Targets 30% license revenue growth in FY’10 on strength of Windchill PLM solution

NEEDHAM, Mass. — (BUSINESS WIRE) — January 26, 2010 — PTC (Nasdaq: PMTC), The Product Development Company®, today reported results for its first fiscal quarter ended January 2, 2010.

Highlights

• Q1 Results: Revenue of $258 million and non-GAAP EPS of $0.27; GAAP EPS of $0.15
  • Non-GAAP operating margin of 17.5%; GAAP operating margin of 8.6%
  • Relative to Q1 guidance, currency was favorable to revenue by $1.9 million and unfavorable to expenses by $1.3 million
• Q2 Guidance: Revenue of $235 to $245 million and non-GAAP EPS of $0.14 to $0.20
  • GAAP EPS of $0.02 to $0.07
  • Assumes $1.46 USD / EURO
• FY 2010 Targets: Increasing revenue target to $1,015 million and non-GAAP EPS to $1.00
  • Non-GAAP operating margin of 16%; GAAP operating margin of 7.5%
  • GAAP EPS of $0.50
  • Assumes $1.46 USD / EURO

The Q1 non-GAAP results exclude $13.9 million of stock-based compensation expense, $9.0 million of acquisition- related intangible asset amortization and $7.4 million of income tax adjustments. The Q1 results include a non-GAAP tax rate of 25% and a GAAP tax rate of 18%.

Results Commentary

C. Richard Harrison, chairman and chief executive officer, commented, “We begin fiscal 2010 with strong performance in Q1: total revenue was up 8% year-over-year with license revenue up 48%. Our better than expected performance was driven by large enterprise PLM contracts in North America.” On a constant currency basis total Q1 revenue was up 3% and license revenue was up 43%.

“Our PLM license revenue was $45 million, up 143% year-over-year, highlighting our leadership position in a large and growing segment of the enterprise software market,” continued Harrison. “Our pipeline for new business opportunities with new and existing customers remains strong. During the quarter we recognized revenue from leading organizations such as Airbus, BAE Systems, Bucyrus International, Cummins Inc., DRS Technologies, The Danfoss Group, IKEA, Raytheon, Quanta Computer Inc., the United States Army and the United States Navy.”

James Heppelmann, president and chief operating officer added, “Our ongoing investment in technology leadership is clearly paying off and our market momentum is becoming increasingly clear: our total PLM revenue is approaching a $500 million per year revenue run rate, we are engaged in more than 200 active competitive displacement opportunities on a world-wide basis, and we secured 4 additional strategically important “domino” account wins during the quarter.”

“Our product portfolio has never been more compelling and we are continuing to invest to extend our technology leadership position,” continued Heppelmann. “We have significant new releases of Windchill, Pro/ENGINEER, Arbortext, CoCreate and Mathcad coming out in FY’11, and we are progressing on our new embedded software and program portfolio management initiatives. We also continue to add to our product analytics platform; we recently acquired leading technology in the fast-growing carbon information management market, enhancing our “green product development” capabilities. Our product analytics platform enables customers to perform business intelligence-like analytics on their in-process product designs.”

Heppelmann concluded, “We are very optimistic about the long-term opportunity for PTC and will continue to make strategic investments that we believe are critical to delivering value to our customers and gaining market share. We expect these investments to enable us to achieve our goal of 20% non-GAAP EPS CAGR over the next 5 years.”

Neil Moses, chief financial officer, commented, “Our strong license revenue was, as expected, partly offset by a slight year-over-year decline in our maintenance and services revenue as we continue to work through the impact of soft license sales in 2009. Our CAD and SMB-related businesses were down modestly on a year-over-year basis, as expected, given the maturity of the CAD market and the ongoing impact of the global economy on the SMB space. Importantly, however, we are beginning to see signs of improvement in the SMB market and in the European and Asian markets as well. Our balance sheet remains solid with $231 million of cash.”