
|
Free cash flow1 |
$825 – $875 |
~$1,000 |
$825 – $875 |
~$1,000 |
|
1 Assumes capital expenditures of approximately $25 million. |
FY’24 financial guidance includes the following assumptions:
- We provide ARR guidance on a constant currency basis, using our FY’24 Plan foreign exchange rates (rates as of September 30, 2023) for all periods. Foreign exchange rate fluctuations during the first half of FY’24 had a $14 million favorable impact on our Q2’24 reported ARR, compared to our Q2’24 constant currency ARR. Using foreign exchange rates as of the end of Q2’24 and assuming the midpoint of our constant currency guidance ranges:
- Q3’24 reported ARR would be higher by approximately $14 million, compared to Q3’24 constant currency ARR guidance; and
- FY’24 reported ARR would be higher by approximately $15 million, compared to FY’24 constant currency ARR guidance.
- We expect churn to remain low.
- For cash flow, due to invoicing and payments seasonality, and consistent with the past 3 years, we expect the majority of our collections to occur in the first half of our fiscal year and for fiscal Q4 to be our lowest cash flow generation quarter.
- Compared to FY’23, at the midpoint of FY’24 ARR guidance, FY’24 GAAP operating expenses are expected to increase approximately 6%, and FY’24 non-GAAP operating expenses are expected to increase approximately 8%, primarily due to investments to drive future growth, the acquisition of ServiceMax, and foreign exchange rate fluctuations.
- FY’24 GAAP P&L results are expected to include the items below, totaling approximately $285 million to $315 million, as well as their related tax effects:
- approximately $200 million to $230 million of stock-based compensation expense,
- approximately $81 million of intangible asset amortization expense,
- approximately $2 million, net, related to acquisition and transaction-related expense and a restructuring credit, and
- approximately $2 million of other non-operating expenses, related to an impairment loss on an available-for-sale debt security.
- Our FY’24 GAAP and non-GAAP tax rates are expected to be approximately 20%.
- Cash tax payments are expected to be approximately $80 million in FY’24.
- Capital expenditures are expected to be approximately $20 million in FY’24.
- Cash interest payments are expected to be approximately $135 million in FY’24.
- 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.
- We expect to prioritize paying down our debt in FY’24.
- We expect gross debt of approximately $1.7 billion at the end of FY’24.
- We expect our fully diluted share count to increase by approximately 1.5 million in FY’24.
PTC’s Fiscal Second Quarter Conference Call
The Company will host a conference call to discuss results at 5:00 pm ET on Wednesday, May 1, 2024. To participate in the live conference call, dial (888) 330-2508 or (240) 789-2735, provide the passcode 7328695, and press # or log in to the webcast, available on PTC’s Investor Relations website. A replay will also be available.
Important Information About Our Operating and Non-GAAP Financial Measures
Non-GAAP Financial Measures
We provide supplemental non-GAAP financial measures to our 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 and credits, net; non-operating charges and credits shown in the reconciliation provided; 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, 2023.
Free Cash Flow: We provide 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 exchange rate fluctuations. To present CC information, FY’24 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, 2023, rather than the actual exchange rates in effect during that period.
Operating Measure
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 ARR: We provide an organic 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. We do not adjust for acquisitions that have an immaterial impact on our ARR results when providing organic ARR 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. We do not adjust for acquisitions that have an immaterial impact on our ARR results when providing organic constant currency ARR results.
Deferred ARR: Deferred ARR is ARR attributable to our portfolio of subscription software, cloud, SaaS and support contracts that are not active as of the end of the reporting period but are contractually committed to commence in a future period.
Because ARR is independent of recognized and unearned revenue, deferred ARR should not be viewed as a measurement of revenue which will be recognized in future periods.
Forward-Looking Statements
Statements in this document that are not historic facts, including statements about our future financial and growth expectations 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 not improve when or as we expect or may deteriorate due to, among other factors, high interest rates or increases in 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 conflicts between Russia and Ukraine and in the Middle East, 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 investments in our solutions may not drive expansion of those solutions and/or generate the ARR and/or cash flow we expect if customers are slower to adopt those solutions than we expect or if they adopt competing solutions; other uses of cash or our credit facility limits could limit or preclude the return of 50% of free cash flow to shareholders via share 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 changes to tax laws in the U.S. and other countries and 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, Quarterly Reports on Form 10-Q, and other filings with the U.S. Securities and Exchange Commission.
