Don't Forget To
Rate This Article

Get the Latest Investment Ideas Delivered Straight to Your Inbox. Subscribe


Software Co. Posts Strong Organic ARR Growth in Q2
Trending Company

Share on Stocktwits


PTC Inc. shares traded 18% higher after the software and services firm reported Q2/22 earnings and raised its FY/22 estimates for ARR, revenue and free cash flow.

Software and services company PTC Inc. (PTC:NASDAQ), which provides CAD, PLM, IoT, and AR technologies that are delivered via on-premise, hybrid and SaaS in order to merge digital and physical worlds with the goal of transforming how products are engineered, manufactured and serviced, yesterday announced financial results for its second quarter of 2022 ended March 31, 2022.

The stock has traded today between $109.00 and $118.49 per share and is currently trading at $115.44 (+$17.82, +18.25%).




PTC Inc.'s President and CEO James Heppelmann stated, "In the second quarter we continued to see our key operating and financial metrics showing strong performance. We delivered organic constant currency ARR growth of 13% year over year to end Q2 at $1.56 billion. In Q2, our cash from operations was $142 million, up 17% year over year, and our adjusted free cash flow was $158 million, up 22% year over year. The strength in Q2 was broad-based across all segments and geographic regions, driven by demand for digital transformation and SaaS."

"Our differentiated product portfolio and growing SaaS capabilities position PTC to drive superior value for customers. Our market position coupled with our subscription model, which took us years of hard work to put in place, is highly resilient and positions us to continue to deliver strong double-digit ARR growth. Based on our strong performance in the first half of the year and the momentum we have created, we are raising our fiscal 2022 guidance for ARR and free cash flow," Heppelmann added.

The company reported that in Q2/22 it had an Annual Run Rate (ARR) of $1,532 million, which it noted was up 11% versus Q2/21. The firm explained that it believes that ARR is a key and useful metric to assess its performance as a SaaS and on-premise subscription company as "it captures expected subscription and support cash generation from customers." The firm noted that on a constant currency basis, ARR in Q2/22 increased by 13% to $1,564 million, which it said exceeded its prior guidance of $1,540-1,550 million.

PTC advised that total revenue in Q2/22 increased by 9% to $505.2 million, compared to $461.8 million in Q2/21 and added that on a constant currency basis, total revenue grew 13% year-over-year.

The company indicated that for Q2/22 it recorded net income of $89.7 million or $0.76 per diluted share, versus net income of $109.3 million, or $0.92 per diluted share in Q2/21. The firm added that on a non-GAAP basis it had adjusted earnings of $1.39 per share in Q2/22, compared to $1.08 per share in Q2/21.

The company's EVP and CFO Kristian Talvitie commented, "PTC delivered strong second quarter results that exceeded our expectations…Based on our Q2 performance and our forecast for the remainder of the year, we are raising our guidance for fiscal 2022 ARR, Free Cash Flow, and Revenue."

PTC offered some forward guidance and stated that for Q3/22 it expects ARR on a constant currency basis of $1,580-1,595 million and adjusted free cash flow of approximately $120.0 million.

The company advised that for FY/22, it raised its prior estimates for ARR to $1,640-1,665 million on a constant currency basis, which implies a 12-13% increase over FY/21. PTC added that it expects total revenue in FY/22 of $1,905-1,975 million and adjusted free cash flow of around $455 million.

PTC is a software and services company based in Boston, Mass. that helps global manufacturers integrate software and technology solutions to improve operational efficiency and productivity by enabling continuity of data across departments and fostering of collaboration throughout the enterprise. The company's CAD, PLM, IoT, and AR technologies are used in tandem to link the digital and physical worlds in manufacturing. The firm's clients include industrial equipment, aerospace, automotive, defense, high-tech and medical devices manufacturers.

PTC started the day with a market cap of around $11.4 billion with approximately 117.0 million shares outstanding and a short interest of about 2.0%. PTC shares opened 19% higher today at $116.19 (+$18.57, +19.02%) over yesterday's $97.62 closing price. The stock has traded today between $109.00 and $118.49 per share and is currently trading at $115.44 (+$17.82, +18.25%).

Want to be the first to know about interesting Technology investment ideas? Sign up to receive the FREE Streetwise Reports' newsletter. Subscribe

1) Stephen Hytha compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Want to read more about Technology investment ideas?
Get Our Streetwise Reports Newsletter Free and be the first to know!

A valid email address is required to subscribe