PTC Announces Second Quarter Fiscal Year 2018 Results

(2) In the third quarter of 2017, PTC began reporting cost of support revenue separate from cost of license and subscription revenue. Costs for previous periods have also been separately reported to conform to the current period presentation.

(3) Headquarters relocation charges represent accelerated depreciation expense recorded in anticipation of the exit of our current headquarters facility.

(4) Our 2018 year-to-date tax rate includes a benefit of $7 million relating to the enactment of the Tax Cuts and Jobs Act.

 
PTC Inc.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (UNAUDITED)
(in thousands, except per share data)
                 
Three Months Ended Six Months Ended
March 31, April 1, March 31, April 1,
2018 2017 2018 2017
 
GAAP revenue $ 307,883 $ 280,040 $ 614,527 $ 566,367
Fair value adjustment of acquired deferred subscription revenue 75 411 191 1,057
Fair value adjustment of acquired deferred services revenue   233     262     480     530  
Non-GAAP revenue $ 308,191   $ 280,713   $ 615,198   $ 567,954  
 
GAAP gross margin $ 224,252 $ 198,210 $ 447,938 $ 402,422
Fair value adjustment of acquired deferred revenue 308 673 671 1,587
Fair value adjustment to deferred services cost (96 ) (108 ) (200 ) (221 )
Stock-based compensation 2,767 3,207 5,694 6,101
Amortization of acquired intangible assets included in cost of revenue   6,556     6,389     13,231     12,777  
Non-GAAP gross margin $ 233,787   $ 208,371   $ 467,334   $ 422,666  
 
GAAP operating income $ 22,366 $ 7,513 $ 39,838 $ 12,074
Fair value adjustment of acquired deferred revenue 308 673 671 1,587
Fair value adjustment to deferred services cost (96 ) (108 ) (200 ) (221 )
Stock-based compensation 17,026 21,577 35,357 39,565
Amortization of acquired intangible assets included in cost of revenue 6,556 6,389 13,231 12,777
Amortization of acquired intangible assets 7,895 7,946 15,716 16,013
Acquisition-related charges included in general and administrative costs 133 554 140 723
Restructuring charges, net (839 ) 464 (734 ) 6,749
Headquarters relocation charges   953     -     953     -  
Non-GAAP operating income (1) $ 54,302   $ 45,008   $ 104,972   $ 89,267  
 
GAAP net income (loss) $ 7,922 $ (1,104 ) $ 21,799 $ (10,245 )
Fair value adjustment of acquired deferred revenue 308 673 671 1,587
Fair value adjustment to deferred services cost (96 ) (108 ) (200 ) (221 )
Stock-based compensation 17,026 21,577 35,357 39,565
Amortization of acquired intangible assets included in cost of revenue 6,556 6,389 13,231 12,777
Amortization of acquired intangible assets 7,895 7,946 15,716 16,013
Acquisition-related charges included in general and administrative costs 133 554 140 723
Restructuring charges, net (839 ) 464 (734 ) 6,749
Headquarters relocation charges 953 - 953 -
Non-operating credit facility refinancing costs - 1,152 - 1,152
Income tax adjustments (2)   (80 )   (2,787 )   (11,080 )   (2,639 )
Non-GAAP net income $ 39,778   $ 34,756   $ 75,853   $ 65,461  
 
GAAP diluted earnings (loss) per share $ 0.07 $ (0.01 ) $ 0.19 $ (0.09 )
Fair value adjustment of acquired deferred revenue - 0.01 0.01 0.01
Stock-based compensation 0.14 0.18 0.30 0.34
Amortization of acquired intangibles 0.12 0.12 0.25 0.25
Acquisition-related charges - - - 0.01
Restructuring charges, net (0.01 ) - (0.01 ) 0.06
Headquarters relocation charges 0.01 - 0.01 -
Non-operating credit facility refinancing costs 0.01 - 0.01
Income tax adjustments   -     (0.02 )   (0.09 )   (0.02 )
Non-GAAP diluted earnings per share $ 0.34   $ 0.30   $ 0.64   $ 0.56  
 
GAAP diluted weighted average shares outstanding 117,905 115,709 117,780 115,498
Dilutive effect of stock-based compensation plans   -     1,737     -     1,736  
Non-GAAP diluted weighted average shares outstanding   117,905     117,446     117,780     117,234  
 
(1) Operating margin impact of non-GAAP adjustments:
Three Months Ended Six Months Ended
March 31, April 1, March 31, April 1,
2018 2017 2018 2017
GAAP operating margin 7.3 % 2.7 % 6.5 % 2.1 %
Fair value of acquired deferred revenue 0.1 % 0.2 % 0.1 % 0.3 %
Fair value adjustment to deferred services cost 0.0 % 0.0 % 0.0 % 0.0 %
Stock-based compensation 5.5 % 7.7 % 5.8 % 7.0 %
Amortization of acquired intangibles 4.7 % 5.1 % 4.7 % 5.1 %
Acquisition-related charges 0.0 % 0.2 % 0.0 % 0.1 %
Restructuring charges, net -0.3 % 0.2 % -0.1 % 1.2 %
Headquarters relocation charges   0.3 %   0.0 %   0.2 %   0.0 %
Non-GAAP operating margin   17.6 %   16.0 %   17.1 %   15.7 %
 

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