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Engineering and design software provider PTC (NASDAQ:PTC) announced better-than-expected results in Q1 CY2024, with revenue up 11.2% year on year to $603.1 million. On the other hand, next quarter's revenue guidance of $532.5 million was less impressive, coming in 9.2% below analysts' estimates. It made a GAAP profit of $0.95 per share, improving from its profit of $0.53 per share in the same quarter last year.
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PTC (PTC) Q1 CY2024 Highlights:
- Revenue: $603.1 million vs analyst estimates of $577 million (4.5% beat)
- EPS: $0.95 vs analyst estimates of $0.74 (28.5% beat)
- Revenue Guidance for Q2 CY2024 is $532.5 million at the midpoint, below analyst estimates of $586.2 million
- The company reconfirmed its revenue guidance for the full year of $2.31 billion at the midpoint
- Gross Margin (GAAP): 81.8%, up from 79.1% in the same quarter last year
- Free Cash Flow of $247.1 million, up 35.2% from the previous quarter
- Annual Recurring Revenue: $2.09 billion at quarter end, up 10.9% year on year
- Market Capitalization: $21.21 billion
Used to design the Airbus A380 and Boeing (NYSE:BA) 787 Dreamliner commercial airplanes, PTC’s (NASDAQ:PTC) software-as-service platform helps engineers and designers create and test products before manufacturing.
Design SoftwareThe demand for rich, interactive 2D, 3D, VR and AR experiences is growing, and while the ubiquitous metaverse might still be more of a buzzword than a real thing, what is real is the demand for the tools to create these experiences, whether they are games, 3D tours or interactive movies.
Sales GrowthAs you can see below, PTC's revenue growth has been unremarkable over the last three years, growing from $461.8 million in Q2 2021 to $603.1 million this quarter.
This quarter, PTC's quarterly revenue was once again up 11.2% year on year. We can see that PTC's revenue increased by $52.86 million quarter on quarter, which is a solid improvement from the $3.59 million increase in Q4 CY2023. Shareholders should applaud the acceleration of growth.
Next quarter, PTC is guiding for a 1.8% year-on-year revenue decline to $532.5 million, a further deceleration from the 17.3% year-on-year decrease it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 9.7% over the next 12 months before the earnings results announcement.
Cash Is KingIf you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. PTC's free cash flow came in at $247.1 million in Q1, up 19.3% year on year.
PTC has generated $638 million in free cash flow over the last 12 months, an eye-popping 28.5% of revenue. This robust FCF margin stems from its asset-lite business model, scale advantages, and strong competitive positioning, giving it the option to return capital to shareholders or reinvest in its business while maintaining a healthy cash balance.
Key Takeaways from PTC's Q1 Results We enjoyed seeing PTC exceed analysts' billings expectations this quarter. We were also excited its revenue outperformed Wall Street's estimates. On the other hand, its revenue guidance for next quarter missed analysts' expectations and its full-year revenue guidance missed Wall Street's estimates. Overall, the results could have been better. The stock is flat after reporting and currently trades at $174.75 per share.
