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PTC's Q4 Earnings Surpass Estimates, Revenues Rise Y/Y, Shares Jump

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PTC Inc (PTC - Free Report) reported fourth-quarter fiscal 2024 non-GAAP earnings per share (EPS) of $1.54, up 28% year over year. The figure beat the Zacks Consensus Estimate by 7.7%.

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Quarterly revenues soared 15% year over year to $627 million. The Zacks Consensus Estimate for revenues was pegged at $620.5 million. The top line neared the high end of PTC’s guidance, driven by continued demand for its product lifecycle management (PLM) and computer-aided design (CAD) solutions.

As part of its commitment to enhancing shareholder value, PTC announced a new $2 billion share repurchase authorization extending through Sept. 30, 2027. It plans to buy back nearly $300 million of its stock in fiscal 2025, with purchases commencing in the fiscal first quarter. In addition, PTC intends to retire $500 million in senior notes due in the fiscal second quarter of 2025. 

In response to the results, shares of PTC gained 4.2% in trading on Nov. 6 and closed the session at $198.04. The company's shares have rallied 33.7% in the past year compared with the sub-industry's growth of 22.1%.

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Image Source: Zacks Investment Research

Top Line Details

Recurring revenues of $582.4 million rose 16.4% year over year. Perpetual licenses increased 21% to $9.9 million.

PTC Inc. Price, Consensus and EPS Surprise

PTC Inc. Price, Consensus and EPS Surprise

PTC Inc. price-consensus-eps-surprise-chart | PTC Inc. Quote

Revenues by License, Support and Services

License revenues (38.2% of total revenues) were $239.5 million, up 29.9% from the year-ago quarter’s figure.

Support and cloud services revenues (56.3%) of $352.9 million increased 8.9%.

Professional services revenues (5.5%) were $34.2 million, down 10.4% year over year.

Revenues by Product Group

PLM and CAD businesses continue to witness healthy momentum. In the fiscal fourth quarter, PLM revenues were $408 million, rising 14% year over year. CAD revenues were $219 million, up 16% from a year ago.

ARR Performance

Annualized recurring revenues (ARR) were $2.255 billion, up 14% year over year. At constant currency, ARR was $2.207 billion, up 12% year over year. The uptick was driven by strong performance across all divisions and regions.

In the fiscal fourth quarter, PLM and CAD ARR were $1,387 million and $868 million, rising 15% and 13% year over year, respectively.

Operating Details

Non-GAAP gross margin came in at 84.4% compared with 81.6% in the prior-year period.

Total operating expenses increased 3.3% year over year to $319.8 million.

Operating income on a non-GAAP basis rose 37.8% year over year to $276.6 million.

Operating margin on a non-GAAP basis increased 740 basis points on a year-over-year basis to 44.1%.

Balance Sheet & Cash Flow

As of Sept. 30, 2024, cash and cash equivalents were $266 million compared with $288 million as of Sept. 30, 2024.

Total debt, net of deferred issuance costs, was $1.748 billion as of Sept. 30, 2024, compared with $1.695 billion as of Sept. 30, 2023.

Cash provided by operating activities was $98 million compared with the prior-year quarter’s figure of $50 million.

The free cash flow was $94 million compared with $44 million in the year-ago quarter.

Guidance

For the first quarter fiscal 2025, PTC estimates revenues in the $540-$570 million band. Non-GAAP EPS is projected in the range of 75 cents to 95 cents. Cash from operations is expected to be $234 million, and free cash flow is forecasted to be $230 million.

Revenues for fiscal 2025 are projected in the range of $2,505-$2,605 billion, indicating a rise of 9-13% year over year. Non-GAAP EPS is estimated in the $5.60-$6.30 band, suggesting a rise of 10-24%.

For fiscal 2025, cash from operations is projected between $850 million and $865 million, indicating a rise of 13% to 15% on a year-over-year basis. The free cash flow is forecasted in the $835-$850 million band, suggesting a 14% to 16% increase.

PTC projects 9% to 10% growth in ARR on a constant currency basis for fiscal 2025.

PTC’s Zacks Rank

Currently, PTC carries a Zacks Rank #4 (Sell). 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Companies

Itron Inc (ITRI - Free Report) reported non-GAAP EPS of $1.84 for third-quarter 2024, which beat the Zacks Consensus Estimate by 62.8%. The company reported earnings of 98 cents in the prior-year quarter.

Shares of ITRI gained 77% in the past year. 

Watts Water Technologies, Inc. (WTS - Free Report) reported third-quarter 2024 adjusted EPS of $2.03 compared with $2.04 in the prior-year quarter. The bottom line topped the Zacks Consensus Estimate by 2%.

Shares of WTS have gained 5.2% in the past year. 

Western Digital Corporation (WDC - Free Report) reported first-quarter fiscal 2025 non-GAAP earnings of $1.78 per share, surpassing the Zacks Consensus Estimate by 2.3%. The company incurred a loss of $1.76 per share in the prior-year quarter.

Shares of WDC have gained 51.1% in the past year.

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