Summary
The valuation looks high at first glance; however, the share price is being supported by the CAGR opportunity of ~30-40% in Internet of Things.
The company transitioned to a subscription-based revenue model, which recognizes revenue differently and this impacted the financial statements over the past few years.
The strengthening ecosystem will allow the company to retain and win new customer relationships.
Synopsis
PTC Inc. (PTC) is a software solution leader in the computer automated design ("CAD"), Product Lifecycle Management ("PLM"), Service Lifecycle Management ("SLM") and high growth Internet of Things ("IoT") markets. The opportunity is the potential for margin expansion from a change in monetization to a subscription-based model and the company's ability to remain the market leader in the expansion of the IoT markets. The current market size of the IoT market segment was near $1 billion at the end of 2017 and is expected to grow at a rate of 30-40% per year. The company derives around $100 million annually from its IoT business and looks to capture significant market share with their wide base of software solutions moving forward.
(Source: Koyfin)
