Amazon Isn’t Coming After Cisco, After All

Cisco Systems (NASDAQ: CSCO) had a bit of a scare last week when a report suggested that habitual disrupter Amazon.com (NASDAQ: AMZN) was contemplating entering the lucrative market for networking switches that Cisco has long dominated. Cisco shares fell 4% on the news. With Amazon Web Services (AWS) being the largest cloud infrastructure provider in the world, it made quite a bit of sense that the e-commerce titan would consider such a move, seeing as how its cloud operations continue to grow along with its own internal needs for networking switches. Amazon could save on costs by in-sourcing the component (Amazon is a prominent Cisco customer) while also selling them to third-party customers.

Cisco and its investors can now breathe a sigh of relief. Kind of.

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A partial denial

MarketWatch reports that Amazon is “not actively building a commercial network switch,” according to a statement that Cisco provided to the outlet. The Cisco spokesperson said AWS CEO Andy Jassy confirmed as much to Cisco CEO Chuck Robbins, noting that “Cisco and AWS have a long-standing customer and partner relationship.” An AWS spokesperson backed up the statement without elaborating further.

However, Cisco may not be entirely out of the woods, as Amazon declined to comment on whether or not it was developing networking equipment for internal use. The statement merely says that Amazon isn’t interested in commercializing any such product to sell to third-party customers. Amazon still very much has a strong incentive to utilize “white-box” switches with customized open-source software that would allow it to better customize the performance for its own specialized needs.

If Amazon did so, Cisco could stand to lose a prominent customer. The silver lining is that Cisco’s customer concentration risk isn’t too great, noting in its most recent 10-K that “no single customer accounted for 10% or more of revenue” in each of the last three fiscal years. That said, Cisco has been struggling with revenue growth for years, with growth oscillating somewhat inconsistently. Losing a major customer like Amazon wouldn’t help in that regard.

The good news for Cisco is that it has withstood these types of “white-box” threats in the past, which are not new concepts in the networking space. Those types of offerings may save costs up front, but don’t offer the kind of support that large enterprise data center operators need at scale. Saving up front only to incur greater expenses in support and maintenance later on is a poor trade-off, and IT managers factor all of these variables into their long-term operating budgets.

Still, if there’s any company that can innovate in order to find a way to bring more of its networking needs in-house, it’s Amazon.

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Slowly but Surely, Smart Speaker Adoption Continues to Rise

The smart speaker market continues to be among the most promising spaces within consumer electronics in years. NPR and Edison Research released a fresh report this week on the growing trend among U.S consumers. The report comes six months after their prior report. The results are derived from an online survey of 909 U.S. adults. Approximately 18% of Americans now own a smart speaker, or roughly 43 million people. That’s up from 16%, or 39 million people, in January.

Here are some other notable findings in the report that have broad implications for Amazon.com (NASDAQ: AMZN), Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) subsidiary Google, and Apple (NASDAQ: AAPL), among other smart speaker players.

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Survey says

The market is well into the early mainstream phase of adoption. The report considers first adopters to be those who have owned a smart speaker for a year or more, and this group represents around 26% of the installed base. The remaining 74% of smart speaker owners would fall into the early mainstream category, having owned their devices for less than a year.

Usage among these two groups is also on the rise. Nearly half of first adopters (48%) say they currently use smart speakers “more often” now compared to when the first month they owned one. Among early mainstream adopters, over half (54%) say they use the devices “more often.”

The data also strongly suggest that once a consumer buys one smart speaker, they buy more over time: 55% of first adopters own two or more, while 46% of early mainstream adopters own two or more. That suggests that the longer a person owns a smart speaker, the more inclined they are to purchase more to place in other rooms around the house. The purchase intent data supports this notion too, with 44% of first adopters say they’re planning to buy another smart speaker; 58% of early mainstream adopters say likewise.

By offering a lineup of affordable smart speakers, Amazon and Google are best positioned to grow their respective installed base, as it would cost a fortune to put an Apple HomePod in every room.

Smart-home technology applications are garnering considerable interest. Of those interesting in buying another smart speaker, using the device to “control appliances or lights in more rooms of your house” ranks as the top reason, with 65% of this subset expressing interest. Getting up to speed with the news is also a popular use case, with approximately 70% of each adopter category listening to news on smart speakers; 37% of smart speaker owners listen to two hours of news each week.

Commerce and advertising

Voice commerce is also emerging as a promising opportunity for companies. Earlier this year, Google announced a new program called Shopping Actions that would help it challenge Amazon in voice commerce. In terms of consumer behavior, it’s still less common compared to listening to music or getting news, but the opportunity is still there.

Re-ordering known items is much more likely than buying new products, as it’s hard to conduct product research using a voice interface. This is partially why Amazon hopes you have an Echo in your kitchen, so you can easily ask Alexa to fill up your fridge and have those groceries delivered with Amazon Fresh.

Consumers are also increasingly open to advertising, with a whopping 81% of owners either saying they “like” or “don’t mind” brand-sponsored features. A solid 67% of respondents would be open to product endorsements delivered via smart speaker. That’s good news for Google.

There aren’t any groundbreaking revelations in the report. Rather, the data mostly serve as more evidence of how sustained smart speaker adoption is. This is a booming product category. Too bad Apple might miss out on smart speaker growth this year, according to Canalys.

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PTC (PTC) Q3 2018 Earnings Conference Call Transcript

PTC (NASDAQ: PTC) Q3 2018 Earnings Conference CallJul. 18, 2018 5:00 p.m. ET

Contents:

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  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon, ladies and gentlemen. Thank you for standing by, and welcome to the PTC 2018 third-quarter conference call. [Operator instructions] This call is being recorded. If anyone has any objections, you may disconnect at this time.

