Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (
see
General Instruction A.2. below):
|
|
☐
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
☐
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
☐
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
☐
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
99.1
|
PTC Inc. press release dated April 20, 2016.
|
99.2
|
Prepared remarks posted by PTC Inc. on April 20, 2016.
|
99.3
|
Amendment No. 1 dated April 18, 2016 to Credit Agreement dated as of November 4, 2015 by and among PTC Inc., JPMorgan Chase Bank, N.A., as Administrative Agent, and the lenders party thereto.
|
PTC Inc.
|
|||
Date: April 20, 2016
|
By:
|
/s/Andrew Miller
|
|
Andrew Miller
|
|||
Executive Vice President and Chief Financial Officer
|
|||
o
|
License and subscription bookings were $86 million; above the high end of the guidance range of $71 million to $81 million.
|
o
|
For the quarter, subscription bookings were approximately 54% of total bookings, well above our guidance assumption of 26% and up from 14% a year ago. Based upon our model, this higher than guidance mix of subscription in the quarter, while expected to be positive long-term, reduced perpetual license revenue by approximately $24 million and reduced non-GAAP EPS by approximately $0.16 as compared to our guidance. As a rule of thumb, our model indicates that, on an annual basis, every 1% change in subscription mix will impact annual revenue by $3 million, and annual non-GAAP EPS by $0.02.
|
o
|
Total subscription annualized contract value (ACV) was $23 million; above guidance of $10 million.
|
o
|
Software revenue, which reflects a higher mix of subscription than last year, was down approximately $24 million or 9% on a year-over-year, constant currency basis. Our model indicates that the higher mix of subscription than last year lowered Q2'16 software revenue by approximately $30 million.
|
o
|
Annualized recurring revenue (ARR) was approximately $742 million at the end of the second quarter of fiscal 2016
.
|
o
|
GAAP operating expenses were approximately $191 million; non-GAAP operating expenses were approximately $164 million. These results were at the low end of both the GAAP and non-GAAP guidance ranges.
|
o
|
Q2'16 GAAP operating margin was 1% and non-GAAP operating margin was 14%. Q2'15 GAAP operating margin was 1% and non-GAAP operating margin was 23%. Based on our model, the higher mix of subscription in Q2'16 reduced Q2'16 non-GAAP operating margin by approximately 700 basis points as compared to guidance.
|
o
|
For Q2'16, we recorded a GAAP income tax expense of $1.6 million, or $0.01 per share and a non-GAAP income tax expense of $6.8 million, or $0.06 per share. The non-GAAP tax rate for the quarter was 21%.
|
o
|
Cash flow from operations was $49 million. Excluding $28 million paid in February in connection with the SEC and DOJ FCPA investigation related to our China business and $25 million paid in connection with the restructuring announced in October 2015, cash provided by operations for Q2'16 was $102 million and free cash flow was $97 million. We did not purchase any shares in Q2'16, as our share repurchases are planned for the second half of FY'16.
|
o
|
We ended the quarter with total cash and cash equivalents of $368 million and total debt of $838 million.