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 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 |
Six Months Ended |
||||||||||||||
|
March 31, |
March 31, |
March 31, |
March 31, |
||||||||||||
|
2024 |
2023 |
2024 |
2023 |
||||||||||||
|
Revenue: |
|||||||||||||||
|
Recurring revenue |
$ |
564,014 |
$ |
492,143 |
$ |
1,070,041 |
$ |
909,253 |
|||||||
|
Perpetual license |
6,753 |
8,921 |
15,193 |
22,165 |
|||||||||||
|
Professional services |
32,305 |
41,117 |
68,052 |
76,673 |
|||||||||||
|
Total revenue(1) |
603,072 |
542,181 |
1,153,286 |
1,008,091 |
|||||||||||
|
Cost of revenue (2) |
110,055 |
113,506 |
220,075 |
209,296 |
|||||||||||
|
Gross margin |
493,017 |
428,675 |
933,211 |
798,795 |
|||||||||||
|
Operating expenses: |
|||||||||||||||
|
Sales and marketing (2) |
134,521 |
129,207 |
271,445 |
247,590 |
|||||||||||
|
Research and development (2) |
106,998 |
100,349 |
212,781 |
188,526 |
|||||||||||
|
General and administrative (2) |
61,526 |
65,923 |
130,732 |
116,894 |
|||||||||||
|
Amortization of acquired intangible assets |
10,424 |
10,656 |
20,787 |
18,682 |
|||||||||||
|
Restructuring and other charges (credits), net |
(7) |
1 |
(802) |
(337) |
|||||||||||
|
Total operating expenses |
313,462 |
306,136 |
634,943 |
571,355 |
|||||||||||
|
Operating income |
179,555 |
122,539 |
298,268 |
227,440 |
|||||||||||
|
Other expense, net |
(33,810) |
(41,470) |
(66,924) |
(59,947) |
|||||||||||
|
Income before income taxes |
145,745 |
81,069 |
231,344 |
167,493 |
|||||||||||
|
Provision for income taxes |
31,300 |
17,565 |
50,512 |
28,954 |
|||||||||||
|
Net income |
$ |
114,445 |
$ |
63,504 |
$ |
180,832 |
$ |
138,539 |
|||||||
|
Earnings per share: |
|||||||||||||||
|
Basic |
$ |
0.96 |
$ |
0.54 |
$ |
1.52 |
$ |
1.17 |
|||||||
|
Weighted average shares outstanding |
119,587 |
118,260 |
119,354 |
118,037 |
|||||||||||
|
Diluted |
$ |
0.95 |
$ |
0.53 |
$ |
1.50 |
$ |
1.17 |
|||||||
|
Weighted average shares outstanding |
120,712 |
119,041 |
120,480 |
118,912 |
|||||||||||
|
(1) See supplemental financial data for revenue by license, support and cloud services, |
|||||||||||||||
|
(2) See supplemental financial data for additional information about stock-based |
|||||||||||||||
|
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 |
Six Months Ended |
||||||||||||||
|
March 31, |
March 31, |
March 31, |
March 31, |
||||||||||||
|
2024 |
2023 |
2024 |
2023 |
||||||||||||
|
License revenue (1) |
$ |
234,321 |
$ |
196,993 |
$ |
418,319 |
$ |
369,691 |
|||||||
|
Support and cloud services revenue |
336,446 |
304,071 |
666,915 |
561,727 |
|||||||||||
|
Professional services revenue |
32,305 |
41,117 |
68,052 |
76,673 |
|||||||||||
|
Total revenue |
$ |
603,072 |
$ |
542,181 |
$ |
1,153,286 |
$ |
1,008,091 |
|||||||
|
(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 |
Six Months Ended |
||||||||||||||
|
March 31, |
March 31, |
March 31, |
March 31, |
||||||||||||
|
2024 |
2023 |
2024 |
2023 |
||||||||||||
|
Cost of revenue |
$ |
5,034 |
