PTC Inc. EBITDA surged on 25.9% and EBITDA Margin increased slightly on 2.0 pp from 11.0% to 12.9%
10/24/2018 • About PTC Inc. (
$PTC) • By InTwits
PTC Inc. reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is quite volatile: 12.9% in FY2018, 11.0% in FY2017, 4.3% in FY2016, 10.0% in FY2015, 20.2% in FY2014
- PTC Inc. motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2014-FY2018 was 5.1% while average EBITDA Margin was 12.0% for the sames years. In FY2018 SBC/Revenue was even higher: 6.7%
- PTC Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.3%. At the same time it's a lot of higher than industry average of 5.2%.
- CAPEX is quite volatile: $53m in FY2018, $39m in FY2017, $63m in FY2016, $60m in FY2015, $23m in FY2014
- In the last 5 years the company invested considerably less than D&A: $144m vs. $422m. In FY2018 this situation was still the same: CAPEX was 36 while D&A was 87
- The company has potentially unprofitable business model: ROIC is 5.1%
- It operates with medium-size leverage: Net Debt/EBITDA is 2.4x while industry average is -2.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
PTC Inc.'s Revenue increased on 6.7%. Revenue growth showed slowdown in FY18Q4 - it was 2.0% YoY. During FY2014-FY2018 Revenue growth bottomed in FY2016 at -9.1% and was accelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 7.4 pp from 23.1% to 30.6% in 2018. During the last 5 years EBITDA Margin bottomed in FY2016 at 4.3% and was growing since that time.
Gross Margin increased slightly on 2.0 pp from 71.7% to 73.7% in FY2018. SG&A as a % of Revenue showed almost no change in FY2018. SG&A as a % of Revenue followed a growing trend at 2.0 pp per annum in FY2014-FY2018. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in FY2018. SBC as a % of Revenue followed a growing trend at 1.00 pp per annum in the last 5 years.
Net Income margin increased on 3.7 pp from 0.54% to 4.2% in FY2018. During the last 5 years Net Income margin bottomed in FY2016 at -4.8% and was growing since that time.
Investments (CAPEX, working capital and M&A)
In FY2018 the company had CAPEX/Revenue of 2.9%. The company's CAPEX/Revenue showed almost no change from FY2015 to FY2018. For the last three years the average CAPEX/Revenue was 2.5%.
Accounts receivable as a % of Revenue decreased on 2.7 pp from 13.1% to 10.4% in FY2018. Accounts payable as a % of Revenue increased on 5.7 pp from 10.7% to 16.4% in FY2018.
PTC Inc. has spent
$3m on M&A in FY2018 which accounts for 0.24% of revenue.
Return on investment
The company operates at low ROIC (5.1%) and ROE (5.9%). ROIC increased on 2.4 pp from 2.7% to 5.1% in FY2018. ROE increased on 5.2 pp from 0.72% to 5.9% in FY2018. During the last 5 years ROIC bottomed in FY2016 at -2.4% and was growing since that time. During the last 5 years ROE bottomed in FY2016 at -6.4% and was growing since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.4x and Debt / EBITDA is 4.0x. Net Debt / EBITDA dropped on 1.0x from 3.4x to 2.4x in FY2018. Debt decreased on 9.7% while cash decreased on 7.2%. During FY2014-FY2018 Net Debt/EBITDA topped in FY2016 at 9.6x and was declining since that time.
PTC Inc. has questionable short term financial stability: Interest coverage ratio (ICR) is only 1.8x. The company has no short term refinancing risk: short term debt is zero.
Average interest expence paid by the company was 6.5% in FY2018.
Valuation and dividends
The company's trades at EV/EBITDA 62.4x and P/E 185.5x.
Management team
James E Heppelmann "Jim" is a PTC Inc.'s CEO. James E Heppelmann "Jim" is a founder and has spent 8 years with the company. CEO total compensation was
$49,969,163 in FY2018 which included
$800,000 salary.
0.90% of the company is owned by insiders. Insider ownership didn't change in 2018.
The company has 6,110 employees. The number of employees increased on 2.1%. Average revenue per employee in FY2018 was
$203,245 and it increased on 4.5%.