|
Q3'16
|
Q3'16
|
FY'16
|
FY'16
|
|||||||||||||
($ in millions)
|
Low
|
High
|
Low
|
High
|
||||||||||||
Subscription ACV
(1)
|
$
|
22
|
$
|
24
|
$
|
79
|
$
|
84
|
||||||||
License and Subscription Bookings
(1)
|
90
|
100
|
357
|
377
|
||||||||||||
Subscription % of Bookings
(1)
|
48
|
%
|
48
|
%
|
44
|
%
|
44
|
%
|
||||||||
Subscription Revenue
|
$
|
32
|
$
|
32
|
$
|
115
|
$
|
116
|
||||||||
Support Revenue
|
159
|
159
|
649
|
650
|
||||||||||||
Perpetual License Revenue
|
47
|
52
|
200
|
212
|
||||||||||||
Total Software Revenue
|
238
|
243
|
964
|
978
|
||||||||||||
Professional Services Revenue
|
49
|
49
|
196
|
197
|
||||||||||||
Total Revenue
|
$
|
287
|
$
|
292
|
$
|
1,160
|
$
|
1,175
|
||||||||
Operating Expense (GAAP)
|
$
|
196
|
$
|
198
|
$
|
798
|
$
|
802
|
||||||||
Operating Expense (Non-GAAP)
|
167
|
169
|
656
|
660
|
||||||||||||
Operating Margin (GAAP)
|
2
|
%
|
4
|
%
|
3
|
%
|
4
|
%
|
||||||||
Operating Margin (Non-GAAP)
|
16
|
%
|
17
|
%
|
18
|
%
|
19
|
%
|
||||||||
Tax Rate (GAAP)
|
10
|
%
|
8
|
%
|
10
|
%
|
0
|
%
|
||||||||
Tax Rate (Non-GAAP)
|
10
|
%
|
8
|
%
|
10
|
%
|
8
|
%
|
||||||||
Shares Outstanding
|
116
|
116
|
116
|
116
|
||||||||||||
EPS (GAAP)
|
$
|
0.01
|
$
|
0.06
|
$
|
0.11
|
$
|
0.18
|
||||||||
EPS (Non-GAAP)
|
$
|
0.31
|
$
|
0.36
|
$
|
1.52
|
$
|
1.62
|
||||||||
Free Cash Flow
(2)
|
$
|
215
|
$
|
225
|
($ in millions)
|
Q3'16
|
FY'16
|
||||||
Effect of acquisition accounting on fair value of acquired deferred revenue
|
$
|
1
|
$
|
3
|
||||
Stock-based compensation expense
|
14
|
66
|
||||||
Intangible asset amortization expense
|
15
|
58
|
||||||
Acquisition-related charges
|
0
|
2
|
||||||
Restructuring charges
|
8
|
50
|
||||||
Non-operating credit facility refinancing costs
|
-
|
2
|
||||||
Total Estimated GAAP adjustments
|
$
|
38
|
$
|
182
|
PTC Inc.
|
||||||||||||||||
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (UNAUDITED)
|
||||||||||||||||
(in thousands, except per share data)
|
||||||||||||||||
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
April 2,
|
April 4,
|
April 2,
|
April 4,
|
|||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
GAAP revenue
|
$
|
272,627
|
$
|
314,119
|
$
|
563,644
|
$
|
639,561
|
||||||||
Fair value adjustment of acquired deferred subscription revenue
|
777
|
590
|
965
|
1,272
|
||||||||||||
Fair value adjustment of acquired deferred support revenue
|
-
|
265
|
-
|
730
|
||||||||||||
Fair value adjustment of acquired deferred services revenue
|
286
|
278
|
595
|
535
|
||||||||||||
Non-GAAP revenue
|
$
|
273,690
|
$
|
315,252
|
$
|
565,204
|
$
|
642,098
|
||||||||
GAAP gross margin
|
$
|
192,436
|
$
|
228,065
|
$
|
403,305
|
$
|
460,565
|
||||||||
Fair value adjustment of acquired deferred revenue
|
1,063
|
1,133
|
1,560
|
2,537
|
||||||||||||
Fair value adjustment to deferred services cost
|
(125
|
)
|
(151
|
)
|
(257
|
)
|
(257
|
)
|
||||||||
Stock-based compensation
|
2,379
|
2,611
|
5,735
|
5,218
|
||||||||||||
Amortization of acquired intangible assets included in cost of software revenue
|
6,725
|
4,714
|
11,852
|
9,481
|
||||||||||||
Non-GAAP gross margin
|
$
|
202,478
|
$
|
236,372
|
$
|
422,195
|
$
|
477,544
|
||||||||
GAAP operating income (loss)
|
$
|
1,758
|
$
|
3,988
|
$
|
(11,535
|
)
|
$
|
41,619
|
|||||||
Fair value adjustment of acquired deferred revenue
|
1,063
|
1,133
|
1,560
|
2,537
|
||||||||||||
Fair value adjustment to deferred services cost
|
(125
|
)
|
(151
|
)
|
(257
|
)
|
(257
|
)
|
||||||||
Stock-based compensation
|
14,836
|
12,822
|
38,025
|
24,064
|
||||||||||||
Amortization of acquired intangible assets included in cost of software revenue
