Tuesday, Parametric Technology Corp. (PMTC), a provider of product lifecycle management software solutions, reported a sharp increase in net income for the first quarter. The higher profit was mainly due to the increase in license revenue which in-turn was driven by large enterprise product life-cycle management contracts in North America. Both earnings and revenues for the quarter also came in well ahead of Street expectations.
According to the company, GAAP net income for the first quarter increased to $17.86 million or $0.15 per share from $4.65 million or $0.04 per share in the year-ago period.
Non-GAAP net income for the quarter increased to $33.29 million or $0.27 per share from $17.53 million or $0.15 per share in the year-ago period.
On average, 10 analysts polled by Thomson Reuters expected the company to earn $0.17 per share. Analysts' estimates typically exclude special items.
According to the company, the first quarter non-GAAP results exclude $13.9 million of stock-based compensation expense, $9.0 million of acquisition-related intangible asset amortization and $7.4 million of income tax adjustments. The results include a non-GAAP tax rate of 25% and a GAAP tax rate of 18%.
Total revenue for the quarter increased to $258.42 million from $240.39 million in the year-ago period. Ten Wall Street analysts estimated revenue of $233.18 million for the quarter.
Segment-wise, license revenue rose to $74.81 million from $50.50 million. However, the strong license revenue was offset partially by a slight year-over-year decline in service revenue which declined to $183.61 million from $189.88 million a year-ago.
According to the Needham, Massachusetts-based company, total costs and expenses for the quarter including the cost of license revenue, the cost of service revenue, sales and marketing expenses, research and development expenses, general and administrative expenses and the amortization of acquired intangible assets declined to $236.08 million from $236.85 million a year-ago.
Richard Harrison, chairman and chief executive officer, commented, "We begin fiscal 2010 with strong performance in Q1: total revenue was up 8% year-over-year with license revenue up 48%. Our better than expected performance was driven by large enterprise PLM contracts in North America."
PTC said that PLM license revenue was $45 million, up 143% year-over-year, highlighting the company's leadership position in a large and growing segment of the enterprise software market.
The company said that during the quarter it recognized revenue from leading organizations such as Airbus, BAE Systems, Bucyrus International, Cummins Inc., DRS Technologies, The Danfoss Group, IKEA, Raytheon, Quanta Computer Inc., the United States Army and the United States Navy.
For the second quarter, the company said that it estimates non-GAAP earnings per share to be in the range of $0.14 to $0.20 and revenue to be in the range of $235 million to $245 million.
Analysts estimate earnings of $0.20 per share on revenue of $234.34 million for the second quarter.
Looking forward to the remainder of FY10, the company said that it is increasing the full-year non-GAAP EPS target to $1.00 and the full-year revenue target to $1.01 billion.
Analysts estimate earnings of $0.95 per share on revenue of $976.69 million for the entire fiscal year.
On December 17, 2009 market rival Oracle Corp. said that its second quarter profit rose 12% from last year, helped by higher revenue and improved margins.
PMTC closed Tuesday's last trade at $15.73, down $0.37 or 2.30%, on a volume of 1.04 million shares on the Nasdaq. In the after hours the stock traded up $1.17 or 7.44%.
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