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Parametric Technology's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Stocks in this article: PMTC

With us this morning, we have Jim Heppelmann, Jeff Glidden and Barry Cohan. And with that, I'd like to turn the call over to Jim.

James E. Heppelmann

Thanks, Tim. So thank you, and welcome to all of you who are spending your time with us here this morning. As you saw on our press release last night, PTC is off to a good start in fiscal 2012 with solid Q1 results. Just a quick note that throughout my comments here this morning, I'm going to be referring to non-GAAP numbers.

In Q1, revenue of $320 million was at the high end of our guidance and up about 20% year-over-year with about 12% of that growth being organic. The revenue mix was aligned with our expectations with Enterprise revenue increasing 21% organically, and 38% overall, while Desktop revenue was up 5%, all of which, of course, was organic.

EPS was $0.35 a share, which was up 59% year-over-year and well above our guidance. That's largely because operating margins were better than 18%, a full 5 points higher than a year ago. So Q1 looks to me like a solid quarter largely devoid of surprises other than perhaps the positive element of higher margins driving higher EPS.

I'd like then to move on to the bigger news in the press release, which is the changes we're making to our profitability outlook, both short and long term. You will note that we significantly raised our profit guidance both for FY 2012 and for our longer term model. To provide some context, you will recall that after I became president in 2009, we outlined to our shareholders a goal to deliver a 20% EPS growth rate for 5 years through 2014. Our strategy was to do this by growing revenue about 12% annually and combining that with the operating margin, expansion of about 1 percentage point per year, resulting ultimately in an operating margin target of 20% by 2014.

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