PTC’s 2012 Annual Revenue Results Analysis: After-Sales Services Strategy Paying Off

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Last week, PTC announced its fiscal year first quarter results for 2013. Though its license growth was weak this quarter compared with the same quarter last year, its after-sales services business led by Servigistics experienced strong growth.

PTC has been focusing on expanding its solution portfolio into new product lifecycle management (PLM) industry verticals such as footwear, apparel, medical devices, etc., and on supporting the after-product sales services process, which it calls services lifecycle management (SLM). PTC completed the acquisition of Servigistics in October 2012 to address areas such as technical information, service knowledge management, service parts management, warranty and contract management, field service management, and service logistics.

PTC earnings results of the last quarter highlighted the success that it has achieved by expanding into the after-product sales services domain. Its computer-aided design (CAD) (PTC Creo® and PTC Mathcad®) and PLM (PTC Windchill® and PTC Integrity™) revenue was nearly flat for the year and saw some decline in the last quarter of calendar year 2012. PTC services business including Servigistics and Arbortext saw steady growth throughout the year with a jump in the last quarter or Q4 of calendar year 2012 (see figure 1). For the sake of uniformity, the revenue data has been converted from PTC’s fiscal reporting year to calendar year.


PTC total annual revenue grew by 9.5% in 2012; PTC also saw a steady growth in total revenue each quarter in 2012 compared with 2011 (see figure 2). Most of the growth in Q4 came from its Servigistics product with close to 10 million (USD) in license revenue. The Q4 maintenance revenue (service and support) was also driven higher again by Servigistics, as its implementation requires higher upfront services and support. PTC’s total annual revenue grew by 6.1% in 2012 over that of 2011. Its software license revenue in the Q4 was down despite the acquisition of Servigistics in October 2012 (see figure 3).


Higher maintenance revenue in Q4 of 2012 helped PTC to do slightly better in terms of total revenue, which was about $1.48 million (USD) more than the Q4 total revenue for 2011. A look at regional total revenue revealed that the Americas contributed close to 39.4% of the total revenue in 2012 while Europe was at 37.1%, followed by Asia Pacific at 12.9% and Japan at 10.6%. While it was clear that the Servigistics acquisition was fruitful for PTC, no specific guidance was provided on its performance in some of the niche PLM industry verticals.


PTC’s notable wins in the traditional aerospace industry in 2012 were Embraer and Mitsubishi Aircraft Corp. Under the leadership of its chief executive officer (CEO) James Heppelmann, PTC has extended its vision of the product life cycle into the after-sales services of products. This has created a competitive advantage for PTC, which will lead to further expansion of its customer base in traditional PLM industry verticals.
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