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PTC Inc. (PTC) Down 5.8% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for PTC Inc. (PTC - Free Report) . Shares have lost about 5.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is PTC Inc. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
PTC's Q1 Earnings Miss Estimates, Revenues Increase Y/Y
PTC reported first-quarter fiscal 2023 non-GAAP earnings of 99 cents per share, up 4% on a year-over-year basis. However, the figure lagged the Zacks Consensus Estimate by 2%.
Revenues came in at $466 million, up 2% year over year (up 9% at constant currency or cc). The top line beat the Zacks Consensus Estimate by 0.4%.
The year-over-year improvement in the top line was driven by steady demand for software products and services to support SaaS and digital transformation. The company is also working toward accelerating the SaaS transition by launching Windchill plus and other SaaS offerings like Creo Plus in fiscal 2023.
In the first quarter, the company also landed several Windchill plus deals. Continued momentum in Onshape and Arena will further assist the company in the SaaS transition.
Top Line in Detail
Recurring revenues of $417.1 million rose 3% year over year. Perpetual licenses increased 53.1% to $13.2 million.
Revenues by License, Support and Services
License revenues (37.1% of total revenues) were $172.7 million, up 2.1% from the year-ago quarter’s figure.
Support and cloud services revenues (55.3%) of $257.6 million increased 5.4% year over year.
Professional services revenues (7.6%) were $35.6 million, down 19.4% year over year
Revenues by Product Group
PLM and computer-aided design (CAD) businesses continue to witness healthy growth. In the first quarter, PLM and CAD revenues were $279 million and $187 million, rising 4% and declining 1% year over year, respectively.
ARR Performance
Annualized recurring revenues (ARR) were $1.663 billion, up 11% year over year (up 15% at cc). The uptick was driven by strong performance across all divisions and geographies.
In the first quarter, PLM and CAD ARR were $936 million and $727 million, rising 16% and 5% year over year, respectively.
Operating Details
Non-GAAP gross margin decreased 30 bps on a year-over-year basis at 81.6%.Total operating expenses decreased $35 million year over year at $265 million.
Operating income on a non-GAAP basis improved 5.1% year over year to $166 million.Operating margin on a non-GAAP basis expanded 100 bps on a year-over-year basis to 36%.
Balance Sheet & Cash Flow
As of Dec 31, 2022, cash, cash equivalents and marketable securities were $387.6 million compared with $272 million as of Sep 30, 2022.
Total debt, net of deferred issuance costs, was $1.351 billion as of Dec 31, 2022, compared with $1.35 billion as of Sep 30, 2022.
Cash provided by operating activities came in at $181 million compared with the prior-year quarter figure of $138 million.
The free cash flow was $172 million compared with $134 million reported in the previous year’s quarter.
Fiscal 2023 Guidance
For fiscal 2023, ARR is now expected to be $1.910-$1.960 billion, which indicates a rise of 22-25% year over year at cc. Revenues for fiscal 2023 are projected in the range of $2.070-$2.150 billion, indicating a rise of 7-11% year over year.
For fiscal 2023, cash from operations is projected to be $595 million, indicating a rise of 37% on a year-over-year basis. The free cash flow is forecasted to be $575 million, suggesting 38% increase.
For the fiscal second quarter, PTC expects ARR to be between $1.790 and $1.810 billion. Cash from operations is projected to be $205 million, and free cash flow is forecasted to be $200 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -13.24% due to these changes.
VGM Scores
Currently, PTC Inc. has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise PTC Inc. has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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PTC Inc. (PTC) Down 5.8% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for PTC Inc. (PTC - Free Report) . Shares have lost about 5.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is PTC Inc. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
PTC's Q1 Earnings Miss Estimates, Revenues Increase Y/Y
PTC reported first-quarter fiscal 2023 non-GAAP earnings of 99 cents per share, up 4% on a year-over-year basis. However, the figure lagged the Zacks Consensus Estimate by 2%.
Revenues came in at $466 million, up 2% year over year (up 9% at constant currency or cc). The top line beat the Zacks Consensus Estimate by 0.4%.
The year-over-year improvement in the top line was driven by steady demand for software products and services to support SaaS and digital transformation. The company is also working toward accelerating the SaaS transition by launching Windchill plus and other SaaS offerings like Creo Plus in fiscal 2023.
In the first quarter, the company also landed several Windchill plus deals. Continued momentum in Onshape and Arena will further assist the company in the SaaS transition.
Top Line in Detail
Recurring revenues of $417.1 million rose 3% year over year. Perpetual licenses increased 53.1% to $13.2 million.
Revenues by License, Support and Services
License revenues (37.1% of total revenues) were $172.7 million, up 2.1% from the year-ago quarter’s figure.
Support and cloud services revenues (55.3%) of $257.6 million increased 5.4% year over year.
Professional services revenues (7.6%) were $35.6 million, down 19.4% year over year
Revenues by Product Group
PLM and computer-aided design (CAD) businesses continue to witness healthy growth. In the first quarter, PLM and CAD revenues were $279 million and $187 million, rising 4% and declining 1% year over year, respectively.
ARR Performance
Annualized recurring revenues (ARR) were $1.663 billion, up 11% year over year (up 15% at cc). The uptick was driven by strong performance across all divisions and geographies.
In the first quarter, PLM and CAD ARR were $936 million and $727 million, rising 16% and 5% year over year, respectively.
Operating Details
Non-GAAP gross margin decreased 30 bps on a year-over-year basis at 81.6%.Total operating expenses decreased $35 million year over year at $265 million.
Operating income on a non-GAAP basis improved 5.1% year over year to $166 million.Operating margin on a non-GAAP basis expanded 100 bps on a year-over-year basis to 36%.
Balance Sheet & Cash Flow
As of Dec 31, 2022, cash, cash equivalents and marketable securities were $387.6 million compared with $272 million as of Sep 30, 2022.
Total debt, net of deferred issuance costs, was $1.351 billion as of Dec 31, 2022, compared with $1.35 billion as of Sep 30, 2022.
Cash provided by operating activities came in at $181 million compared with the prior-year quarter figure of $138 million.
The free cash flow was $172 million compared with $134 million reported in the previous year’s quarter.
Fiscal 2023 Guidance
For fiscal 2023, ARR is now expected to be $1.910-$1.960 billion, which indicates a rise of 22-25% year over year at cc.
Revenues for fiscal 2023 are projected in the range of $2.070-$2.150 billion, indicating a rise of 7-11% year over year.
For fiscal 2023, cash from operations is projected to be $595 million, indicating a rise of 37% on a year-over-year basis. The free cash flow is forecasted to be $575 million, suggesting 38% increase.
For the fiscal second quarter, PTC expects ARR to be between $1.790 and $1.810 billion. Cash from operations is projected to be $205 million, and free cash flow is forecasted to be $200 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -13.24% due to these changes.
VGM Scores
Currently, PTC Inc. has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise PTC Inc. has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.