Financial and operational results
FY ended 09/30/2018
PTC Inc. ($PTC) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 1,357 | 1,255 | 1,141 | 1,164 | 1,242 | 6.7% |
| Gross Profit | 983 | 921 | 815 | 835 | 916 | 9.7% |
| SG&A | 500 | 506 | 513 | 518 | 558 | 7.6% |
| EBITDA | 274 | 126 | 50 | 128 | 161 | 25.9% |
| EBIT | 197 | 42 | -37 | 41 | 73 | 79.1% |
| Interest expence | 8 | 15 | 30 | 42 | 42 | -1.7% |
| Tax | 26 | -21 | -13 | -8 | -23 | |
| Net Income | 160 | 48 | -54 | 6 | 52 | 733.3% |
| Stock Based Compensation | 40 | 50 | 66 | 77 | 83 | 8.1% |
Balance Sheet
|
|---|
| Cash | 294 | 273 | 278 | 280 | 260 | -7.2% |
| Accounts Receivable | 236 | 197 | 161 | 152 | 129 | -15.1% |
| Accounts Payable | 20 | 13 | 18 | 35 | 53 | 52.1% |
| Short Term Debt | 25 | 50 | 0 | 0 | 0 | |
| Long Term Debt | 587 | 618 | 752 | 712 | 643 | -9.7% |
Cash flow
|
|---|
| Capex | 25 | 31 | 26 | 25 | 36 | 41.6% |
| Acquisitions | 324 | 98 | 166 | 5 | 3 | -39.5% |
Ratios
|
|---|
| Revenue growth | 4.9% | -7.5% | -9.1% | 2.1% | 6.7% | |
| EBITDA growth | 34.3% | -54.0% | -60.7% | 157.7% | 25.9% | |
|
|---|
| Gross Margin | 72.5% | 73.3% | 71.4% | 71.7% | 73.7% | 2.0% |
| EBITDA Margin | 20.2% | 10.0% | 4.3% | 11.0% | 12.9% | 2.0% |
| EBIT Margin | 14.5% | 3.3% | -3.2% | 3.5% | 5.9% | 2.4% |
| SG&A, % of revenue | 36.8% | 40.3% | 45.0% | 44.5% | 44.9% | 0.4% |
| SBC, % of revenue | 3.0% | 4.0% | 5.8% | 6.6% | 6.7% | 0.1% |
| Net Income Margin | 11.8% | 3.8% | -4.8% | 0.5% | 4.2% | 3.7% |
| CAPEX, % of revenue | 1.9% | 2.4% | 2.3% | 2.2% | 2.9% | 0.7% |
|
|---|
| ROIC | 14.4% | 2.7% | -2.4% | 2.7% | 5.1% | 2.4% |
| ROE | 18.0% | 5.5% | -6.4% | 0.7% | 5.9% | 5.2% |
| Net Debt/EBITDA | 1.2x | 3.1x | 9.6x | 3.4x | 2.4x | -1.0x |
| Interest expence / Average debt | 1.3% | 2.3% | 4.2% | 5.8% | 6.5% | 0.7% |
People
|
|---|
| Insider ownership | 0.9% | 0.9% | 0.9% | 0.9% | 0.9% | 0.0% |
| Employees | 6,444 | 5,982 | 5,800 | 5,983 | 6,110 | 2.1% |
| Revenue/Employee, th. $ | 211 | 210 | 197 | 195 | 203 | 4.5% |
PTC Inc. ($PTC) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 307 | 308 | 315 | 313 | | 7.1% | 9.9% | 8.1% | 2.0% |
| EBITDA | 38 | 44 | 44 | 34 | | 47.5% | 52.7% | 35.2% | -15.8% |
| Net Income | 14 | 8 | 17 | 13 | | | | | -24.3% |
Balance Sheet
|
|---|
| Cash | 292 | 300 | 267 | 260 | | 68.2% | 23.2% | 2.2% | -7.2% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 743 | 643 | 693 | 643 | | 1.5% | -9.7% | -2.7% | -9.7% |
Ratios
|
|---|
| Gross Margin | 72.9% | 72.8% | 74.1% | 75.0% | | 1.6% | 2.0% | 2.3% | 2.1% |
| EBITDA Margin | 12.5% | 14.3% | 14.1% | 10.8% | | 3.4% | 4.0% | 2.8% | -2.3% |
| Net Income Margin | 4.5% | 2.6% | 5.4% | 4.2% | | 7.7% | 3.0% | 5.7% | -1.5% |
Peers in Application Software
Below we provide PTC Inc. benchmarking against other companies in Application Software industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| nFusz Inc ($FUSZ) | | | | | 433.3% |
