PTC Inc. (NASDAQ:PTC) Q4 2018 Earnings Conference Call Transcript

Oct 25, 2018 • 05:00 pm ET


PTC Inc. (NASDAQ:PTC) Q4 2018 Earnings Conference Call Transcript


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Good afternoon ladies and gentlemen, and thank you for standing by, and welcome to the PTC 2018 Fourth Quarter Conference Call. During today's presentation, all parties will be in a listen-only mode, and the conference is being recorded. Following the presentation, the conference will be opened for questions.

I would now like to turn the call over to Tim Fox, PTC's Senior Vice President of Investor Relations. Please go ahead.

Tim Fox

Good afternoon. Thank you, Gabriela and welcome to PTC's 2018 fourth quarter conference call. On the call today are Jim Heppelmann, Chief Executive Officer; Andrew Miller, Chief Financial Officer; and Barry Cohen, Chief Strategy Officer.

Today's conference call is being broadcast live through an audio webcast, and a replay of the call will be available later today on our Investor Relations website.

During this call, PTC will make forward-looking statements including guidance as to future operating results. Because such statements deal with future events, actual results may differ materially from those projected in the forward-looking statements. Information concerning factors that could cause actual results to differ materially from those in forward-looking statements can be found in PTC's most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other filings with the US Securities and Exchange Commission, as well as in today's press release. The forward-looking statements and guidance provided during this call are valid only as of today's date, October 24, 2018, and PTC assumes no obligation to update these forward-looking statements.

During the call today, PTC will discuss non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with Generally Accepted Accounting Principles. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures can be found in today's press release and made available on our Investor Relations website.

With that, I would like to turn the call over to PTC's CEO, Jim Heppelmann.

James Heppelmann

Thanks, Tim. Good afternoon everyone, and thank you for joining us. As usual, I'd like to begin with the review of our quarterly and annual results, and then provide some perspectives on the significant milestones and progress that we achieved throughout fiscal 2018. Q4 of fiscal 2018 was another strong quarter, and it closed out another strong fiscal year where we demonstrated near flawless execution of our strategic and operational objectives. In the fourth quarter, we delivered record quarterly bookings of $149 million, and ACV of $60 million, both at or near the high end of our guidance range. We delivered a subscription mix of 81%, our highest level of subscription bookings to date.

Despite modest FX headwinds, total revenue was near the high end of our guidance. Our operating margins expanded over 350 basis points year-over-year and EPS was at the high end of guidance. In Q4, the momentum around our recurring revenue models continued with recurring software revenue growing 13%, and ARR growing 12% year-over-year, and crossing the $1 billion mark the first time despite the FX headwinds. This was the seventh consecutive quarter of double-digit ARR