|
6,725
|
4,714
|
11,852
|
9,481
|
||||||||||||
Amortization of acquired intangible assets
|
8,396
|
9,173
|
16,746
|
18,586
|
||||||||||||
Acquisition-related charges included in general and administrative costs
|
1,071
|
1,892
|
2,278
|
5,925
|
||||||||||||
US pension plan termination-related costs
|
-
|
1,713
|
-
|
3,397
|
||||||||||||
Restructuring charges
|
4,579
|
38,487
|
41,726
|
38,232
|
||||||||||||
Non-GAAP operating income
(2)
|
$
|
38,303
|
$
|
73,771
|
$
|
100,395
|
$
|
143,584
|
||||||||
GAAP net income (loss)
|
$
|
(5,173
|
)
|
$
|
5,392
|
$
|
(29,065
|
)
|
$
|
35,676
|
||||||
Fair value adjustment of acquired deferred revenue
|
1,063
|
1,133
|
1,560
|
2,537
|
||||||||||||
Fair value adjustment to deferred services cost
|
(125
|
)
|
(151
|
)
|
(257
|
)
|
(257
|
)
|
||||||||
Stock-based compensation
|
14,836
|
12,822
|
38,025
|
24,064
|
||||||||||||
Amortization of acquired intangible assets included in cost of software revenue
|
6,725
|
4,714
|
11,852
|
9,481
|
||||||||||||
Amortization of acquired intangible assets
|
8,396
|
9,173
|
16,746
|
18,586
|
||||||||||||
Acquisition-related charges included in general and administrative costs
|
1,071
|
1,892
|
2,278
|
5,925
|
||||||||||||
US pension plan termination-related costs
|
-
|
1,713
|
-
|
3,397
|
||||||||||||
Restructuring charges
|
4,579
|
38,487
|
41,726
|
38,232
|
||||||||||||
Non-operating credit facility refinancing costs
|
-
|
-
|
2,359
|
-
|
||||||||||||
Income tax adjustments
(3)
|
(5,208
|
)
|
(13,757
|
)
|
(279
|
)
|
(17,243
|
)
|
||||||||
Non-GAAP net income
|
$
|
26,164
|
$
|
61,418
|
$
|
84,945
|
$
|
120,398
|
PTC Inc.
|
||||||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
|
||||||||
(in thousands)
|
||||||||
April 2,
|
September 30,
|
|||||||
2016
|
2015
|
|||||||
ASSETS
|
||||||||
Cash and cash equivalents
|
$
|
368,456
|
$
|
273,417
|
||||
Accounts receivable, net
|
146,669
|
197,275
|
||||||
Property and equipment, net
|
62,867
|
65,162
|
||||||
Goodwill and acquired intangible assets, net
|
1,511,416
|
1,360,342
|
||||||
Other assets
|
322,094
|
313,717
|
||||||
Total assets
|
$
|
2,411,502
|
$
|
2,209,913
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Deferred revenue
|
$
|
446,608
|
$
|
386,850
|
||||
Borrowings under credit facility
|
838,125
|
668,125
|
||||||
Other liabilities
|
272,665
|
294,767
|
||||||
Stockholders' equity
|
854,104
|
860,171
|
||||||
Total liabilities and stockholders' equity
|
$
|
2,411,502
|
$
|
2,209,913
|
||||
Operating and Non-GAAP Guidance
|
Operating and Non-GAAP Results
|
GAAP Results
|
||||||
In millions
|
Q2'16
Low |
Q2'16
High |
Actual
|
At Guidance Mix
(1)
|
Actual
|
|||
Subscription ACV
|
$10
|
$10
|
$23
|
$11
|
N/A
|
|||
License and Subscription Bookings
|
$71
|
$81
|
$86
|
$86
|
N/A
|
|||
Subscription % of Bookings
|
26%
|
26%
|
54%
|
26%
|
N/A
|
|||
Subscription Revenue
|
$24
|
$24
|
$24
|
$24
|
$24
|
|||
Support Revenue
|
$162
|
$162
|
$161
|
$161
|
$161
|
|||
Perpetual License Revenue
|
$55
|
$60
|
$40
|
$64
|
$40
|
|||
Software Revenue
|
$241
|
$246
|
$225
|
$249
|
$224
|
|||
Professional Services Revenue
|
$49
|
$49
|
$49
|
$49
|
$49
|
|||
Total Revenue
|
$290
|
$295
|
$274
|
$298
|
$273
|
|||
Operating Expense
|
$164
|
$166
|
$164
|
$164
|
$191
|
|||
Operating Margin
|
19%
|
19%
|
14%
|
21%
|
1%
|
|||
Tax Rate
|
16%
|
16%
|
21%
|
21%
|
(45%)
|
|||
EPS
|
$0.33
|
$0.38
|
$0.23
|
$0.39
|
($0.05)
|
(1)
|
Adjusted to guidance mix of 26% vs. actual Q2'16 mix of 54% and includes other adjustments as described in "Important Disclosures" set forth below.
