Shares of PTC (NASDAQ:PTC) have gotten crushed today, down by 11% as of 11:35 a.m. EDT, after the company reported fiscal second-quarter earnings results. The industrial software specialist beat expectations for the quarter, but guidance for the fiscal third quarter left a little to be desired.
Revenue in the fiscal second quarter was $315.5 million, ahead of the consensus estimate of $312.3 million in sales. License and subscription bookings were $112 million, and recurring software revenue was $266 million. Adjusted operating margin was 21%. That all translated into non-GAAP net income of $45 million, or $0.38 per share. Wall Street was expecting adjusted profits of $0.34 per share.
"We are pleased with our second quarter financial performance with revenue, margin and EPS at or above the high end of our guidance range," CEO James Heppelmann said in a statement. "Bookings growth of 18% year over year in constant currency was driven by a strong quarter for IoT, with IoT bookings growth well above the estimated 30-40% market growth rate. In the first quarter following the completion of our subscription business model transition, we were pleased to deliver Subscription bookings mix above 90%."
Investors were disappointed that PTC lowered its fiscal 2019 revenue guidance. The company now expects total revenue this fiscal year to be $1.313 billion to $1.325 billion, down from the forecast issued in January that called for sales of $1.325 billion to $1.34 billion. Analysts are currently modeling for $1.33 billion in revenue for fiscal 2019. Adjusted earnings per share guidance was unchanged at $1.75 to $1.85.
On the conference call, Heppelman explained the guidance reduction:
We've trimmed our full-year fiscal '19 bookings guidance by $15 million or 3% at the midpoint, reflecting two specific challenges we've faced, each contributing about half of the bookings reduction. First, as part of our go-to-market transformation, we had planned for a certain level of new IoT and AR sales capacity to support accelerating market demand. Given the tight labor market we've been operating in for some time, now particularly within the enterprise software, competition for top sales talent has extended recruitment times and that's put us a bit behind in our hiring plans.
PTC also announced a CFO transition, with Kristian Talvitie starting the role next month. Current CFO Andrew Miller previously announced that he was retiring by the end of the fiscal year.