PTC Announces Fiscal Second Quarter 2021 Results

Solid ARR, Revenue, EPS, and Cash Flow Performance for the second quarter and first half of 2021

BOSTON, April 28, 2021 — (PRNewswire) — PTC (NASDAQ: PTC) today reported financial results for its fiscal second quarter ended March 31, 2021.

"Our performance in the second quarter and the first half of 2021 reflects continued strong execution across all our businesses. We delivered double-digit top line growth with expanding margins, leading to strong operating and free cash flows," said James Heppelmann, President and CEO, PTC.

"I am especially excited about our pure-SaaS CAD and PLM solutions. In its first quarter as part of PTC, Arena Solutions delivered record bookings, while Onshape bookings are tracking to more than 100% growth for the year. These impressive results clearly demonstrate the increasing investment that customers are making in SaaS solutions," said Heppelmann. "With the strong leadership position we have captured in SaaS, PTC is poised to capitalize on this transition in the market."

"Perhaps more importantly, customers continue looking to PTC as a strategic partner in their digital transformation initiatives aimed to reduce costs and time to market, increase productivity, and transform their customer experience and engagement," continued Heppelmann. "Our Core CAD and PLM business continues to outpace the market, and FSG bookings were strong. With our continued investment in differentiated technologies, we look forward to building on our strong performance in the first half of fiscal 2021."

Second quarter 2021 highlights¹Key operating and financial highlights are set forth below. For additional details, please refer to the Q2'21 earnings presentation and financial data tables that have been posted to the Investor Relations section of our website at investor.ptc.com.

ARR was $1.39 billion in Q2'21, representing growth of 18%, or 15% in constant currency, compared to Q2'20, reflecting strong performance in our Core and Growth businesses as well as Arena. Organic growth was 14% in Q2'21, or 11% in constant currency, compared to Q2'20.
Revenue was $462 million in Q2'21 compared to $360 million in Q2'20, growth of 28%, or 22% in constant currency, driven primarily by strong execution, as well as the impact of up-front license revenue recognition under ASC 606, and a modest contribution from Arena.
Cash flow from operations was $122 million and free cash flow was $116 million in Q2'21, compared to Q2'20 cash flow from operations of $88 million and free cash flow of $82 million.
Operating margin was 22% in Q2'21, compared to 14% in Q2'20. Non-GAAP operating margin in Q2'21 was 37%, compared to 29% in Q2'20.
Total cash and cash equivalents as of the end of Q2'21 was $326 million; total debt, net of deferred issuance costs, was $1.5 billion. We repaid $80 million on our revolver in Q2'21.

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¹ We include operating and non-GAAP financial measures in our operational highlights. The detailed definitions of these items and reconciliations of Non-GAAP financial measures to comparable GAAP measures are included below and in the reconciliation tables at the end of this press release.

Fiscal 2021 Guidance

"PTC delivered strong ARR, Revenue, EPS, Operating Cash Flow and Free Cash Flow in the second quarter. We are updating guidance to reflect Q2 performance and the changing currency impact we saw in the quarter. On a constant currency basis, we remain on track to deliver against our full year guidance," said Kristian Talvitie, EVP and CFO, PTC.

Our FY'21 financial guidance includes the assumptions below:

Macroeconomic conditions related to the COVID-19 crisis improve in the second-half of FY'21.
Organic ARR growth of 10% to 12% on a constant currency basis and Arena contributes ~400 basis points of ARR growth.
Changes in foreign currency versus prior guidance effectively eliminate the prior ~200 bps currency tailwind to ARR. Our current guidance assumes that currency effects in FY'21 are now relatively flat with FY20.
FY'21 ARR growth is inclusive of a ~2% headwind from lower Deferred ARR exiting FY'20, primarily due to lower bookings in FY'20 reflecting the effect of the COVID pandemic.
ARR YoY growth rates, on an organic constant currency basis, are expected to be approximately linear each quarter throughout FY'21.
Organic churn improves ~100 bps YoY.
GAAP tax rate is expected to be ~20%, including a benefit of $42 million related to the tax effects for Arena Solutions and an approximately $34 million tax reserve related to an ongoing tax matter in a non-US jurisdiction. Non-GAAP tax rate is expected to be ~19%.


*In millions except per share amounts*	Previous Guidance	Revised Guidance	YoY
ARR	$1,470 - $1,500	$1,445 - $1,470	14% - 16%
Cash from Operations	~$365		~55%
Free Cash Flow ⁽¹⁾	~$340		~60%
Revenue ⁽²⁾	$1,690 - $1,730	$1,710 - $1,740	17% - 19%
GAAP Operating Margin ⁽²⁾	15% - 16%	15% - 17%	150 bps – 300 bps
Non-GAAP Operating Margin ⁽²⁾	30% - 31%	31% -32%	200 bps – 300 bps
GAAP EPS ⁽²⁾	$0.82 - $0.94	$1.38 - $1.59	23% - 41%
Non-GAAP EPS ⁽²⁾	$3.05 - $3.25	$3.18 - $3.39	24% - 32%


(1)	Cash from operations and free cash flow include ~$16 million of restructuring payments, ~$14 million of acquisition-related payments, ~$14 million un-forecasted payment related to a non-U.S. tax dispute, and ~$8 million of incremental interest related to the Arena acquisition; free cash flow is net of capital expenditures of ~$25 million.
(2)	The FY'21 non-GAAP guidance excludes the estimated items outlined in the table below, as well as any additional tax effects and discrete tax items (which are not known or reflected). Our FY'21 non-GAAP guidance also excludes tax expense of ~$34 million related to a non-US tax exposure primarily related to foreign withholding taxes and a tax benefit of ~$42 million related to Arena Solutions.

*In millions*			FY'21
Acquisition-related charges			$14
Intangible asset amortization expense			$59
Stock-based compensation expense			$186
Restructuring charges			$1
Total Estimated Pre-Tax GAAP adjustments			$260

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