PTC Inc. (NASDAQ:PTC) Q1 2020 Earnings Conference Call - Final Transcript

Jan 22, 2020 • 05:00 pm ET

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PTC Inc. (NASDAQ:PTC) Q1 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good afternoon, ladies and gentlemen. Thank you for standing by, and welcome to the PTC 2020 First Quarter Conference Call. [Operator Instructions]

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

Executive
Tim Fox

Thank you, Sheila. Good afternoon everyone and thank you for joining PTC's conference call to discuss our fiscal Q1 '20 results. On the call today are Jim Heppelmann, Chief Executive Officer; and Kristian Talvitie, Chief Financial Officer.

Before we get started, please note that today's comments include forward-looking statements, including statements regarding future financial guidance. These forward-looking statements are subject to risks and uncertainties and involve factors that could cause actual results to differ materially from those expressed or implied by such statements. Additional information concerning these factors is contained in PTC's filings with the SEC, including our annual report on Form 10-K and quarterly reports on Form 10-Q.

As a reminder, we'll be referring to operating and non-GAAP financial measures during today's call. Discussion of our operating metrics and these items excluded from our non-GAAP financial measures and a reconciliation between GAAP and non-GAAP financial measures are included in our earnings press release and related Form 8-K. Lastly, references to growth rates will be in constant currency unless otherwise noted.

And with that let me turn the call over to Jim.

Executive
James E. Heppelmann

Thanks, Tim. Good afternoon everyone and thank you for joining us. I'm pleased to share that our solid Q1 performance puts us right on track to deliver against our fiscal '20 targets and our attractive long-term financial ranges. ARR which is our key top line metric grew 11% in Q1. As Kristian will detail later in the call, we are raising our fiscal '20 ARR guidance based on our Q1 performance, our visibility into the balance of the fiscal year and favorable currency tailwinds. We're also raising revenue, EPS and adjusted free cash flow guidance for the year.

At the midpoint of our guidance, we're now expecting fiscal '20 ARR growth in the mid-teens, revenue growth approaching 20% and EPS growth above 40%. The benefits of all the hard work we've done in the past years to expand our profitability, to increase our growth rate and to convert to a subscription model are really starting to show, because PTC truly is emerging as one of the world's premier public software companies.

Before digging into the details, I'd like to share some observations about broader industry trends and PTC's unique position in terms of helping customers thrive during this period of rapid change in the industrial world. Similar to other industries like entertainment, hospitality or transportation that have been disrupted by digital technologies, industrial companies are now facing new challenges from traditional competitors that are embracing digital technologies across the value chains, and from new entrants exploring new business models.

Digital transformation has become a wave that's sweeping across the industrial market, enabling companies to better differentiate their products and services while simultaneously optimizing their engineering,