PTC Announces First Quarter FY’17 Results

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PTC has the most robust Internet of Things technology in the world. In 1986 we revolutionized digital 3D design, and in 1998 were first to market with Internet-based PLM. Now our leading IoT and AR platform and field-proven solutions bring together the physical and digital worlds to reinvent the way you create, operate, and service products. With PTC, global manufacturers and an ecosystem of partners and developers can capitalize on the promise of the IoT today and drive the future of innovation.

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PTC Inc.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)


				Three Months Ended
				December 31,			January 2,
				2016			2016

Revenue:
	Subscription			$	54,362		$	22,176
	Support				151,478			171,756
Total recurring software					205,840			193,932
	Perpetual license				34,379			47,763
Total software					240,219			241,695
	Professional services				46,108			49,322
Total revenue					286,327			291,017

Cost of revenue:
	Cost of software revenue ⁽¹⁾				42,947			36,814
	Cost of professional services revenue ⁽¹⁾				39,168			43,333
Total cost of revenue					82,115			80,147

Gross margin					204,212			210,870

Operating expenses:
	Sales and marketing ⁽¹⁾				90,690			82,429
	Research and development ⁽¹⁾				57,914			57,669
	General and administrative ⁽¹⁾				36,695			38,567
	Amortization of acquired intangible assets				8,067			8,350
	Restructuring charges				6,285			37,147
Total operating expenses					199,651			224,162

Operating income (loss)					4,561			(13,292	)
	Other expense, net				(11,064	)		(6,253	)
Income (loss) before income taxes					(6,503	)		(19,545	)
	Provision (benefit) for income taxes				2,638			4,347
Net income (loss)				$	(9,141	)	$	(23,892	)

Earnings (loss) per share:
	Basic			$	(0.08	)	$	(0.21	)
			Weighted average shares outstanding		115,290			114,151

	Diluted			$	(0.08	)	$	(0.21	)
			Weighted average shares outstanding		115,290			114,151



	(1	)	The amounts in the tables above include stock-based compensation as follows:

				Three Months Ended
				December 31,			January 2,
				2016			2016
	Cost of software revenue			$	1,437		$	1,905
	Cost of professional services revenue				1,457			1,451
	Sales and marketing				3,621			4,282
	Research and development				2,997			2,513
	General and administrative				8,476			13,038
			Total stock-based compensation	$	17,988		$	23,189


PTC Inc.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (UNAUDITED)
(in thousands, except per share data)

				Three Months Ended
				December 31,			January 2,
				2016			2016

GAAP revenue				$	286,327		$	291,017
	Fair value adjustment of acquired deferred subscription revenue				646			188
	Fair value adjustment of acquired deferred services revenue				268			309
Non-GAAP revenue				$	287,241		$	291,514

GAAP gross margin				$	204,212		$	210,870
	Fair value adjustment of acquired deferred revenue				914			497
	Fair value adjustment to deferred services cost				(113	)		(132	)
	Stock-based compensation				2,894			3,356
	Amortization of acquired intangible assets included in cost of software revenue				6,388			5,127
Non-GAAP gross margin				$	214,295		$	219,718

GAAP operating income (loss)				$	4,561		$	(13,292	)
	Fair value adjustment of acquired deferred revenue				914			497
	Fair value adjustment to deferred services cost				(113	)		(132	)
	Stock-based compensation				17,988			23,189
	Amortization of acquired intangible assets included in cost of software revenue				6,388			5,127
	Amortization of acquired intangible assets				8,067			8,350
	Acquisition-related charges included in general and administrative costs				169			1,207
	Restructuring charges				6,285			37,147
Non-GAAP operating income ⁽²⁾				$	44,259		$	62,093

GAAP net income (loss)				$	(9,141	)	$	(23,892	)
	Fair value adjustment of acquired deferred revenue				914			497
	Fair value adjustment to deferred services cost				(113	)		(132	)
	Stock-based compensation				17,988			23,189
	Amortization of acquired intangible assets included in cost of software revenue				6,388			5,127
	Amortization of acquired intangible assets				8,067			8,350
	Acquisition-related charges included in general and administrative costs				169			1,207
	Restructuring charges				6,285			37,147
	Non-operating credit facility refinancing costs				-			2,359
	Income tax adjustments ⁽³⁾				148			4,930
Non-GAAP net income				$	30,705		$	58,782

GAAP diluted earnings (loss) per share				$	(0.08	)	$	(0.21	)
	Fair value of acquired deferred revenue				0.01			-
	Stock-based compensation				0.15			0.20
	Amortization of acquired intangibles				0.12			0.12
	Acquisition-related charges				-			0.01
	Restructuring charges				0.05			0.32
	Non-operating credit facility refinancing costs				-			0.02
	Income tax adjustments				-			0.04
Non-GAAP diluted earnings per share				$	0.26		$	0.51

GAAP diluted weighted average shares outstanding					115,290			114,151
	Dilutive effect of stock based compensation plans				1,735			1,088
Non-GAAP diluted weighted average shares outstanding					117,025			115,239

	(2	)	Operating margin impact of non-GAAP adjustments:
				Three Months Ended
				December 31,			January 2,
				2016			2016
	GAAP operating margin				1.6	%		-4.6	%
			Fair value of acquired deferred revenue		0.3	%		0.2	%
			Fair value adjustment to deferred services cost		0.0	%		0.0	%
			Stock-based compensation		6.3	%		8.0	%
			Amortization of acquired intangibles		5.0	%		4.6	%
			Acquisition-related charges		0.1	%		0.4	%
			Restructuring charges		2.2	%		12.8	%
	Non-GAAP operating margin				15.4	%		21.3	%

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