Shares of manufacturing software maker Parametric Technology (PMTC) are down $5.16, or almost 19%, at $22.04, after the company this morning cut its fiscal Q2 outlook below analysts’ estimates owing to a missed contract in Europe and weakness in its North American business.
The company expects $300 million in Q2 revenue, and EPS, excluding some costs, of 26 cents to 28 cents per share. The company had previously projected $305 million to $320 million.
The Street has been modeling $315 million and 34 cents.
CEO James Heppelmann remarked that “Our second quarter license revenue was impacted by a large transaction in Europe that did not close and lower than expected performance in North America,” adding that maintenance license revenue “continued to perform well,” as did its “MKS” division.
Added Heppelmann, “We are strategically positioned in attractive growth markets and remain confident in our ability to drive long-term growth and profitability.”
In a conference call following the announcement, Heppelmann said that the European deal, which would have contributed $10 million, looked certain but slipped because of a “change in control” at the single large customer. The deal is now “at risk,” he said. He said North American weakness appeared not to be an issue of demand — North American ISM data on manufacturing appear strong. Rather, he chalked it up to problems with PMTC’s own “execution” in the region.
Heppelmann said the weakness was “only a temporary setback,” and remarked,
Clearly, our dependence on big deals is a risk factor for us, as we experienced this quarter. As you know, we’ve been working hard to expand our sales capacity to create a bigger pipeline of opportunities. And at the same time, we’re actively installing new systems and processes to have better visibility to that pipeline.
Parametric expects to report full Q2 results on April 26th.
The shares have received one downgrade this morning, from J.P. Morgan’s Sterling Auty, who cut his rating to Neutral from Overweight.
Shares of competitors Ansys (ANSS) are down 91 cents, or 1.4%, at $63.50, and Autodesk (ADSK) is down 51 cents, or 1%, at $41.24.
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