01—Abstract
Summary
Summary of the 10-K filed November 22, 2021. Cited figures are marked; the original filing is the authoritative source.
PTC Inc. reported fiscal 2021 (year ended September 30, 2021) as a year of strong top-line and profit growth.
Total revenue was $1.81 billiona, up 24% from $1.46 billion in FY'20 (20% in constant currency). ARR increased 16% to $1,474.7 million, and the company cited its fourth consecutive year of double-digit ARR growth. Operating income rose to $380.7 million from $210.9 million, operating margin reached 21.1% versus 14.5%, and diluted EPS more than doubled to $4.03.
GAAP results were boosted by a $69 millionb gain on its Matterport, Inc. equity stake and a $137.4 million valuation allowance release on U.S. deferred tax assets. Non-GAAP operating margin was 35.1%, and non-GAAP diluted EPS was $3.97. Cash generation improved substantially, with operating cash flow of $368.8 million (up 58%) and free cash flow of $344.1 million (up 61%).
The company spent $718 millionc on acquisitions, primarily Arena, funded partly by $600 million borrowed under its credit facility. Total debt was $1.45 billion at September 30, 2021, versus $1.018 billion a year earlier, and cash and cash equivalents were $326.5 million. Management stated it expects to return about 25% of estimated free cash flow excluding restructuring payments (about $450 million) to shareholders through buybacks in FY'22.
Looking forward, PTC is shifting toward a SaaS model and committed in November 2021 to a workforce reorganization and facility consolidation, with a charge and cash payments of approximately $45 million to $50 milliond expected in 2022. Management noted that professional services revenue is expected to trend flat-to-down over time and that a higher share of sales will shift to ratably recognized cloud services, which may affect the timing of revenue recognition.
02—Key points
Key Highlights
- Total revenue of $1,807.2 million, up 24% (20% constant currency) from $1,458.4 million in FY'20.
- ARR of $1,474.7 million, up 16%; organic constant currency ARR growth excluding Arena was 12%.
- Operating income of $380.7 million (21.1% margin) versus $210.9 million (14.5% margin); non-GAAP operating margin was 35.1%.
- Diluted EPS of $4.03 versus $1.12, helped by a $69 million Matterport gain and a $137.4 million U.S. valuation allowance release; non-GAAP diluted EPS was $3.97.
- Operating cash flow of $368.8 million (up 58%) and free cash flow of $344.1 million (up 61%).
- Acquired Arena Holdings for approximately $715 million net of cash acquired; total debt rose to $1,450 million from $1,018 million.
- Plans to return about 25% of estimated FY'22 free cash flow excluding restructuring payments (about $450 million) through share repurchases; a November 2021 restructuring is expected to cost $45 million to $50 million in cash in 2022.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, PTC kept $0.26.
- Revenue$1.81B100.0%
- Cost of revenue−$371.1M20.5%
- Gross profit$1.44B79.5%
- Operating costs−$1.06B58.4%
- Operating income$380.7M21.1%
- Interest, other & tax$96.2M5.3%
- Net income$476.9M26.4%
Where FY2021 revenue went
$1.81B- Other operating costs: $755.4M, 42% of revenue
- Operating income: $380.7M, 21% of revenue
- Cost of revenue: $371.1M, 21% of revenue
- R&D: $299.9M, 17% of revenue
Kept 21% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed November 22, 2021Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $1.81B$1.46B | +23.9% |
| Cost of Revenue | $371.10M$334.27M | +11.0% |
| Gross Profit | $1.44B$1.12B | +27.7% |
| R&D Expenses | $299.92M$256.57M | +16.9% |
| Operating Expenses | $1.06B$913.28M | +15.6% |
| Operating Income | $380.75M$210.86M | +80.6% |
| Interest Expense | $50.48M$76.43M | −34.0% |
| Net Income | $476.92M$130.69M | +264.9% |
| EPS (Basic) | $4.08$1.13 | +261.1% |
| EPS (Diluted) | $4.03$1.12 | +259.8% |
| Shares Outstanding (Basic) | 116.84M115.66M | +1.0% |
| Shares Outstanding (Diluted) | 118.37M116.27M | +1.8% |
05—Questions
Frequently Asked Questions
How much did PTC's revenue and profitability grow in fiscal 2021?
Total revenue rose 24% to $1,807.2 million, and operating income more than doubled to $380.7 million, lifting the operating margin to 21.1% from 14.5%. Diluted EPS was $4.03 versus $1.12, though the filing notes that GAAP results included a $69 million gain on a Matterport investment and a $137.4 million valuation allowance release. Non-GAAP diluted EPS was $3.97.
How strong is PTC's recurring revenue base?
Total recurring revenue was $1,616.3 million, up 26% from $1,281.9 million. ARR ended the year at $1,474.7 million, up 16%, and management said FY'21 was the fourth consecutive year of double-digit ARR growth.
How much debt does PTC carry and how is it structured?
Total debt was $1,450 million at September 30, 2021, comprising $500 million of 4.000% Senior Notes due 2028, $500 million of 3.625% Senior Notes due 2025, and $450 million drawn on the credit facility. The company had $550 million of unused credit facility commitments and stated it was in compliance with all covenants.
What is PTC's plan for shareholder returns and restructuring in fiscal 2022?
Management expects to return about 25% of estimated free cash flow excluding restructuring payments, roughly $450 million, through stock repurchases in FY'22. Separately, the company committed in November 2021 to a workforce restructuring and facility consolidation, with a charge and cash payments of approximately $45 million to $50 million expected in 2022, to support its transition to SaaS.
06—Continue