$ |
5,746 |
$ |
10,123 |
$ |
9,821 |
|||||||
|
Sales and marketing |
14,729 |
12,845 |
30,856 |
25,041 |
|||||||||||
|
Research and development |
13,936 |
15,580 |
28,174 |
27,038 |
|||||||||||
|
General and administrative |
20,492 |
18,075 |
44,051 |
31,850 |
|||||||||||
|
Total stock-based compensation |
$ |
54,191 |
$ |
52,246 |
$ |
113,204 |
$ |
93,750 |
|||||||
|
PTC Inc. |
|||||||||||||||
|
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (UNAUDITED) |
|||||||||||||||
|
(in thousands, except per share data) |
|||||||||||||||
|
Three Months Ended |
Six Months Ended |
||||||||||||||
|
March 31, |
March 31, |
March 31, |
March 31, |
||||||||||||
|
2024 |
2023 |
2024 |
2023 |
||||||||||||
|
GAAP gross margin |
$ |
493,017 |
$ |
428,675 |
$ |
933,211 |
$ |
798,795 |
|||||||
|
Stock-based compensation |
5,034 |
5,746 |
10,123 |
9,821 |
|||||||||||
|
Amortization of acquired intangible assets included in cost of |
9,584 |
9,834 |
19,150 |
15,976 |
|||||||||||
|
Non-GAAP gross margin |
$ |
507,635 |
$ |
444,255 |
$ |
962,484 |
$ |
824,592 |
|||||||
|
GAAP operating income |
$ |
179,555 |
$ |
122,539 |
$ |
298,268 |
$ |
227,440 |
|||||||
|
Stock-based compensation |
54,191 |
52,246 |
113,204 |
93,750 |
|||||||||||
|
Amortization of acquired intangible assets |
20,008 |
20,490 |
39,937 |
34,658 |
|||||||||||
|
Acquisition and transaction-related charges |
302 |
11,883 |
2,808 |
17,689 |
|||||||||||
|
Restructuring and other charges (credits), net |
(7) |
1 |
(802) |
(337) |
|||||||||||
|
Non-GAAP operating income (1) |
$ |
254,049 |
$ |
207,159 |
$ |
453,415 |
$ |
373,200 |
|||||||
|
GAAP net income |
$ |
114,445 |
$ |
63,504 |
$ |
180,832 |
$ |
138,539 |
|||||||
|
Stock-based compensation |
54,191 |
52,246 |
113,204 |
93,750 |
|||||||||||
|
Amortization of acquired intangible assets |
20,008 |
20,490 |
39,937 |
34,658 |
|||||||||||
|
Acquisition and transaction-related charges |
302 |
11,883 |
2,808 |
17,689 |
|||||||||||
|
Restructuring and other charges (credits), net |
(7) |
1 |
(802) |
(337) |
|||||||||||
|
Non-operating charges, net (2) |
2,000 |
4,622 |
2,000 |
5,147 |
|||||||||||
|
Income tax adjustments (3) |
(14,586) |
(14,943) |
(28,624) |
(33,676) |
|||||||||||
|
Non-GAAP net income |
$ |
176,353 |
$ |
137,803 |
$ |
309,355 |
$ |
255,770 |
|||||||
|
GAAP diluted earnings per share |
$ |
0.95 |
$ |
0.53 |
$ |
1.50 |
$ |
1.17 |
|||||||
|
Stock-based compensation |
0.45 |
0.44 |
0.94 |
0.79 |
|||||||||||
|
Amortization of acquired intangibles |
0.17 |
0.17 |
0.33 |
0.29 |
|||||||||||
|
Acquisition and transaction-related charges |
0.00 |
0.10 |
0.02 |
0.15 |
|||||||||||
|
Restructuring and other charges (credits), net |
(0.00) |
0.00 |
(0.01) |
(0.00) |
|||||||||||
|
Non-operating charges, net (2) |
0.02 |
0.04 |
0.02 |
0.04 |
|||||||||||
|
Income tax adjustments (3) |
(0.12) |
(0.13) |
(0.24) |
(0.28) |
|||||||||||
|
Non-GAAP diluted earnings per share |
$ |
1.46 |
$ |
1.16 |
$ |
2.57 |
$ |
2.15 |
|||||||
|
(1) Operating margin impact of non-GAAP adjustments: |
