PTC's Q3 Earnings Miss Estimates, Revenues Increase Y/Y
PTC Inc PTC reported third-quarter fiscal 2023 non-GAAP earnings per share (EPS) of 99 cents, up 2% on a year-over-year basis. However, the figure missed the Zacks Consensus Estimate by 2%.
Revenues came in at $542 million, up 17% year over year (up 21% at constant currency or cc). The top line beat the Zacks Consensus Estimate by 2.3%.
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.
PTC Inc. Price, Consensus and EPS Surprise
PTC Inc. price-consensus-eps-surprise-chart | PTC Inc. Quote
Top Line in Detail
Recurring revenues of $498.4 million rose 20% year over year. Perpetual licenses increased 0.6% to $8.2 million.
Revenues by License, Support and Services
License revenues (35.6% of total revenues) were $192.9 million, up 10.2% from the year-ago quarter’s figure.
Support and cloud services revenues (57.9%) of $313.7 million increased 26.4% year over year.
Professional services revenues (6.5%) were $35.6 million, down 48.7% 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 third quarter, PLM and CAD revenues were $349 million and $193 million, rising 28.8% and 0.5% year over year, respectively.
ARR Performance
Annualized recurring revenues (ARR) were $1.929 billion, up 24.9% year over year (up 24.9% at cc). The uptick was driven by strong performance across all divisions and geographies.
In the third quarter, PLM and CAD ARR were $1,165 million and $764 million, rising 36% and 11% year over year, respectively.
Operating Details
Non-GAAP gross margin increased 30 basis points (bps) on a year-over-year basis to 81.5%.
Total operating expenses increased $36 million year over year to $316.6 million.
Operating income on a non-GAAP basis increased 18.6% year over year to $185 million.
Operating margin on a non-GAAP basis increased 40 bps on a year-over-year basis to 34.1%.
Balance Sheet & Cash Flow
As of Jun 30, 2023, cash, cash equivalents and marketable securities were $281.5 million compared with $320.4 million as of Mar 31, 2023.
Total debt, net of deferred issuance costs, was $1.738 billion as of Jun 30, 2023, compared with $1.917 billion as of Mar 31, 2023.
Cash provided by operating activities was $169 million compared with the prior-year quarter’s figure of $117 million.
The free cash flow was $164 million compared with $112 million reported in the previous year’s quarter.
Fiscal 2023 Guidance
For fiscal 2023, ARR is now expected to be $1.935-$1.950 billion compared with the previous guidance of $1.925-$1.950 billion, which indicates a rise of 23-24% year over year at cc.
Revenues for fiscal 2023 are projected in the range of $2.090-$2.120 billion compared with the previous guidance of $2.080-$2.140 billion, indicating a rise of 8-10% year over year.
For fiscal 2023, cash from operations is projected to be $605 million, indicating a rise of 39% on a year-over-year basis. The free cash flow is forecasted to be $585 million, suggesting a 41% increase year over year.
For the fiscal fourth quarter, PTC expects ARR between $1.935 and $1.950 billion. Cash from operations is projected to be $44 million, and free cash flow is forecasted to be $42 million.
Zacks Rank & Other Stocks to Consider
Currently, PTC carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader technology space are InterDigital IDCC, Badger Meter BMI and Woodward WWD. InterDigital and Badger Meter presently sport a Zacks Rank #1 (Strong Buy), while Woodward currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for InterDigital’s 2023 EPS has increased 0.1% in the past 60 days to $8.08. The company’s long-term earnings growth rate is 13.9%.
InterDigital’s earnings beat estimates in all the trailing four quarters, delivering an average surprise of 170.9%. Shares of IDCC have rallied 53.9% in the past year.
The Zacks Consensus Estimate for Badger Meter’s 2023 EPS has increased 4.8% in the past 60 days to $2.82.
Badger Meter’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 6.7%. Shares of BMI have surged 80.5% in the past year.
The Zacks Consensus Estimate for Woodward’s fiscal 2023 EPS has increased 0.8% in the past 60 days to $3.61.
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