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Dec 31, 2020
PTC Q1 2021 Earnings Report
PTC reported strong ARR, revenue, and cash flow performance, leading to raised FY'21 guidance.
Key Takeaways
PTC's fiscal first quarter of 2021 saw double-digit top line growth and strong cash flow, driven by high demand for their product portfolio. The acquisition of Arena Solutions complements momentum in CAD and PLM markets. The company is updating its fiscal 2021 financial guidance to reflect the effect of Arena Solutions, the impact of foreign currency, and Q1'21 performance.
ARR was $1.34 billion, a 16% increase, or 12% in constant currency, compared to Q1'20.
Revenue was $429 million, a 20% increase, or 17% in constant currency, compared to $356 million in Q1'20.
Cash flow from operations was $114 million, and free cash flow was $111 million in Q1'21.
Operating margin was 21% in Q1'21, compared to 9% in Q1'20; non-GAAP operating margin was 36%, compared to 26% in Q1'20.
PTC
PTC
PTC Revenue by Segment
Revenue by Segment
Perpetual License Revenue
CapyFin.comProfessional Services Revenue
CapyFin.com Forward Guidance
PTC updated its fiscal 2021 financial guidance to reflect the effect of Arena Solutions, the impact of foreign currency, and Q1'21 performance.
Positive Outlook
- Macroeconomic conditions related to the COVID-19 crisis remain stable near-term with conditions improving in the second-half of FY’21.
- Organic ARR growth of 10% to 12% on a constant currency basis, an increase of 100 basis points at the low-end of guidance vs. our prior guidance.
- Arena Solutions contributes ~400 basis points of ARR growth.
- Changes in foreign currency since September 30, 2020 contribute ~200 basis points of ARR growth.
- Churn improves ~100 bps YoY.
Challenges Ahead
- ARR growth includes a ~2% headwind from lower backlog for FY’21 exiting FY’20, resulting primarily from COVID-19-related bookings pressure in FY’20.
- GAAP tax rate is expected to be ~50%, including an approximately $35 million tax reserve related to an ongoing tax matter in a non-US jurisdiction. Non-GAAP tax rate is expected to be ~19%.
- Operating cash flow and free cash flow benefit by ~$15 million from Fx, but the Fx benefit is offset by an un-forecasted foreign tax assessment of ~$15 million, related to the matter noted above.
- Our FY’21 financial guidance does not include the effect of purchase accounting for Arena Solutions, which is expected to have a material effect on our financial statements.
- Guidance does not include the impact of Arena Solutions purchase accounting as the valuation of the acquired assets and liabilities has not been completed. The purchase accounting will include valuing acquired deferred revenue, deferred commissions, intangible assets and deferred taxes, among other assets and liabilities and is expected to have a material impact on our financial statements.
Revenue & Expenses
Visualization of income flow from segment revenue to net income