PTC expects to take a $15 million hit to revenue in the second half of its current fiscal year, which ends September 30, 2010. The company says the revised guidance is 100% about currency fluctuation. We see PTC as the canary in the PLM coal mine.
PTC this week lowered its revenue guidance for its fiscal Q3 and FY’10, which ends June 30, 2010.
The previous guidance was in the range of $345 million to $245 million. The new guidance for the quarter is $230 million to $240 million. For the fiscal year, which ends September 30, 2010, PTC now says it expects revenue of $1 billion, down from a previous estimate of $1.02 billion.
In total, PTC expects $15 million less in revenue in the second half of FY 2010 than it previously estimated. A company representative told VEKTORRUM the revised guidance is specifically related to currency fluctuations. The revised revenue forecasts are based on an exchange rate of $1.20 USD = €1.00, down from $1.46=€1.00 in its initial estimate. PTC President and COO James Heppelmann (and incoming CEO in October) says PTC is “gaining significant market share” but that currency fluctuations are too large to ignore, requiring the updated estimates. Earnings per share estimates are unchanged.
The Final Analysis
SEC rules generally do not require providing revenue estimates, but they do require updating revenue estimates when “substantial” changes are foreseen. PTC has always been more prone to revise guidance than others we cover in technical graphics, even if it means taking a short-term hit on its stock price.
We regard PTC as the bellweather in PLM and technical graphics. They felt the current recession first, and suffered as much in 2009 as any of its peers, save Autodesk with its retail customer base and high percentage of sales based on construction. PTC’s mix of enterprise and SMB customers gives them a realistic exposure to the entire manufacturing marketplace.
If there were no currency fluctuations, PTC would be on pace to exceed its original revenue goals for the current fiscal year. The company’s first revenue forecast for FY2010 was $980 million, at a time when 1 Euro was equal to $1.46 USD. During PTC’s first quarter (October-December 2009), it raised its full-year revenue forecast to $1.15 billion, based on better-than-expected sales. In April of 2010 it reiterated the $1.15 billion forecast, even though the Euro had dropped to $1.36. It was only when the Euro dropped to $1.20 that PTC found it necessary to revise its forecasts.
