PTC (NASDAQ:PTC) Surprises With Q1 Sales

Max Juang /
2024/01/31 4:10 pm EST

Engineering and design software provider PTC (NASDAQ:PTC) reported results ahead of analysts' expectations in Q1 FY2024, with revenue up 18.1% year on year to $550.2 million. The company expects next quarter's revenue to be around $575 million, in line with analysts' estimates. It made a GAAP profit of $0.55 per share, down from its profit of $0.99 per share in the same quarter last year.

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PTC (PTC) Q1 FY2024 Highlights:

  • Market Capitalization: $21.98 billion
  • Revenue: $550.2 million vs analyst estimates of $538 million (2.3% beat)
  • EPS: $0.55 vs analyst estimates of $0.44 (25.8% beat)
  • Revenue Guidance for Q2 2024 is $575 million at the midpoint, roughly in line with what analysts were expecting
  • The company reconfirmed its revenue guidance for the full year of $2.32 billion at the midpoint
  • Free Cash Flow of $182.8 million, up from $43.99 million in the previous quarter
  • Gross Margin (GAAP): 80%, in line with the same quarter last year

"In our first fiscal quarter, we again delivered solid ARR and cash flow results. I am confident that PTC is well positioned to continue delivering durable and consistent ARR and cash flow growth under the leadership of Neil Barua," said James Heppelmann, CEO, PTC.

Used to design the Airbus A380 and Boeing 787 Dreamliner commercial airplanes, PTC’s (NASDAQ:PTC) software-as-service platform helps engineers and designers create and test products before manufacturing.

Design Software

The 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 Growth

As you can see below, PTC's revenue growth has been unremarkable over the last two years, growing from $457.7 million in Q1 FY2022 to $550.2 million this quarter.

PTC Total Revenue

This quarter, PTC's quarterly revenue was up 18.1% year on year, above the company's historical trend. However, its growth did slow down a little compared to last quarter as the company increased revenue by $3.59 million in Q1 compared to $4.28 million in Q4 2023. While we'd like to see revenue increase by a greater amount each quarter, a one-off fluctuation is usually not concerning.

Next quarter's guidance suggests that PTC is expecting revenue to grow 6.1% year on year to $575 million, slowing down from the 7.3% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 9.4% over the next 12 months before the earnings results announcement.

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Cash Is King

If 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 $182.8 million in Q1, up 6.4% year on year.

PTC Free Cash Flow

PTC has generated $598.1 million in free cash flow over the last 12 months, an eye-popping 27.4% 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

It was good to see PTC beat analysts' revenue expectations this quarter. We were also glad its free cash flow improved. Overall, this was a decent quarter for PTC. The stock is flat after reporting and currently trades at $180.65 per share.

So should you invest in PTC right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.

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