Jeff Glidden, chief financial officer, commented, “We delivered $0.50 non-GAAP EPS and achieved a 25.3% non-GAAP operating margin. We generated $36 million in operating cash flow, borrowed $110 million from our credit facility to fund the acquisition of ThingWorx early in the second quarter, and used $6 million for capital expenditures, resulting in an ending cash balance of $371 million.”

Outlook Commentary

“Based on the strength of our pipeline, an expanding set of impact solutions that address key customer challenges, and our ability to address future growth opportunities in the smart, connected product space through our recent acquisition of ThingWorx, we are very excited about the longer-term growth opportunity for PTC. With strong Q1 results, we remain comfortable with our 25% non-GAAP operating margin target for FY’14. Furthermore, we are committed to driving non-GAAP margin expansion toward our FY’17 target range of 28% to 30%,” said Heppelmann.

Glidden added, “For Q2’14, we are providing guidance of $320 to $330 million in revenue with $75 to $90 million in license revenue, approximately $75 million in services revenue and approximately $165 million in support revenue. We anticipate somewhat higher spending levels in Q2’14 driven by increased hiring, particularly within sales and R&D, annual salary increases, and the inclusion of the ThingWorx business. We are expecting Q2 non-GAAP EPS of $0.43 to $0.48 and GAAP EPS of $0.28 to $0.33 (excluding acquisition accounting for the ThingWorx transaction).”

The Q2 guidance assumes $1.36 USD / EURO and 104 YEN / USD, a non-GAAP tax rate of 25%, a GAAP tax rate of 25% and 121 million diluted shares outstanding. The Q2 non-GAAP guidance excludes $13 million of stock-based compensation expense, $12 million of intangible asset amortization expense, their related income tax effects, as well as any additional discrete tax items.

Glidden continued, “Given our Q1 performance and the inclusion of revenue from ThingWorx this fiscal year, we are now targeting FY’14 revenue of $1,330 to $1,345 million, license revenue of $355 to $370 million, services revenue of approximately $300 million and support revenue of approximately $675 million. We are targeting non-GAAP EPS of $2.03 to $2.13 and GAAP EPS of $1.38 to $1.48, up from our prior guidance of $2.00 to $2.10 non-GAAP EPS and $1.28 to $1.38 GAAP EPS, respectively.”

The FY’14 targets assume a non-GAAP tax rate of 25%, a GAAP tax rate of 25% and 121 million diluted shares outstanding. The FY’14 non-GAAP guidance excludes $52 million of stock-based compensation expense, $49 million of intangible asset amortization expense, $1 million of restructuring charges, $1 million of acquisition-related charges and their related income tax effects, as well as any additional discrete tax items. Our Q2 and FY’14 guidance does not include the impact of acquisition accounting for the ThingWorx transaction, for which we expect to record a non-cash tax benefit due to the recording of deferred tax liabilities and the resulting reduction in the U.S. valuation allowance.

Q1 Earnings Conference Call and Webcast

Prepared remarks for the conference call have been posted to the investor relations section of our website. The prepared remarks will not be read live; the call will be primarily Q&A.