|
In millions
|
Q2'16
|
YoY
|
YoY
CC |
Management Comments
|
Subscription ACV
|
$23.5
|
324%
|
330%
|
·
Subscription ACV was well above guidance of $10M, primarily due to a higher than expected mix of subscriptions in our Solutions business, and due to bookings above the high end of our guidance.
|
License and Subscription Bookings
|
$86.1
|
6%
|
8%
|
·
Bookings were above the high end of guidance and grew 8% YoY in CC.
·
Solutions Group bookings grew in the low single-digits YoY in CC, with particular strength in ePLM. Large deal quarterly variability impacted results in SLM, where we have a strong pipeline for the remainder of the year.
·
We continued to gain traction in TPG, where we grew bookings, added 66 new logos during the quarter and saw a number of six-figure expansion deals.
|
Subscription % of Bookings
|
54%
|
297%
|
293%
|
·
Q2'16 Subscription mix of 54% far outpaced our guidance of 26% and Q2'15 mix of 14%, driven by stronger than expected adoption across all segments of our Solutions business.
·
In addition, we are seeing a high subscription mix in the Americas, Europe and Japan, and while the Pac Rim and the channel are trailing in terms of total mix, we are seeing significant growth across all regions and sales channels.
|
In millions
|
Q2'16
|
YoY
|
YoY CC
|
Management Comments
|
Total Revenue
(GAAP)
(Non-GAAP)
|
$272.6
$273.7
|
(13%)
(13%)
|
(10%)
(10%)
|
·
Total non-GAAP revenue was below our Q2'16 guidance range due to the over-performance of subscription mix in the quarter, which our model indicates reduced Software revenue by approximately $24 million compared to guidance.
·
The 10% YoY CC decline in total non-GAAP revenue was driven by 1) software revenue decreasing 9% YoY CC, due primarily to the higher subscription mix, and 2) professional services revenue decreasing 15% YoY CC driven by our strategy to grow our service partner ecosystem.
|
Software Revenue
(GAAP)
(Non-GAAP)
|
$224.0
$224.7
|
(12%)
(12%)
|
(9%)
(9%)
|
·
Non-GAAP Software revenue was below our Q2'16 guidance range due to strong subscription adoption, which our model indicates reduced perpetual license revenue by approximately $24 million compared to guidance.
·
On a CC basis, non-GAAP perpetual license revenue declined 42% YoY, non-GAAP subscription revenue increased 53% YoY and non-GAAP support revenue declined 2% YoY. The support decline is due to a higher mix of subscription bookings and fewer support win-backs in the channel, as we prepared for a Q3 launch of a new support win-back conversion program.
·
Based on our model, license mix-adjusted basis, non-GAAP software revenue increased 2% YoY CC.
|
EPS
(GAAP)
(Non-GAAP)
|
($0.05)
$0.23
|
(197%)
(57%)
|
(168%)
(55%)
|
·
Non-GAAP EPS was below our Q2'16 guidance range driven by the higher than expected mix of subscription in the quarter. Based on our model, it otherwise would have been above the high-end of our guidance.
·
GAAP EPS was negatively impacted by a $5M restructuring charge.
|
In millions
|
Q2'16
|
YoY
|
YoY
CC |
Management Comments
|
Solutions Group Software
|
$206.7
|
(16%)
|
(13%)
|
·
The decline in Solutions Group Software was driven primarily by the higher than expected subscription mix in the quarter. We saw strong YoY subscription mix growth in each segment of the Solutions Group.