| CloudCommerce Inc ($CLWD) | | -38.1% | 247.6% | 40.9% | 301.1% |
| Seven Stars Cloud Group, Inc. ($SSC) | | 134.7% | 663.8% | 310.3% | 161.7% |
| Aurora Mobile Limited ($JG) | | | | 304.9% | 150.8% |
| Intelligent Systems Corporation ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (150 companies) | 27.9% | 14.0% | 14.3% | 15.7% | 15.2% |
|---|
| PTC Inc. ($PTC) | | -7.5% | -9.1% | 2.1% | 6.7% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Skkynet Cloud Systems Inc ($SKKY) | 99.7% | 97.4% | 98.0% | 97.6% | 96.5% |
| hopTo Inc ($HPTO) | 91.8% | 87.8% | 95.9% | 98.2% | 95.4% |
| Aware, Inc. ($AWRE) | 75.4% | 87.2% | 90.3% | 94.6% | 92.3% |
| Alteryx, Inc. ($AYX) | 77.5% | 80.5% | 81.3% | 83.4% | 91.0% |
| Aspen Technology, Inc. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (149 companies) | 62.8% | 61.7% | 63.8% | 64.4% | 65.3% |
|---|
| PTC Inc. ($PTC) | 72.5% | 73.3% | 71.4% | 71.7% | 73.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Aspen Technology, Inc. ($AZPN) | 34.5% | 42.2% | 46.0% | 45.2% | 43.3% |
| ANSYS, Inc. ($ANSS) | 45.9% | 45.8% | 45.1% | 41.9% | 41.4% |
| Paycom Software, Inc. ($PAYC) | 15.1% | 19.5% | 35.1% | 34.4% | 35.9% |
| j2 Global, Inc. ($JCOM) | 41.6% | 40.6% | 41.7% | 36.5% | 35.7% |
| Adobe Inc. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (151 companies) | -10.3% | -10.7% | -5.3% | -4.2% | -3.3% |
|---|
| PTC Inc. ($PTC) | 20.2% | 10.0% | 4.3% | 11.0% | 12.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| TimefireVR Inc ($TFVR) | 0.0% | 350.5% | 4.3% | | 1,021.9% |
| MGT Capital Investments Inc ($MGTI) | 0.0% | 36.5% | 221.4% | 129.8% | 344.5% |
| Integrated Ventures Inc ($INTV) | | | | | 199.9% |
| ShotSpotter, Inc. ($SSTI) | | 18.3% | 28.9% | 27.1% | 24.3% |
| Ellie Mae, Inc. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (152 companies) | 2.8% | 2.7% | 3.0% | 2.3% | 2.4% |
|---|
| PTC Inc. ($PTC) | 1.9% | 2.4% | 2.3% | 2.2% | 2.9% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InsPro Technologies Corp ($ITCC) | -558.9% | | | | 127.4% |
| Manhattan Associates, Inc. ($MANH) | 64.8% | 78.7% | 99.3% | 102.5% | 80.9% |
| Intuit Inc. ($INTU) | 34.2% | 23.7% | 52.1% | 72.6% | 66.8% |
| Aspen Technology, Inc. ($AZPN) | 133.4% | | | | 58.1% |
| Paycom Software, Inc. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (178 companies) | -14.4% | -13.1% | -9.8% | -11.8% | -9.8% |
|---|
| PTC Inc. ($PTC) | 14.4% | 2.7% | -2.4% | 2.7% | 5.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Upland Software, Inc. ($UPLD) | | | 16.4x | 115.6x | 16.7x |
| Nuance Communications, Inc. ($NUAN) | 7.9x | 5.7x | 5.3x | 7.1x | 15.2x |
| Asure Software Inc ($ASUR) | 3.4x | 4.5x | 3.6x | 9.5x | 14.5x |
| SS&C Technologies Holdings, Inc. ($SSNC) | 1.7x | 7.3x | 4.6x | 3.1x | 8.5x |
| Avaya Holdings Corp. ($AVYA) | | | | | 7.4x |
| |
|---|
| Median (69 companies) | -1.4x | -1.0x | -0.9x | -0.9x | -0.7x |
|---|
| PTC Inc. ($PTC) | 1.2x | 3.1x | 9.6x | 3.4x | 2.4x |
