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Jun 27, 2020
PTC Q3 2020 Earnings Report
PTC's Q3 2020 performance was solid, driven by ARR, revenue, operating margin, and EPS, leading to a tightened FY'20 guidance range.
Key Takeaways
PTC reported solid third-quarter results with strong ARR and revenue growth. The company's performance reflects its mission-critical technology portfolio and subscription model strength. Despite macroeconomic challenges, PTC remains committed to delivering solid results for the remainder of FY'20.
ARR was $1.21 billion, reflecting 9% growth, or 10% in constant currency.
Revenue was $352 million, representing a 19% increase compared to Q3 2019.
Cash from operations was $105 million, and free cash flow was $99 million.
Operating margin was 18%, and non-GAAP operating margin was 29%.
PTC
PTC
Forward Guidance
PTC has revised its fiscal 2020 financial outlook, taking into account the impact of weak macroeconomic conditions related to the COVID-19 crisis. The company has narrowed its guidance range for ARR and revenue, while maintaining its outlook for operating margin. They expect new ACV bookings to decline ~25% YoY and churn of approximately 8%. Revenue growth slows quarter over quarter in Q4'20, to the mid-single digits.
Positive Outlook
- ARR revised guidance $1,235 - $1,255 million
- Revenue revised guidance $1,415 - $1,430 million
- GAAP EPS revised guidance $0.73 - $0.79
- Non-GAAP EPS revised guidance $2.28 - $2.35
- Non-GAAP Operating Margin 27% - 28%
Challenges Ahead
- Impact of weak macroeconomic conditions related to COVID-19 crisis.
- New ACV bookings decline ~25% YoY at the midpoint of guidance in the back half of the year.
- Churn of approximately 8%.
- Revenue growth slows quarter over quarter in Q4'20, to the mid-single digits, due primarily to the impact of ASC 606 and related business policy changes.
- Cash from Operations ~$232 million