·
On a constant currency, license mix-adjusted basis, Solutions software revenue was approximately flat YoY.
|
Technology Platform Group Software
(GAAP)
(Non-GAAP)
|
$17.3
$18.0
|
98%
88%
|
99%
89%
|
·
The Technology Platform Group delivered significant software revenue growth YoY, partly driven by the Kepware acquisition.
·
On an organic basis, TPG non-GAAP software revenue grew approximately 15% YoY CC.
·
66 new IoT logos were added in the quarter, a 6% increase YoY, bringing the cumulative total of new IoT logos this year to 131, a 26% increase over the first-half of last year.
|
In millions
|
Q2'16
|
YoY
|
YoY
CC |
Management Comments
|
Americas Software
(GAAP)
(Non-GAAP)
|
$98.6
$99.2
|
(6%)
(6%)
|
(6%)
(6%)
|
·
YoY CC bookings growth of 11% was offset by a YoY increase in subscription mix of greater than 100%.
·
On a license mix-adjusted basis, software revenue grew 3% YoY CC.
·
Non-GAAP subscription revenue grew nearly 40% YoY CC.
|
Europe Software
(GAAP)
(Non-GAAP)
|
$80.4
$80.5
|
(9%)
(9%)
|
(3%)
(3%)
|
·
YoY CC bookings growth of 26% was offset by a YoY increase in subscription mix of over 300%.
·
On a constant currency, license mix-adjusted basis, software revenue grew 6% YoY.
·
Non-GAAP subscription revenue grew over 70% YoY CC.
|
Japan Software
|
$21.6
|
(35%)
|
(34%)
|
·
Q2'15 is a difficult compare for Japan as we had a very strong quarter with a number of large deals, including one mega deal (>$5m).
·
Software revenue declined due to the combination of YoY CC bookings decline of 14% and a YoY increase in subscription mix greater than 20x.
·
On a constant currency, license mix-adjusted basis, software revenue declined 7% YoY.
·
Subscription revenue grew over 60% YoY CC.
|
Pacific Rim Software
|
$23.5
|
(17%)
|
(12%)
|
·
YoY CC bookings growth of 4% was offset by a YoY increase in subscription mix of greater than 10x.
·
On a constant currency, license mix-adjusted basis, software revenue declined 1% YoY.
·
Subscription revenue grew more than 350% YoY CC.
|
In millions
|
Q2'16
GAAP |
Q2'16
Non-GAAP |
Management Comments
|
Professional Services
Gross Margin |
15%
|
17%
|
·
Strong performance in the quarter. We expect to achieve our non-GAAP target of 16% for the full year.
|
Operating Expense
|
$190.7
|
$164.2
|
·
Non-GAAP operating expense was at the low end of our guidance range, despite high incentive compensation expense due to the over-performance in subscription bookings and ACV, while GAAP operating expense was just below the low end of our range.
·
Non-GAAP operating expense increased approximately 1% YoY, despite 3 acquisitions (Kepware, Vuforia and ColdLight), demonstrating our strong focus on managing our costs through rigorous portfolio management.
·
GAAP operating expense reflects restructuring charges of $5 million booked in Q2 related to the workforce realignment announced in October 2015.
|
Operating Margin
|
1%
|
14%
|
·
Both GAAP and non-GAAP operating margin were below our guidance due to lower perpetual revenue recognized in the quarter resulting from the stronger-than-anticipated subscription mix.
·
Our model shows that if adjusted to our guidance subscription mix, non-GAAP operating margin would have exceeded our guidance.
·
GAAP operating margin was negatively impacted by the $5 million restructuring charge described above.
|
Tax Rate
|
(45%)
|
21%
|
·
We expect a non-GAAP tax rate of 8-10% for the year. The first-half non-GAAP tax rate is approximately 7% with a 21% tax rate in Q2.
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·
|
In Q2'16, subscription solutions bookings represented 54% of bookings, above our guidance assumption of 26%, driven by better than expected adoption of our subscription offering in each of our segments, in each of the regions in which we operate, in both our direct and indirect channels, and due to our support conversion program. In Q2'16, all large deals (>$1 million) were subscriptions; there were no large (>$1 million) perpetual bookings.
