"Continued solid execution by our global team overcame challenges related to the ongoing pandemic, leading to strong bookings in our fourth quarter. The pandemic has helped customers recognize the value PTC can unlock through our digital transformation solutions – from enabling global team collaboration across the product development process, to remote asset management, to remote support and front-line worker training, to the growing importance of SaaS-based technologies," said James Heppelmann, President and CEO, PTC.
"We believe that our fourth quarter performance and robust pipeline points to a promising start to our fiscal 2021, despite ongoing macro uncertainty. While consensus around the timing and shape of a broader economic recovery remains uncertain, it is clear that PTC is very well positioned to continue to drive new innovations across our product portfolio, enable significant customer value in the new normal, and deliver strong sustainable growth," concluded Heppelmann.
Fourth quarter and fiscal year 2020 highlights1
Key operating and financial highlights are set forth below. For additional details, please refer to the prepared remarks and financial data tables that have been posted to the Investor Relations section of our website at investor.ptc.com.
- ARR was $1.27 billion. Year-over-year growth of 14%, or 11% in constant currency, reflects solid performance in our Core and Growth businesses, in our global channel, and, as expected, contribution from our Rockwell Automation Strategic Alliance.
- Revenue was $391 million in Q4'20 and $1,458 million in FY'20. Q4'20 growth of 17% compared to Q4'19, and FY'20 growth of 16% compared to FY'19, was driven by strength across our Core and Growth businesses, as well as the impact of ASC 606 and related business policy changes.
- Cash flow from operations was $34 million in Q4'20, compared to $55 million in Q4'19, partly reflecting the impact of interest payments in Q4'20. For FY'20, cash flow from operations was $234 million, compared to $285 million in FY'19. Free cash flow was $29 million in Q4'20, compared to $50 million in Q4'19. For FY'20, free cash flow was $214 million, compared to $221 million in FY'19, and guidance of approximately $210 million.
- Operating margin was 17% in Q4'20 compared to 14% in Q4'19; non-GAAP operating margin was 32% in Q4'20, compared to 24% in Q4'19. Operating margin was 14% in FY'20, compared to 5% in FY'19; non-GAAP operating margin was 29% in FY'20, compared to 20% in FY'19.
- Total cash, cash equivalents, and marketable securities as of the end of Q4'20 was $335 million; total gross borrowings as of the end of Q4'20 was $1.0 billion.
1 We include operating and non-GAAP financial measures in our operational highlights. The definitions of these items and reconciliations of Non-GAAP financial measures to comparable GAAP measures are included below and in the reconciliation tables at the end of this press release.
Fiscal 2021 Outlook
"PTC's solid financial performance throughout this challenging economic environment reflects the value our customers see in our solutions coupled with the benefits of our subscription transition, which is now officially in the rear-view mirror. Looking forward, we remain committed to delivering attractive FY'21 ARR with significant operating and free cash flow growth." said Kristian Talvitie, EVP and CFO, PTC.
Fiscal 2021 Guidance
Our fiscal 2021 financial outlook includes the following assumptions:
- Macroeconomic conditions related to the COVID-19 crisis remain stable near-term with conditions improving in the second-half of FY'21.
- Churn improves approximately 100 bps at the midpoint of guidance.
- ARR growth includes a ~2% headwind from lower backlog for FY'21 exiting FY'20, resulting primarily from COVID-19-related bookings pressure in FY'20.
- ARR YoY growth rates, on a constant currency basis, are expected to be approximately linear each quarter throughout FY'21.
- Revenue growth decelerates in FY'21 reflecting the impact of ASC 606 and related business policy changes that benefited revenue in FY'20.
- FY'21 operating expense growth of approximately 10% YoY, reflecting headcount additions, higher variable compensation, travel, and marketing expenses.
- GAAP tax rate is expected to be 20%, Non-GAAP tax rate is expected to be ~19%.
- Operating cash flow and free cash flow tailwinds of approximately $60 million, reflecting lower restructuring, interest-related, and acquisition-related cash expenditures.
In millions except per share amounts
$1,385 - $1,420
9% - 12%
Cash from Operations
Free cash flow (1)
$1,550 - $1,600
6% - 10%
GAAP Operating Margin
13% - 14%
Non-GAAP Operating Margin (2)
28% - 29%
$1.71 - $1.91
53% - 71%
Non-GAAP EPS (2)
$2.65 - $2.85
3% - 11%