2 L&SS bookings refers to new license revenue plus new subscription solutions annualized contract value (ACV) bookings multiplied by a conversion factor of 2
3 Revenue includes run rate subscription solutions revenue
* No prior year data for YoY comparison
Heppelmann continued, “CAD L&SS non-GAAP revenue and bookings declined YoY versus a strong Q1’14. Extended PLM (EPLM) L&SS non-GAAP revenue and bookings declined as well, with solid growth in our PLM business on a bookings basis offset by a decline in our ALM business. L&SS IoT non-GAAP revenue reached $9 million in Q1’15, up $4 million sequentially (LS&S IoT revenue was $8 million on a GAAP basis). We believe our leadership position within the application enablement platforms space, combined with an ability to sell IoT solutions to new and existing PTC customers, will enable us to achieve healthy double digit growth rates in this business going forward. SLM L&SS non-GAAP revenue and bookings declined YoY. While we remain encouraged by our current SLM pipeline, longer sales cycles led to lower than expected close rates relative to our corporate average, and affected our ability to grow SLM bookings. We continue to believe our SLM L&SS business can return to double digit growth rates over time, particularly as we introduce new connected SLM applications.”
“We had 15 large deals (greater than $1 million of L&SS bookings from a customer during the quarter) in Q1’15, up from 14 in Q1’14. There were no mega deals (transactions resulting in L&SS bookings of over $5 million in the quarter) in Q1’15. During the quarter we recognized revenue from leading organizations such as Brainlab, CKD Pharm, CNH Industrial Italia, General Dynamics, Johnson Controls, KTM Motorrad, Kuhn, LG Display, Shanghai Volkswagen Automotive, and Sirona Dental Systems,” remarked Heppelmann.
Jeff Glidden, chief financial officer, commented, “From a profitability standpoint, we delivered $0.50 non-GAAP EPS, at the high end of our guidance range, driven by higher support revenue and a lower tax rate, offset by a higher mix of subscription solutions business in the quarter, lower gross profit due to a greater mix of professional services business, and investments we are making in select strategic customer engagements, as well as higher operating expenses due to investments in our Internet of Things business. Unfavorable currency movements impacted non-GAAP EPS by approximately $0.05. Additionally, the higher than expected mix of subscription solutions bookings impacted EPS by $0.02. Q1 non-GAAP operating margin of 21.4% was down 400 basis points YoY and 270 basis point YoY CC. We generated $12 million in operating cash flow, repaid $6 million on our credit facility, and ended the quarter with a cash balance of $261 million.”
Updated Outlook Commentary
Heppelmann
remarked, “We are targeting constant currency non-GAAP revenue growth of
4% to 6% and approximately 15% non-GAAP EPS growth for FY’15 on a
constant currency basis. This assumes a less robust global manufacturing
economy than we saw in 2014 offset by strong growth in our IoT
solutions. While our FY’15 outlook is unchanged on a constant currency
basis, we are reducing our FY’15 revenue, operating margin, and EPS
guidance to factor in further depreciation of the Euro and Yen relative
to the US dollar. Looking out to FY’18 we believe we can achieve
approximately 15% per year non-GAAP EPS growth, driven by a healthy mix
of revenue growth, further non-GAAP operating margin expansion, and
reduced share count through our capital allocation strategy.” Detailed
guidance using current currency assumptions is outlined in Table 2 below.
Glidden noted, “For planning purposes we assume subscription solutions bookings will represent approximately 15% of our total bookings in FY’15, up from 8% in FY’14. Importantly, as we saw in Q1’15, if a greater percentage of our customers elect our subscription offerings than our assumption, it will have an adverse impact on revenue, operating margin, cash flow and EPS growth relative to our guidance. Should this happen, we believe it will be net present value positive to PTC over the long-term and we will provide relevant information to help investors understand how our business model is evolving.”
|
Table 2: Q2 and FY’15 Guidance Table (1) |
|||||||||||||
|
Q2'15
|
Q2'15
High |
FY'15
Low |
FY'15
High |
||||||||||
| Subscription Solutions Bookings % of L&SS Bookings | ~15% | ~15% | ~15% | ~15% | |||||||||
| License & Subscription Solutions (L&SS) Revenue | 80 | 95 | 380 | 410 | |||||||||
| Support Revenue | 165 | 165 | 690 | 690 | |||||||||
| Professional Services Revenue | 60 | 60 | 250 | 250 | |||||||||
| Total Revenue | 305 | 320 | 1,320 | 1,350 | |||||||||
| L&SS YoY Change | -10% | 7% | -3% | 5% | |||||||||
| Support YoY Change | -1% | -1% | 0% | 0% | |||||||||
| Professional Services YoY Change | -19% | -19% | -10% | -10% | |||||||||
| Total Revenue YoY Change | -7% | -3% | -3% | -1% | |||||||||
| Non-GAAP Gross Margin | 74% | 75% | 75% | 75% | |||||||||
| GAAP Gross Margin | 72% | 72% | 73% | 73% | |||||||||
| Non-GAAP Operating Margin | 21% | 22% | 24% | 25% | |||||||||
| GAAP Operating Margin | 10% | 11% | 14% | 15% | |||||||||
| Total GAAP Adjustments (2) | 33 | 33 | 127 | 127 | |||||||||
| Other Income (Expense) | -4 | -4 | -14 | -14 | |||||||||
| Non-GAAP Tax Rate | 15% | 15% | 15% | 15% | |||||||||
| GAAP Tax Rate | 15% | 15% | 12% | 12% | |||||||||
| Share Count | 117 | 117 | 117 | 117 | |||||||||
| Non-GAAP EPS | $0.42 | $0.50 | $2.20 | $2.35 | |||||||||
| Non-GAAP EPS Growth | -12% | 5% | 1% | 8% | |||||||||
| GAAP EPS | $0.18 | $0.26 | $1.32 | $1.47 | |||||||||
| GAAP EPS Growth | -50% | -28% | -1% | 10% | |||||||||
|
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