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·
|
For Q2'16, approximately 82% of non-GAAP software revenue came from recurring revenue streams, up from 73% in the year ago period.
|
·
|
Annualized recurring revenue (ARR), was approximately $742 million, which increased 3% on a constant currency basis compared to Q2'15. Due to our calculation methodology, quarterly variability in this metric should be expected, primarily due to the linearity of support billings during the year and the percentage of on-time renewals, the amount of support win-backs in a quarter, and whether the win-backs are traditional support, with immediate revenue recognition of the past-due amount, or a conversion to subscription, where all revenue is recognized over the future period. Multiple other contractual factors including ramping of committed monthly payments and other elements that may be sold with the subscription or support contract can impact the timing of revenue and the calculation of ARR.
|
·
|
In keeping with our strategy to grow our professional services partner ecosystem, Q2'16 service partner bookings grew approximately 11% QoQ, with strong bookings growth among our large system integrator partners.
|
·
|
Cash flow from operations was $49 million. Excluding $28 million paid in February in connection with the SEC and DOJ FCPA investigation related to our China business and $25 million paid in connection with the restructuring announced in October 2015, cash provided by operations for Q2'16 was $102 million and free cash flow was $97 million. We did not purchase any shares in Q2'16, as our share repurchases are planned for the second half of FY'16.
|
·
|
As of April 2, 2016, borrowings under our credit facility totaled $838 million. Under our current leverage covenant, we are limited to 3.5 times adjusted EBITDA, which is reduced to 3.25 from September 30, 2016 forward. Further, if our leverage covenant ratio exceeds 3.0 times adjusted EBITDA, our stock repurchases are limited to $50 million in a year. Our leverage ratio at the end of Q2'16 reflecting all current terms under the credit facility is 3.12.
|
·
|
While our Q2'16 bookings results were above the high-end of our guidance, we attribute our solid performance, relative to guidance, primarily to improved execution and our support conversion program and remain cautious of the global macroeconomic environment.
|
·
|
Despite the macroeconomic uncertainty, we are increasing our bookings guidance to reflect (1) current foreign exchange rates, (2) our first-half bookings over-performance, and (3) our current view of the second half of the fiscal year.
|
·
|
We expect large deals, which historically represented 30% to 50% of bookings, will remain at the lower end of that range. This is based on the effect of a more challenging global manufacturing economy on large deal volumes in our Solutions Group business and the potential for smaller average deal sizes as the subscription model accelerates.
|
·
|
The solid subscription results in the first half of FY'16 and growing pipeline of subscription deals is resulting in an increase to our outlook for the full-year subscription mix. A higher mix of subscription bookings is expected to benefit us over the long term, but results in lower revenue and lower earnings in the near term.
|
·
|
Because subscription is still new to much of our sales force, it can be challenging to forecast the rate of customer adoption, the pace of our subscription transition and the overall impact to near-term reported financial results.
|
·
|
We are modestly increasing the high end of our OpEx guidance for the year, but only to reflect the impact of currency. Excluding currency, there is no change to the high end of our operating investment plans.
|
·
|
Our previously announced restructuring plan to repurpose or eliminate approximately 8% of worldwide positions and to consolidate select facilities in order to drive long-term margin expansion is expected to result in a restructuring charge of up to $50 million; of which $37 million was recorded in Q1'16 and $5 million in Q2'16, with the remainder expected to be recorded in Q3 and Q4 of FY'16. Substantially all of the charges are attributable to termination benefits, most of which will be paid in FY'16.
|
·
|
As it relates to our longer-term capital strategy, the company is evaluating refinancing opportunities in the credit and debt markets, and guidance excludes the impact of any such refinancing, which would likely increase our interest expense in the near-term, but enable us to fix our interest rate for an extended period of time.
|
In millions
|
Q3'16
Low |
Q3'16
High |
FY'16
Low |
FY'16
High |
Management Comments
|
Operating Expense (GAAP)
Operating Expense (Non-GAAP)
|
$196
$167
|
$198
$169
|
$798
$656
|
$802
$660
|
·
FY'16 non-GAAP operating expense increased on the high end to reflect Fx. Range narrowed from the low end to reflect higher incentive compensation due to over-performance on subscription and ACV.
|
Operating Margin
(GAAP) |
2%
|
4%
|
3%
|
4%
|
·
FY'16 non-GAAP operating margin decline to 19% vs. previous guidance of 22% to reflect the negative impact of a higher subscription mix on revenue.
