Editors Note:

Autodesk has been making new highs but they are not the only company in this space. PTC Inc is also in the CAD SAAS space and they are also making new highs.


PTC - PTC Inc - Company Profile

PTC Inc. develops and delivers software products and solutions worldwide. It operates in two segments, Software Products and Services. The company computer-aided design products, including PTC Creo, an interoperable suite of product design software for design engineers; and PTC Mathcad software for solving, analyzing, and sharing vital engineering calculations. It also offers product lifecycle management products comprising PTC Windchill that provides lifecycle intelligence; and PTC Creo View, which enables enterprise-wide visualization, verification, annotation, and automated comparison of various product development data formats. In addition, the company provides application lifecycle management products, such as PTC Integrity that enables users to manage system models, software configurations, test plans, and defects, as well as model-based systems engineering solutions that connect requirements engineering, architecture modeling, physical product definition, and system verification functions. Further, it offers service lifecycle management products that include PTC Servigistics, a suite of software products that enable a systematic approach to service lifecycle management; and PTC Arbortext, an enterprise software suite that allows manufacturers to create, illustrate, manage, and publish technical and service parts information. Additionally, the company provides Internet of Things products, such as ThingWorx, KEPServerEX, Vuforia Studio, and Vuforia, which enable customers to design, connect, operate and service smart and connected products. In addition, it provides consulting, implementation, training, cloud, and license and support services. The company was formerly known as Parametric Technology Corporation and changed its name to PTC Inc. in January 2013. Company description from FinViz.com.

PTC is similar to AutoDesk (ADSK) and business is booming for both of them. PTC just announced ThingWorx Manufacturing Apps that will drive 3D printers.

They reported earnings of 30 cents that beat estimates for 28 cents. Revenue of $280 million missed estimates for $283.2 million. They guided for the current quarter for earnings of 24-29 cents and revenue in the $288-$293 range. For the full year they guided to $1.13-$1.23 and revenue of $1.16-$1.17 billion.

Expected earnings July 19th.

Like AutoDesk, Adobe Systems, etc, they are shifting from a software sales model to a cloud subscription model. This is impacting current earnings as they lose the short-term cash flow from sales but replace it with the long-term cash flow from subscriptions. Subscriptions now account for 71% of bookings. Q2 license and subscription revenue rose 11%. License and subscription bookings rose 20% to $185 million.

They project that every 1% increase in subscription revenue will add $4 million in annual revenue and 3 cents in earnings.

Shares spiked on earnings then went sideways for two weeks while those gains were consolidated. Shares began rising over the last three days and closed at a new high on Tuesday.

They report earnings on July 19th and the July options expire on the 21st. However with the stock at $59.65, the $60 strike is inflated and the July $65 may be out of range for the limited time. I am recommending we go with the October strikes so the earnings expectations will still be in the premium when we exit before earnings. Because it is a longer strike the premium will not fade as quickly. We get the benefit of the higher strike and lower premium and the potential build in expectations. Just because we buy times does not mean we have to use it.

Buy Oct $65 call, currently $2.30, initial stop loss $54.50.


No New Bearish Plays