Home > PTC releases 2006 fourth quarter and fiscal year results

PTC releases 2006 fourth quarter and fiscal year results

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PTC, the Product Development Company, has reported revenue of $245.5 million for the fourth quarter ended September 30, 2006, up 26% from the same period last year. For fiscal year 2006, PTC reported total revenue of $854.9 million, up 19% from fiscal year 2005. Total license revenue for the fourth quarter of 2006 was $84.6 million, up 39% from the same period last year. Total license revenue for fiscal year 2006 was $263.5 million, up 26% from fiscal year 2005. The results for the fourth quarter of 2006 reflected continued acceleration in organic revenue growth and the contribution of recently acquired Mathsoft.

Fiscal 2006 was an exceptional year marked by customer success and strong financial results. In particular, PTC delivered robust Desktop Solutions results, record Enterprise Solutions revenue, and significant operating leverage. PTC performance is attributable to three key differentiators: it’s expanding solution capability footprint, which includes Arbortext, Mathcad and, for fiscal 2007, ITEDO solutions, single platform architecture, and a thorough understanding of customers' product development challenges.

GAAP operating income for the fourth quarter of 2006 was $34.2 million, compared with $11.6 million in the year-ago period. GAAP net income for the fourth quarter of 2006 was $28.1 million, or $0.24 per diluted share, compared with GAAP net income of $17.3 million, or $0.15 per diluted share, in the year-ago period.

PTC’s GAAP results for the fourth quarter and full fiscal year of 2006 include a $2.3 million charge for stock-based compensation expense, resulting from its review of historic stock option grants, which is now complete. Non-GAAP operating income, which excludes stock-based compensation cost, amortisation of acquisition-related intangible assets, in-process research and development write-offs associated with acquisitions, and restructuring charges, was $48.6 million, or 19.8% of total revenue for the fourth quarter of 2006, compared with $27.8 million, or 14.2% of total revenue in the year-ago period.

Non-GAAP net income, which excludes the items excluded from non-GAAP operating income and the related tax effect of these items, as well as one-time tax items, was $42.6 million for the fourth quarter of 2006, or $0.37 per diluted share, compared to $24.6 million in the year-ago period, or $0.22 per diluted share. GAAP operating income for fiscal year 2006 was $74.1 million compared with $85.8 million in fiscal year 2005. GAAP net income for fiscal year 2006 was $63.2 million, or $0.56 per diluted share, compared to $83.6 million, or $0.75 per diluted share in fiscal year 2005.

PTC adopted SFAS 123(R) in the fourth quarter of fiscal year 2005 and, therefore, the full year GAAP results for the year-ago period do not include the cost of stock-based compensation for the first nine months of 2005 in accordance with SFAS 123(R). Non-GAAP operating income, which excludes stock-based compensation cost, amortisation of acquisition-related intangible assets, in-process research and development write-offs associated with acquisitions, and restructuring charges, was $132.8 million in 2006, or 15.5% of total revenue, compared with $103.0 million, or 14.3% of total revenue in 2005.

Non-GAAP net income, which excludes the items excluded from non-GAAP operating income and the related tax effect of these items, as well as one-time tax items, was $113.4 million for 2006, or $1.00 per diluted share, compared to $87.4 million in the year-ago period, or $0.78 per diluted share. Cash and cash equivalents were $183 million at the end of the fiscal year 2006, up from $174 million at the end of the third quarter.

Fourth quarter 2006 revenue metrics
PTC delivered the following results for the fourth quarter of fiscal 2006 compared to the same period last year:

Total revenue growth of 26%, driven by license revenue growth of 39%, training and consulting service revenue growth of 34%, and maintenance revenue growth of 12%. Fourth quarter revenue included two transactions in excess of $5 million each;

Desktop Solutions total revenue growth of 23% to $159.4 million, driven by license revenue growth of 38%, training and consulting service revenue growth of 33%, and maintenance revenue growth of 12%. License revenue growth reflects strong sales of Pro/ENGINEER new seats, modules, and upgrades, in addition to the revenue attributable to recently acquired Mathsoft products;