·
We are targeting a 16% non-GAAP professional services gross margin in FY'16.
|
Operating Margin (Non-GAAP)
|
16%
|
17%
|
18%
|
19%
|
|
Tax Rate
(GAAP) |
10%
|
8%
|
10%
|
0%
|
·
FY'16 tax rate guidance of 8% to 10% vs. previous guidance of 12% to 15% due to full year forecasted geographic mix of non-GAAP earnings.
|
Tax Rate (Non-GAAP)
|
10%
|
8%
|
10%
|
8%
|
|
Shares Outstanding
|
116
|
116
|
116
|
116
|
·
We expect share count to be 116 million, with planned share repurchases in the second half of the year.
|
EPS
(GAAP) |
$0.01
|
$0.06
|
$0.11
|
$0.18
|
·
FY'16 non-GAAP EPS decreased due to the negative impact of a higher subscription mix on revenue.
|
EPS
(Non-GAAP)
|
$0.31
|
$0.36
|
$1.52
|
$1.62
|
|
Free Cash Flow
|
$215
|
$225
|
·
Our FY'16 free cash flow guidance excludes previously announced restructuring payments of approximately $50 million and the $28 million legal settlement in connection with the SEC and DOJ FCPA investigation related to our China business
.
|
In millions
|
Q3
FY'16 |
FY'16
|
Effect of acquisition accounting on fair value of acquired deferred revenue
|
$ 1
|
$3
|
Stock-based compensation expense
|
14
|
66
|
Intangible asset amortization expense
|
15
|
58
|
Acquisition-related charges
|
0
|
2
|
Restructuring Charges
|
8
|
50
|
Non-Operating Credit Facility Refinancing Costs
|
-
|
2
|
Total Estimated GAAP adjustments
|
$38
|
$182
|
·
|
We believe that the initiatives we are driving in our Solutions Group and strong position we have established in our Technology Platform Group together can drive ~10% bookings growth by FY'18. This is predicated on achieving growth in our Solutions Group in line with market growth rates of ~6% by FY18 and growth in our Technology Platform Group in line with market growth rates of ~40%.
|
·
|
Exiting FY'18 we expect to see continued bookings growth, which in turn, we expect to drive ~10% total revenue growth by FY'21, when we expect our financial results will have normalized from the subscription transition.
|
·
|
We expect our subscription bookings mix will average 44% for the full-year, then continue to grow through FY'18, when we expect to achieve a steady-state mix of 70%.
|
·
|
Based on these high-level assumptions, we expect revenue, operating margin and free cash flow to trough in FY'18, begin to recover in FY'19 and normalize in FY'21, at which point we expect to achieve non-GAAP operating margins in the low 30% range.
|
(a)
|
the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and
|
(b)
|
the effects of any Bail-In Action on any such liability, including, if applicable:
|
(i)
|
a reduction in full or in part or cancellation of any such liability;
|
(ii)
|
a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or
|
(iii)
|
the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.
