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Why Is PTC Inc. (PTC) Down 3.5% Since Last Earnings Report?
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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 3.5% in that time frame, outperforming 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 catalysts.
PTC's Q3 Earnings Miss Estimates
PTC reported third-quarter fiscal 2023 non-GAAP earnings per share (EPS) of 99 cents, up 2% on a year-over-year basis. However, the figure missed the Zacks Consensus Estimate by 2%.
Revenues came in at $542 million, up 17% year over year (up 21% at constant currency or cc). The top line beat the Zacks Consensus Estimate by 2.3%.
The year-over-year improvement in the top line was driven by steady demand for its product lifecycle management (PLM) and computer-aided design (CAD) solutions. Continued momentum in Onshape and Arena will further assist the company in the SaaS transition.
Top Line in Detail
Recurring revenues of $498.4 million rose 20% year over year. Perpetual licenses increased 0.6% to $8.2 million.
Revenues by License, Support and Services
License revenues (35.6% of total revenues) were $192.9 million, up 10.2% from the year-ago quarter’s figure. Support and cloud services revenues (57.9%) of $313.7 million increased 26.4% year over year.
Professional services revenues (6.5%) were $35.6 million, down 48.7% year over year. The downtick was caused by the company’s strategy to transfer some of its professional services to DXP services, its partner Windchill plus lift and shift projects.
Revenues by Product Group
PLM and CAD businesses continue to witness healthy growth. In the third quarter, PLM and CAD revenues were $349 million and $193 million, rising 28.8% and 0.5% year over year, respectively.
ARR Performance
Annualized recurring revenues (ARR) were $1.929 billion, up 24.9% year over year (up 24.9% at cc). The uptick was driven by strong performance across all divisions and geographies.
In the third quarter, PLM and CAD ARR were $1,165 million and $764 million, rising 36% and 11% year over year, respectively.
Operating Details
Non-GAAP gross margin increased 30 basis points (bps) on a year-over-year basis to 81.5%. Total operating expenses increased $36 million year over year to $316.6 million.
Operating income on a non-GAAP basis increased 18.6% year over year to $185 million. Operating margin on a non-GAAP basis increased 40 bps on a year-over-year basis to 34.1%
Balance Sheet & Cash Flow
As of Jun 30, 2023, cash, cash equivalents and marketable securities were $281.5 million compared with $320.4 million as of Mar 31, 2023.
Total debt, net of deferred issuance costs, was $1.738 billion as of Jun 30, 2023, compared with $1.917 billion as of Mar 31, 2023.
Cash provided by operating activities was $169 million compared with the prior-year quarter’s figure of $117 million. The free cash flow was $164 million compared with $112 million reported in the previous year’s quarter.
Fiscal 2023 Guidance
For fiscal 2023, ARR is now expected to be $1.935-$1.950 billion compared with the previous guidance of $1.925-$1.950 billion, which indicates a rise of 23-24% year over year at cc.
Revenues for fiscal 2023 are projected in the range of $2.090-$2.120 billion compared with the previous guidance of $2.080-$2.140 billion, indicating a rise of 8-10% year over year.
For fiscal 2023, cash from operations is projected to be $605 million, indicating a rise of 39% on a year-over-year basis. The free cash flow is forecasted to be $585 million, suggesting a 41% increase year over year.
For the fiscal fourth quarter, PTC expects ARR between $1.935 and $1.950 billion. Cash from operations is projected to be $44 million, and free cash flow is forecasted to be $42 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -9.55% due to these changes.
VGM Scores
At this time, PTC Inc. has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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. Notably, PTC Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
PTC Inc. is part of the Zacks Computer - Software industry. Over the past month, SAP (SAP - Free Report) , a stock from the same industry, has gained 1.1%. The company reported its results for the quarter ended June 2023 more than a month ago.
SAP reported revenues of $8.18 billion in the last reported quarter, representing a year-over-year change of +2.2%. EPS of $1.14 for the same period compares with $1.02 a year ago.
For the current quarter, SAP is expected to post earnings of $1.43 per share, indicating a change of +26.6% from the year-ago quarter. The Zacks Consensus Estimate has changed -1.8% over the last 30 days.
SAP has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.
