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Mar 28, 2020
PTC Q2 2020 Earnings Report
PTC's Q2 2020 performance was solid, with revenue, operating margin, and EPS exceeding expectations, driven by the strength of the recurring revenue model.
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
Revenue by Segment
Perpetual License Revenue
CapyFin.comProfessional Services Revenue
CapyFin.com 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