|||||||||||||||
|
Three Months Ended |
Six Months Ended |
||||||||||||||
|
March 31, |
March 31, |
March 31, |
March 31, |
||||||||||||
|
2024 |
2023 |
2024 |
2023 |
||||||||||||
|
GAAP operating margin |
29.8 |
% |
22.6 |
% |
25.9 |
% |
22.6 |
% |
|||||||
|
Stock-based compensation |
9.0 |
% |
9.6 |
% |
9.8 |
% |
9.3 |
% |
|||||||
|
Amortization of acquired intangibles |
3.3 |
% |
3.8 |
% |
3.5 |
% |
3.4 |
% |
|||||||
|
Acquisition and transaction-related charges |
0.1 |
% |
2.2 |
% |
0.2 |
% |
1.8 |
% |
|||||||
|
Restructuring and other charges (credits), net |
0.0 |
% |
0.0 |
% |
(0.1) |
% |
0.0 |
% |
|||||||
|
Non-GAAP operating margin |
42.1 |
% |
38.2 |
% |
39.3 |
% |
37.0 |
% |
|||||||
|
(2) In Q2’24, we recognized an impairment loss of $2.0 million on an available-for-sale debt security. In Q2’23, we recognized |
|||||||||||||||
|
(3) Income tax adjustments reflect the tax effects of non-GAAP adjustments which are calculated by applying the applicable |
|||||||||||||||
|
PTC Inc. |
|||||||
|
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||||
|
(in thousands) |
|||||||
|
March 31, |
September 30, |
||||||
|
2024 |
2023 |
||||||
|
ASSETS |
|||||||
|
Cash and cash equivalents |
$ |
248,971 |
$ |
288,103 |
|||
|
Accounts receivable, net |
705,493 |
811,398 |
|||||
|
Property and equipment, net |
81,811 |
88,391 |
|||||
|
Goodwill and acquired intangible assets, net |
4,377,844 |
4,299,760 |
|||||
|
Lease assets, net |
135,262 |
143,028 |
|||||
|
Other assets |
655,882 |
658,162 |
|||||
|
Total assets |
$ |
6,205,263 |
$ |
6,288,842 |
|||
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|||||||
|
Deferred revenue |
$ |
724,571 |
$ |
681,550 |
|||
|
Debt, net of deferred issuance costs |
2,005,741 |
1,695,785 |
|||||
|
Deferred acquisition payments (1) |
– |
620,040 |
|||||
|
Lease obligations |
183,789 |
193,192 |
|||||
|
Other liabilities |
348,030 |
420,985 |
|||||
|
Stockholders’ equity |
2,943,132 |
2,677,290 |
|||||
|
Total liabilities and stockholders’ equity |
$ |
6,205,263 |
$ |
6,288,842 |
|||
|
(1) FY’23 Deferred acquisition payments represented the fair value of the $650 million payment associated with the ServiceMax, |
|||||||
|
PTC Inc. |
|||||||||||||||
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||||||||||
|
(in thousands) |
|||||||||||||||
|
Three Months Ended |
Six Months Ended |
||||||||||||||
|
March 31, |
March 31, |
March 31, |
March 31, |
||||||||||||
|
2024 |
2023 |
2024 |
2023 |
||||||||||||
|
Cash flows from operating activities: |
|||||||||||||||
|
Net income |
$ |
114,445 |
$ |
63,504 |
$ |
180,832 |
$ |
138,539 |
|||||||
|
Stock-based compensation |
54,191 |
52,246 |
113,204 |
93,750 |
|||||||||||
|
Depreciation and amortization |
26,922 |
27,709 |
54,144 |
49,037 |
|||||||||||
|
Amortization of right-of-use lease assets |
7,735 |
8,510 |
15,459 |
16,564 |
|||||||||||
|
Operating lease liability |
(5,340) |
(2,910) |
(10,293) |
4,985 |
|||||||||||
|
Accounts receivable |
(46,443) |
