PTC(US:PTC)2023-11-19 16:00Financial Performance - ARR grew 26% (23% constant currency) to $1.98 billion as of the end of FY'23 compared to FY'22, with organic ARR growth of 15% (13% constant currency) to $1.81 billion [142]. - Total revenue for FY'23 was $2.10 billion, reflecting an 8% increase (12% constant currency) compared to FY'22, driven by contributions from ServiceMax and Codebeamer [144]. - Non-GAAP operating income for FY'23 was $758.9 million, a 4% increase from $732.2 million in FY'22 [149]. - PLM software revenue grew 21% to $1.19 billion in FY'23, benefiting from contributions from ServiceMax and Codebeamer [163]. - CAD software revenue decreased by 4% to $760.6 million in FY'23, with constant currency revenue growth flat due to shorter contract durations [164]. - GAAP net income decreased to $245.5 million in FY'23 from $313.1 million in FY'22, a decline of about 21.6% [220]. - Non-GAAP net income for FY'23 was $517.6 million, slightly down from $541.5 million in FY'22, reflecting a decrease of approximately 4.4% [220]. - GAAP diluted earnings per share (EPS) fell to $2.06 in FY'23 from $2.65 in FY'22, a decline of about 22.2% [220]. - Non-GAAP diluted EPS for FY'23 was $4.34, down from $4.58 in FY'22, indicating a decrease of approximately 5.2% [220]. Cash Flow and Operations - Cash from operations increased by 40% to $611 million in FY'23, while free cash flow rose 41% to $587 million [143]. - Cash provided by operating activities increased by $175.6 million to $610.9 million in FY'23 compared to $435.3 million in FY'22 [188]. - Free cash flow for FY'23 was $587.0 million, a significant increase from $415.8 million in FY'22, representing a growth of approximately 41.2% [220]. - Cash and cash equivalents totaled $288.1 million as of September 30, 2023, up from $272.2 million in FY'22 [183]. - Cash used in investing activities was $(866.1) million in FY'23, primarily due to the acquisition of ServiceMax [185]. Expenses and Margins - Operating expenses increased by 9% to $1.20 billion in FY'23, reflecting higher costs associated with the ServiceMax acquisition [149]. - Total operating expenses increased by 9% to $1,197.6 million in FY'23 from $1,100.0 million in FY'22 [172]. - Research and development expenses rose by 16% to $394.4 million, accounting for 19% of total revenue in FY'23 [172]. - Total gross margin for FY'23 was $1.66 billion, a 7% increase from FY'22, with a gross margin percentage of 79% [166]. - GAAP gross margin for FY'23 was $1,656.0 million, up from $1,547.4 million in FY'22, reflecting an increase of approximately 7.1% [220]. - Non-GAAP gross margin for FY'23 reached $1,712.6 million, compared to $1,595.7 million in FY'22, indicating a growth of about 7.3% [220]. - GAAP operating margin for FY'23 was 21.9%, down from 23.1% in FY'22, reflecting a decrease of approximately 5.2% [222]. - Non-GAAP operating margin for FY'23 was 36.2%, down from 37.9% in FY'22, indicating a decline of about 4.5% [222]. Debt and Interest - Total debt as of September 30, 2023, was $1,702.0 million, with $1,695.8 million net of issuance costs [191]. - Interest expense surged by 138% to $(129.4) million in FY'23, driven by higher total debt and interest rates [176]. - The annual rate on the credit facility loans was 7.18% as of September 30, 2023, with a 100 basis point change in interest rates potentially impacting earnings and cash flows by $7 million [261]. - As of September 30, 2023, the company had $702 million outstanding under its credit facility [261]. Foreign Currency Impact - Approximately 50% of revenue and 35% of expenses were transacted in currencies other than the U.S. Dollar, impacting reported results due to foreign currency exchange fluctuations [152]. - A $0.10 change in the USD to EUR exchange rate would impact operating income by approximately $30 million, while a 10 Yen change in the Yen to USD exchange rate would impact operating income by approximately $6 million [255]. - Changes in foreign currencies relative to the U.S. Dollar had a favorable impact of $2.9 million and an unfavorable impact of $24.2 million on consolidated cash balances in FY'23 and FY'22, respectively [263]. - The company does not enter into or hold foreign currency derivative financial instruments for trading or speculative purposes [254]. - The foreign currency hedging program primarily uses forward contracts and options denominated in Euro, Swedish Krona, and Swiss Franc currencies, with maturities of less than four months [257]. Acquisition and Future Outlook - The company expects capital expenditure requirements of approximately $20 million in FY'24 [195]. - The company had a $620 million deferred acquisition payment liability related to the $650 million installment for the ServiceMax acquisition, paid in October 2023 [261].