Product lifecycle management service provider Parametric Technology Corp. (PMTC) reported a 73.8% year-over-year plunge in profit for the third quarter, hurt by charges and a decline in quarterly revenues. Non-GAAP earnings per share dropped 39.4%, but topped analysts' expectations by four cents. The company also issued earnings and revenue guidance for the third quarter of fiscal 2009, and lowered earnings and revenue forecast for the full year 2009.
In a statement, chairman and chief executive officer, Richard Harrison said, "On a constant currency and non-GAAP basis, our total Q3 revenue was down 11% compared to last year, which in this challenging economy highlights the stability provided by our maintenance and services businesses."
The Needham, Massachusetts-based company reported net income of $3.79 million or $0.03 per share in the third quarter, sharply lower than $14.47 million or $0.12 per share in the prior-year quarter.
The results for the latest quarter include $6.6 million restructuring charge to reduce operating expenses, $11.5 million of stock-based compensation expense, $9.4 million of acquisition-related intangible asset amortization and in-process research and development expenses as well as $8.3 million of income tax adjustments.
Excluding special items, non-GAAP net income for the quarter declined to $22.93 million or $0.20 per share from $39.22 million or $0.33 per share in the year-ago quarter. On average, 9 analysts polled by Thomson Reuters expected earnings of $0.16 per share for the third quarter. Analysts' estimates typically exclude special items.
Total revenues for the quarter declined to $226.16 million from $271.75 million in the same quarter last year, but topped nine Wall Street analysts' consensus estimate of $222.87 million.
License revenues for the second quarter dropped to $49.45 million from $79.91 million in the prior-year quarter, and revenues for service totaled $176.71 million, down from $191.84 million in the same quarter of the prior year.
Operating income for the quarter plunged to $1.99 million from $31.92 million in the prior-year quarter, while total costs and expenses was $224.17 million, down from $239.83 million in the year-ago quarter.
The company noted that operating margins and earnings per share for the quarter were stronger than expected primarily due to stronger than expected license revenue, favorable currency impact as well as a lower than anticipated tax rate.
For the first six months, the company reported net income of $15.62 million or $0.13 per share, lower than $43.20 million or $0.37 per share in the prior-year period.
Excluding special items, non-GAAP net income for the period dropped to $57.96 million or $0.50 per share from $106.04 million or $0.90 per share in the year-ago period.
Total revenues for the year-to-date period declined to $691.84 million from $770.78 million in the same period last year.
"We are very optimistic about the long-term opportunity for PTC and will continue to make strategic investments that we believe are critical to delivering value to our customers and gaining market share, while remaining mindful of our goal of 20% non-GAAP EPS growth for 2010 and beyond," president and chief operating officer, James Heppelmann added.
Looking ahead to the fourth quarter, the company expects GAAP earnings in a range of $0.09 to $0.13 per share, and non-GAAP earnings in the range of $0.25 to $0.30 per share. The company also anticipates fourth quarter revenues between $235 million and $245 million. Analysts expect the company to report earnings of $0.31 per share on revenues of $241.32 million for the fourth quarter.
For fiscal 2009, the company lowered GAAP earnings guidance to about $0.24 per share from the prior outlook of $0.34 per share. Further, the company now expects non-GAAP earnings of $0.77 per share, down from the prior outlook of $0.80 per share. The company trimmed its full year revenue forecast to about $931 million from the prior outlook of $940 million. Analysts expect the company to report earnings of $0.77 per share on revenues of $929.88 million for fiscal 2009.
PMTC closed Tuesday's regular trading session at $12.96, up $0.04 or 0.31% on a volume of 1.76 million shares, higher than the three-month average volume of 1.48 million shares.
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