|
PTC INC.,
as the Parent
|
|
By:
_/s/Andrew Miller
__________________
|
|
Name: Andrew Miller
|
|
Title: Chief Financial Officer
|
|
PTC (IFSC) LIMITED,
as the Irish Borrower
|
|
By: _
/s/Charles C.W. Dunn
_____________
|
|
Name: Charles C.W. Dunn
|
|
Title: Director
|
Name of Lender:
|
|
JPMORGAN CHASE BANK, N.A.,
|
|
individually as a Lender, as the Swingline Lender, as an Issuing Bank and as Administrative Agent | |
By
__/s/Justin Burton
________________
|
|
Name: Justin Burton
|
|
Title: Vice President
|
|
For any Lender requiring a second signature line:
|
|
By _________________________________
|
|
Name:
|
|
Title:
|
Name of Lender:
|
|
KEYBANK NATIONAL ASSOCIATION
|
|
By
__/s/David A. Wild
_________________
|
|
Name: David A. Wild
|
|
Title: Senior Vice President
|
|
For any Lender requiring a second signature line:
|
|
By _________________________________
|
|
Name:
|
|
Title:
|
Name of Lender:
|
|
HSBC BANK USA, NATIONAL ASSOCIATION
|
|
By __
/s/Manuel Burgueno
______________
|
|
Name: Manuel Burgueno
|
|
Title: Senior Vice President
|
|
For any Lender requiring a second signature line:
|
|
By _________________________________
|
|
Name:
|
|
Title:
|
Name of Lender:
|
|
CITIZENS BANK, N.A.,
Individually as a Lender and as a Co-Documentation Agent
|
|
By __
/s/Christopher Delauro
____________
|
|
Name: Christopher Delauro
|
|
Title: Vice President
|
|
For any Lender requiring a second signature line:
|
|
By _________________________________
|
|
Name:
|
|
Title:
|
Name of Lender:
|
|
TD BANK, N.A.
|
|
By
__/s/Christopher Matheson
____________
|
|
Name: Christopher Matheson
|
|
Title: Director
|
|
For any Lender requiring a second signature line:
|
|
By _________________________________
|
|
Name:
|
|
Title:
|
Name of Lender:
|
|
FIFTH THIRD BANK
|
|
By __
/s/Colin Murphy
_______________
|
|
Name: Colin Murphy
|
|
Title: Director
|
|
For any Lender requiring a second signature line:
|
|
By _________________________________
|
|
Name:
|
|
Title:
|
Name of Lender:
|
|
ROYAL BANK OF CANADA
|
|
By __
/s/Nicholas Heslip
______________
|
|
Name: Nicholas Heslip
|
|
Title: Authorized Signatory
|
|
For any Lender requiring a second signature line:
|
|
By _________________________________
|
|
Name:
|
|
Title:
|
Name of Lender:
|
|
BARCLAYS BANK PLC
|
|
By __
/s/Daniel Hunter
_____________________
|
|
Name: Daniel Hunter
|
|
Title: Assistant Vice President
|
|
For any Lender requiring a second signature line:
|
|
By _________________________________
|
|
Name:
|
|
Title:
|
Name of Lender:
|
|
SUN TRUST BANK
|
|
By __
/s/Jason Crowley
__________________
|
|
Name: Jason Crowley
|
|
Title: Vice President
|
|
For any Lender requiring a second signature line:
|
|
By _________________________________
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|
Name:
|
|
Title:
|
Name of Lender:
|
|
WELLS FARGO BANK, NATIONAL ASSOCIATION
|
|
By
__/s/David Mallett
___________________
|
|
Name: David Mallett
|
|
Title: Managing Director
|
|
For any Lender requiring a second signature line:
|
|
By _________________________________
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|
Name:
|
|
Title:
|
Name of Lender:
|
|
SILICON VALLEY BANK
|
|
By
__/s/Frank Groccia
________________
|
|
Name: Frank Groccia
|
|
Title: Vice President
|
|
For any Lender requiring a second signature line:
|
|
By _________________________________
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|
Name:
|
|
Title:
|
Name of Lender:
|
|
THE HUNTINGTON NATIONAL BANK
|
|
By __
/s/Jared Shaner
__________________
|
|
Name: Jared Shaner
|
|
Title: Vice President
|
|
For any Lender requiring a second signature line:
|
|
By _________________________________
|
|
Name:
|
|
Title:
|
Name of Lender:
|
|
BANK OF AMERICA, N.A.
|
|
By
__/s/Patrick Martin
_________________
|
|
Name: Patrick Martin
|
|
Title: Managing Director
|
|
For any Lender requiring a second signature line:
|
|
By _________________________________
|
|
Name:
|
|
Title:
|
Name of Lender:
|
|
PEOPLE'S UNITED BANK, N.A.
|
|
By __
/s/Kathryn M. Williams
____________
|
|
Name: Kathryn M. Williams
|
|
Title: Vice President
|
|
For any Lender requiring a second signature line:
|
|
By _________________________________
|
|
Name:
|
|
Title:
|