Enterprise Solutions total revenue growth of 31% to a record $86.1 million, driven by license revenue growth of 40%, training and consulting service revenue growth of 34%, and maintenance revenue growth of 13%. License revenue reflects strong sales of multiple Windchill solutions including Windchill PDMLink and related modules, Windchill ProjectLink, and PTC’s visualisation software;

Total revenue from PTC’s reseller channel of $46.8 million, up 34%, reflecting success in the SMB market around the world;

Revenue growth across all major geographies: 38% growth in North America, 21% growth in Europe, and 12% growth in Asia-Pacific. Asia-Pacific revenue growth reflects an 18% revenue decline in Japan, more than offset by a 53% increase in revenue in the Pacific Rim.

In the fourth quarter, PTC received orders from leading organisations, including Alstom Power Hydro, ANDREAS STIHL AG & Co. KG, Dell Inc., Daihatsu Motor Co., LTD., Federal Mogul Corporation, Festo AG & Co. KG, Herman Miller, Inc., Ingersoll Rand, Kye Systems Corp., OKI Electric Industry Co., Ltd., Qingdao Beihai Ship Building Heavy Ind. Co. Ltd., Stihl, and Tontec International.

Fiscal year 2006 revenue metrics
PTC delivered the following results for fiscal 2006 compared to fiscal 2005:

Total revenue growth of 19%, driven by license revenue growth of 26%, training and consulting service revenue growth of 31%, and maintenance revenue growth of 8%;

Desktop Solutions total revenue growth of 12%, driven by license revenue growth of 20%, training and consulting service revenue growth of 17%, and maintenance revenue growth of 6%;

Enterprise Solutions total revenue growth of 35%, driven by license revenue growth of 36%, training and consulting service revenue growth of 43%, and maintenance revenue growth of 21%;

Total revenue from PTC’s reseller channel of $171.5 million, up 24%;

Revenue growth across all major geographies: 33% growth in North America, 13% growth in Europe, and 6% growth in Asia-Pacific. Asia-Pacific revenue growth reflects a 14% revenue decline in Japan for fiscal year 2006, offset by a 34% increase in revenue in the Pacific Rim.

PTC plans to drive continued revenue and earnings growth throughout 2007. PTC will continue to execute its strategy to help its customers solve their product development challenges, while at the same time making continued improvements to its worldwide distribution and service business models.

First quarter and fiscal year 2007 financial outlook
PTC unveiled the acquisition of ITEDO Software, a provider of leading technical illustration software. ITEDO's revenue for the past year was approximately $5 million. PTC expects the acquisition to be slightly dilutive to GAAP net income for fiscal 2007, due to the incremental amortisation expense. However, PTC expects the acquisition to have a neutral effect on non-GAAP net income. Reflecting this acquisition, PTC has updated its targets for fiscal 2007.

PTC's revenue forecast for the first quarter of fiscal 2007 is between $215 million and $220 million. On a GAAP basis, first quarter total costs and expenses are expected to be between $200 million and $203 million, and earnings per share are expected to be between $0.09 and $0.11.

Total non-GAAP first quarter operating costs and expenses are expected to be between $187 million and $190 million. PTC expects non-GAAP first quarter earnings per share to be between $0.19 and $0.21. These non-GAAP operating cost and earnings expectations exclude the following first quarter estimated expenses and their tax effects:

Approximately $10 million of expense related to stock-based compensation
Approximately $3 million of acquisition-related amortisation expense

For the fiscal year ending September 30, 2007, PTC expects revenue to be about $945 million. On a GAAP basis, fiscal year 2007 total costs and expenses are expected to be approximately $834 million, and earnings per share are expected to be between $0.70 and $0.75. Total non-GAAP operating costs and expenses are expected to be approximately $780 million.

PTC expects non-GAAP earnings per share to be between $1.15 and $1.20 for the fiscal year. These non-GAAP earnings expectations exclude the following full-year estimated items and their tax effects:

Approximately $40 million of expense related to stock-based compensation
Approximately $14 million of acquisition-related amortisation expense

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