(19,034) |
107,507 |
86,478 |
|||||||||||
|
Accounts payable and accruals |
(109) |
2,492 |
(64,796) |
(7,358) |
|||||||||||
|
Deferred revenue |
70,065 |
55,727 |
40,971 |
36,092 |
|||||||||||
|
Income taxes |
4,620 |
4,667 |
18,087 |
(12,169) |
|||||||||||
|
Other |
24,644 |
18,037 |
(17,044) |
(14,049) |
|||||||||||
|
Net cash provided by operating activities |
250,730 |
210,948 |
438,071 |
391,869 |
|||||||||||
|
Capital expenditures |
(3,639) |
(3,770) |
(8,202) |
(12,950) |
|||||||||||
|
Acquisition of businesses, net of cash acquired(1) |
– |
(828,271) |
(93,457) |
(828,271) |
|||||||||||
|
Borrowings (payments) on debt, net(2) |
(254,230) |
566,000 |
304,174 |
566,000 |
|||||||||||
|
Deferred acquisition payment(3) |
– |
– |
(620,040) |
– |
|||||||||||
|
Net proceeds associated with issuance of common stock |
12,709 |
10,592 |
12,709 |
10,592 |
|||||||||||
|
Payments of withholding taxes in connection with vesting of stock-based awards |
(20,858) |
(3,599) |
(71,184) |
(56,022) |
|||||||||||
|
Settlement of net investment hedges |
5,123 |
(1,749) |
(2,224) |
(12,544) |
|||||||||||
|
Purchases of investments |
– |
(5,823) |
– |
(5,823) |
|||||||||||
|
Credit facility origination costs |
– |
(12,005) |
– |
(13,355) |
|||||||||||
|
Other financing & investing activities |
– |
– |
– |
(371) |
|||||||||||
|
Foreign exchange impact on cash |
(5,860) |
565 |
829 |
9,181 |
|||||||||||
|
Net change in cash, cash equivalents, and restricted cash |
(16,025) |
(67,112) |
(39,324) |
48,306 |
|||||||||||
|
Cash, cash equivalents, and restricted cash, beginning of period |
265,499 |
388,306 |
288,798 |
272,888 |
|||||||||||
|
Cash, cash equivalents, and restricted cash, end of period |
$ |
249,474 |
$ |
321,194 |
$ |
249,474 |
$ |
321,194 |
|||||||
|
Supplemental cash flow information: |
|||||||||||||||
|
Cash paid for interest(3) |
$ |
49,263 |
$ |
24,546 |
$ |
94,020 |
$ |
29,370 |
|||||||
|
(1) In Q1’24, we acquired pure-systems for $93 million, net of cash acquired. In Q2’23, we acquired ServiceMax Inc. for $1,448 |
|||||||||||||||
|
(2) In Q1’24, we borrowed $740 million to fund the ServiceMax deferred acquisition payment and the pure-systems acquisition. |
|||||||||||||||
|
(3) In Q1’24, we made a payment of $650 million to settle the ServiceMax deferred acquisition payment liability, of which $620 |
|||||||||||||||
|
PTC Inc. |
|||||||||||||||
|
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (UNAUDITED) |
|||||||||||||||
|
(in thousands) |
|||||||||||||||
|
Three Months Ended |
Six Months Ended |
||||||||||||||
|
March 31, |
March 31, |
March 31, |
March 31, |
||||||||||||
|
2024 |
2023 |
2024 |
2023 |
||||||||||||
|
Cash provided by operating activities(1) |
$ |
250,730 |
$ |
210,948 |
$ |
438,071 |
$ |
391,869 |
|||||||
|
Capital expenditures |
(3,639) |
(3,770) |
(8,202) |
(12,950) |
|||||||||||
|
Free cash flow(1) |
$ |
247,091 |
$ |
207,178 |
$ |
429,869 |
$ |
378,919 |
|||||||
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SOURCE PTC Inc.