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Why Is PTC Inc. (PTC) Down 3.5% Since Last Earnings Report?
It has been about a month since the last earnings report for PTC Inc. (PTC - Free Report) . Shares have lost about 3.5% in that time frame, outperforming 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 catalysts.
PTC's Q3 Earnings Miss Estimates
PTC reported third-quarter fiscal 2023 non-GAAP earnings per share (EPS) of 99 cents, up 2% on a year-over-year basis. However, the figure missed the Zacks Consensus Estimate by 2%.
Revenues came in at $542 million, up 17% year over year (up 21% at constant currency or cc). The top line beat the Zacks Consensus Estimate by 2.3%.
The year-over-year improvement in the top line was driven by steady demand for its product lifecycle management (PLM) and computer-aided design (CAD) solutions. Continued momentum in Onshape and Arena will further assist the company in the SaaS transition.
Top Line in Detail
Recurring revenues of $498.4 million rose 20% year over year. Perpetual licenses increased 0.6% to $8.2 million.
Revenues by License, Support and Services
License revenues (35.6% of total revenues) were $192.9 million, up 10.2% from the year-ago quarter’s figure. Support and cloud services revenues (57.9%) of $313.7 million increased 26.4% year over year.
Professional services revenues (6.5%) were $35.6 million, down 48.7% year over year. The downtick was caused by the company’s strategy to transfer some of its professional services to DXP services, its partner Windchill plus lift and shift projects.
Revenues by Product Group
PLM and CAD businesses continue to witness healthy growth. In the third quarter, PLM and CAD revenues were $349 million and $193 million, rising 28.8% and 0.5% year over year, respectively.
ARR Performance
Annualized recurring revenues (ARR) were $1.929 billion, up 24.9% year over year (up 24.9% at cc). The uptick was driven by strong performance across all divisions and geographies.
In the third quarter, PLM and CAD ARR were $1,165 million and $764 million, rising 36% and 11% year over year, respectively.
Operating Details
Non-GAAP gross margin increased 30 basis points (bps) on a year-over-year basis to 81.5%. Total operating expenses increased $36 million year over year to $316.6 million.
Operating income on a non-GAAP basis increased 18.6% year over year to $185 million. Operating margin on a non-GAAP basis increased 40 bps on a year-over-year basis to 34.1%
Balance Sheet & Cash Flow
As of Jun 30, 2023, cash, cash equivalents and marketable securities were $281.5 million compared with $320.4 million as of Mar 31, 2023.
Total debt, net of deferred issuance costs, was $1.738 billion as of Jun 30, 2023, compared with $1.917 billion as of Mar 31, 2023.
Cash provided by operating activities was $169 million compared with the prior-year quarter’s figure of $117 million. The free cash flow was $164 million compared with $112 million reported in the previous year’s quarter.
Fiscal 2023 Guidance
For fiscal 2023, ARR is now expected to be $1.935-$1.950 billion compared with the previous guidance of $1.925-$1.950 billion, which indicates a rise of 23-24% year over year at cc.
Revenues for fiscal 2023 are projected in the range of $2.090-$2.120 billion compared with the previous guidance of $2.080-$2.140 billion, indicating a rise of 8-10% year over year.
For fiscal 2023, cash from operations is projected to be $605 million, indicating a rise of 39% on a year-over-year basis. The free cash flow is forecasted to be $585 million, suggesting a 41% increase year over year.
For the fiscal fourth quarter, PTC expects ARR between $1.935 and $1.950 billion. Cash from operations is projected to be $44 million, and free cash flow is forecasted to be $42 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -9.55% due to these changes.
VGM Scores
At this time, PTC Inc. has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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. Notably, PTC Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
PTC Inc. is part of the Zacks Computer - Software industry. Over the past month, SAP (SAP - Free Report) , a stock from the same industry, has gained 1.1%. The company reported its results for the quarter ended June 2023 more than a month ago.
SAP reported revenues of $8.18 billion in the last reported quarter, representing a year-over-year change of +2.2%. EPS of $1.14 for the same period compares with $1.02 a year ago.
For the current quarter, SAP is expected to post earnings of $1.43 per share, indicating a change of +26.6% from the year-ago quarter. The Zacks Consensus Estimate has changed -1.8% over the last 30 days.
SAP has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.