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.
In terms of actual performance, we've been able to exceed the EPS growth goals in 2010 when we had 25% EPS growth, and again in 2011 when we had 26% EPS growth. If you look at how we've accomplished that, you'll see that we've been achieving the 12% revenue growth goal on average, but we've been adding more like 2 percentage points of margin expansion per year.This year, in FY '12, we are again expecting to meet or exceed our revenue growth goal of 12%, and we feel confident that we will expand margins by another 2 percentage points to take our margins to around 20% for the year. And with Q1 coming in at 18.4%, this seems likely to be achievable. Note that if we do achieve our 20% margin target here in 2012, that puts us already at the finish line of the original FY '14 margin expansion plan, which essentially causes our FY '14 goals to be no longer meaningful. So with a couple of years under my belt, and with Jeff having been with us for more than a year, we have a lot of time to analyze the business. We feel comfortable we can maintain that same level of revenue growth going forward and also think there are some changes we can make that would allow us to commit to the 2 percentage points per year margin expansion until such time as we drive our margins into the upper 20s where they arguably should be. So with that in mind and with our 2014 goal becoming obsolete, we are retiring the FY '14 goal and have provided a new set of targets for the 2015 timeframe, which is to drive an 11% to 13% revenue growth rate while increasing our margins to the 25% to 27% range. If you play this out at the midpoints, it would suggest revenue of around $1.85 billion and EPS of about $3 a share in the 2015 timeframe. Read the rest of this transcript for free on seekingalpha.com