2024-02-16 08:02:00 ET
There's little doubt that the manufacturing sector is slowing, but what does that mean for industrial software company PTC (NASDAQ: PTC) ? The company's first-quarter 2024 results showed that it's continuing to grow its crucial metric by a mid-teens rate, and its guidance for the full year suggests it will keep growing and generating value for investors. Still, will PTC hit its guidance? Here's what you need to know before buying the stock.
There's no way around it. This is an investment article about PTC, so there will be three-letter acronyms! Please stick with me -- it will get easier as I go along. ARR refers to PTC's key metric: Annual run rate. This represents "the annualized value of our portfolio of active subscription software, cloud, SaaS , and support contracts as of the end of the reporting period." As with all software companies focused on a subscription model, this is the critical number to follow as it tends to convert to free cash flow (FCF).
After delivering 13% organic constant currency ARR growth of 13% in 2023, management expects ARR growth of 11% to 14% in 2024 and conservatively models 12% ARR growth to hit its guidance for FCF of $725 million.
For further details see:
PTC Is Great. Here's Why You Shouldn't Buy It