PTC Q2 2020 Earnings Report
Key Takeaways
PTC reported solid Q2 2020 results with ARR growing 11% on a constant currency basis. Revenue, operating margin, and EPS exceeded expectations. The company remains committed to delivering solid results for the remainder of FY'20 while navigating macroeconomic uncertainty.
ARR was $1.18 billion, growing 10%, or 11% in constant currency.
Revenue was $360 million, growing 24% compared to Q2'19.
Operating margin was 14% on a GAAP basis and 29% on a non-GAAP basis.
Total cash, cash equivalents, and marketable securities were $884 million.
PTC
PTC
PTC Revenue by Segment
Forward Guidance
Revised fiscal 2020 guidance includes the impact of weakening macroeconomic conditions, a severe disruption in new bookings growth, deterioration in churn, and operating expense growth.
Positive Outlook
- Even in this challenging environment, PTC will remain financially healthy.
- PTC will still post solid growth.
- Operating expense growth of roughly 2% YoY compared to our previous projection of 9% YoY due primarily to restructuring activity conducted in H1’20 as well as increased cost discipline related to headcount additions, variable compensation expense, travel and marketing expense.
- GAAP tax rate is expected to be 20%.
- Non-GAAP tax rate is expected to be 19%.
Challenges Ahead
- Impact of weakening of macroeconomic conditions related to the COVID-19 crisis.
- A severe disruption in new bookings growth, down 30% YoY at the midpoint for the second half of the year.
- The low end of the range assumes ~50% decline in new bookings for Q3’20 and Q4’20.
- The high end of the range assumes a ~30% decline in new bookings for Q3’20 and a ~20% decline in Q4.
- Churn deteriorates approximately 100 bps to 8%, rather than a modest improvement over FY’19.
Revenue & Expenses
Visualization of income flow from segment revenue to net income