Parametric Technology Corporation (PMTC)
F3Q10 Earnings Conference Call
July 28, 2010 8:30 AM ET
Kristian Talvitie – VP, Corporate Communications
James Heppelmann – President and COO
Cornelius Moses – CFO
Barry Cohen – EVP, Strategic Services and Partners
Michael Olson – Piper Jaffray Companies
Ross MacMillan – Jeffries & Company, Inc.
Ben Rose – Battle Road Research
Sterling Auty – JP Morgan Chase & Co.
Yun Kim – Gleacher & Company, Inc.
Steven Koenig – Longbow Research LLC
Blair Abernethy – Thomas Weisel Partners
Previous Statements by PMTC
» Parametric Technology Q2 2010 Earnings Call Transcript
» Parametric Technology Corporation F1Q10 (Qtr End 01/02/10) Earnings Call Transcript
» Parametric Technology Corporation Q4 Results Call Transcript
Good morning, ladies and gentlemen, and welcome to the PTC’s Third Quarter Fiscal Year 2010 Results Conference Call. (Operator Instructions) I would now like to introduce Kristian Talvitie, PTC’s Vice President of Corporate Communications. Please go ahead.
Thanks, (Inaudible). Good morning, everybody. Before we get started here, I just want to quickly read through the Safe Harbor Statement. This Q&A session may include forward-looking statements regarding PTC’s products or anticipated future operations or financial performance. Any such statements will be based on the current assumptions of PTC’s management and are subject to risks and uncertainties that could cause actual events and results to differ materially. Information concerning these risks and uncertainties is contained in PTC’s most recent Form 10-K and on form 10-Q on file with the SEC.
All financial measures in this Q&A will be non-GAAP financial measures. A reconciliation between the non-GAAP measures and the comparable GAAP measure is located on our Investor Relations website at www.ptc.com.
With that, we’ve got – with us here today is Jim Heppelmann, Barry Cohen, Neil Moses and Dick Harrison. With that I’m going to turn it over to Jim for some brief opening comments, and then we’ll go right into Q&A.
All right. Thank you, Kristian, and good morning to everybody on the call. Based on the press released and the earnings transcripts, which we provided to you already, I think you’ll agree that we had a very solid Q3. We came in above our revised guidance both for revenue and for earnings, which we were pleased with.
Naturally, this gives us a lot more confidence in our full year plan and we’re pretty confident in that billion dollars in revenue and a dollar in earnings. That would land us naturally at 25% earnings growth for the year, which of course is ahead of the 20% earnings growth long-term goal that we have, so we’d be sort of in the lean column for the first year on that, a little bit of upside.
In the quarter, we had very strong PLM results again as well as some sort of renewed strength in the reseller segment and then the desktop business, which was good to see. But the most important thing, I think as we continue to see this market share expansion phenomenon continue in the PLM sector, we talked about landing two more of these big important Domino competitive win. One of them was this Continental Automotive account that we have a press release on yesterday or the day before.
Continental was €20 billion in 2009, so it’s a very large company. This is a company, who had largely standardized on the (inaudible) and product line and we went through a comprehensive benchmarking process, proof of concept and then as a result of all that, the (inaudible) concluded a very significant order, which would be one of the large orders in the quarter.
We also won another Domino account. I’m not yet able to disclose the name, but it’s a medical technology company. Again, that company is about $20 billion of revenue. This was an account that was somewhat brain field though; I will note the one PLM installation they did have was from Dassault. Again, a long comprehensive benchmark in process and PTC was elected the winner.
So, if you add the two Dominos we secured in Q3 to the goal we had to the year, that puts us at 15
, which was our twice revise goal. I have a little piece of good news here this morning, which is we’ve already secured one more Domino account in Q4. This one is Target. Target, you’ll probably recognize as the $65 billion retailer, know very much sort of step the standards with private label products.
Target is the case where they have an active installation of a competitor’s product. Now, they began to question whether or not that installation was providing adequate value. They went through a one-year comprehensive benchmarking process and at the end of that, decided to make a switch to PTC, which we’re very pleased about. So, the reason these Dominoes and the competitive displacements in general are so important is I think they’re just adding to our revenue growth abilities and I’ll remind you what we said before, is that today’s Domino is tomorrow’s annuity, and our ability to take these accounts and these wins and monetize them for years to come is really sort of the basis for the magnitude of the PLM business that we’re building.
In the quarter, we also made some incremental investments for growth, in terms of sales capacity and a few other areas. We will continue to do that in Q4 for our plan. We told you in June, we were slowing that down a bit, just to cautious, I think we’re going back to our original plan based on where Q3 landed in their outlook for Q4.