I would now like to turn the call over to Tim Fox, PTC’s senior vice president of Investor Relations. Please, go ahead.

Tim FoxSenior Vice President of Investor Relations

Good afternoon. Thank you, Kim, and welcome to PTC’s 2018 third-quarter conference call. On the call today are Jim Heppelmann, chief executive officer; Andrew Miller, chief financial officer; and Barry Cohen, chief strategy officer. Today’s conference call is being broadcast live through an audio webcast, and a replay of the call will be available later today on our Investor Relations website.

During this call, PTC will make forward-looking statements including guidance as to future operating results. Because such statements deal with future events, actual results may differ materially from those projected in the forward-looking statements. Information concerning factors that could cause actual results to differ materially from those in the forward-looking statements can be found in PTC’s most recent annual report on Form 10-K, quarterly reports on Form 10-Q and other filings with the U.S. Securities and Exchange Commission, as well as in today’s press release.

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The forward-looking statements, including guidance provided during the call, are valid only as of today’s date, July 18, 2018, and PTC assumes no obligation to update these forward-looking statements. During the call, PTC will discuss non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures can be found in today’s press release made available on our Investor Relations website.

With that, I’d like to turn the call over to PTC’s CEO Jim Heppelmann.

Jim HeppelmannChief Executive Officer

Great. Thank you, Tim. Good afternoon, everyone, and thank you for joining us. As usual, I’d like to begin with a review of the third-quarter results and then provide some perspectives on the significant milestones and progress that we achieved during the quarter.

Q3 was a solid quarter across the board with standout performance in our IoT segment. Assuming FX rates have remained constant with our guidance back in April, bookings and recurring software revenue would have been at the high end of our guidance, and total software revenue would have exceeded the high end of our guidance. As reported, total revenue was at the high end of our guidance despite lower professional services revenue, and operating margin and EPS each came in above the high end of our guidance. Bear in mind that our results this quarter benefited from a higher-than-forecasted amount of perpetual license revenue, driven by a geographic mix of bookings that were slightly more weighted to Asia-Pac, where we still offer perpetual licenses.

We’ll discuss our subscription program in more detail later in the call, including today’s announcement to end perpetual licensing globally on January 1, 2019. While subscription mix was lower than our guidance, ACV was within our guidance range. And with the global end-of-life of perpetual coming in two quarters for all products except Kepware, we remain on track with the recurring revenue projections that underlie the long-range model we presented at LiveWorx. Momentum around that recurring revenue model continued in Q3, driving software revenue growth of 10%, recurring software revenue growth of 15% and ARR growth of 15%.

This is the sixth consecutive quarter of double-digit ARR growth. Total deferred revenue grew 33% year over year, and 91% of our software revenue was recurring this quarter. These metrics make it clear that we’ve established a solid foundation for our growth going forward. Bookings grew 26% to $113 million, near the high end of our guidance even in the face of FX headwinds in the quarter.

Overall, we were pleased with our bookings performance through the first three quarters of the fiscal year and believe we’re on track to the constant currency bookings growth we had previously guided. To summarize my commentary on Q3, I’ll once again orient my discussion around our three strategic initiatives designed to maximize long-term shareholder value which are, first, to increase our top-line growth; second, convert to a subscription model; and third, expand our margins. Let me start by discussing our progress on the growth front. I will mostly frame my comments around our year-to-date growth performance.

Year-to-date bookings grew 15% overall and 11% in constant currency. From a geographic perspective, Americas has delivered solid performance with 8% bookings growth, and that’s compared to a strong growth of 17% over the same period last year. Europe year-to-date bookings grew 3% in constant currency but also against very strong results in fiscal ’17, where we had 26% constant currency growth. Also, the $7 million megadeal that we closed early in Q4 of ’17 instead of Q1 of ’18 as originally planned significantly impacts Europe’s year-to-date bookings growth percentage.

As we discussed with you on our Q2 earnings call, our outlook for Europe called for strong sequential bookings growth this quarter due to the timing of large deals, and the European team came through with 25% sequential constant currency bookings growth in the third quarter. Performance in APAC, with year-to-date constant currency bookings growth of more than 20%, has been driven by solid performance in China, Taiwan and Korea, and benefited from an easier comparison due to a weak Q3 performance in Japan. Japan continued to progress well on its recovery, driving sequential growth again in Q3 and is tracking to a full-year recovery plan. Based on our performance in Japan year to date and a good forecast for Q4, we believe we put our FY ’17 challenges in Japan behind us.

Turning now to our business unit performance. Let’s start by discussing IoT, which is, of course, our highest growth business. For those of you who joined our June LiveWorx event, you were clearly exposed to some of the industry’s most cutting-edge IoT technology. You saw a strong partner ecosystem that helps us to engage customers around the globe.

And if LiveWorx got you excited about PTC’s momentum in IoT, then our Q3 results will add an exclamation point. Our bookings growth in the quarter well exceeded the estimated market growth rate. IoT bookings in the quarter were basically neck-and-neck with PLM bookings. Customer expansions once again accounted for over half of our ThingWorx bookings, and the number of 6-figure deals grew by a record 80% year over year, driven by these expansions.

If you exclude the eight-figure megadeal from Q1 of 2017, then year-to-date IoT bookings growth is well above the 30% to 40% estimated market growth rate. Recurring IoT software revenue growth accelerated again in Q3, posting 7% sequential growth and 33% year-over-year growth, reflecting the compounding benefit of our maturing subscription model that’s now starting to happen. During the quarter, we saw strength across the major IIoT use cases, geographies and vertical markets. I’ll begin with SCO or smart, connected operations, which you may recall is a $500 million market growing north of 40%.

PTC is uniquely positioned to win in this market with our combination of ThingWorx, Kepware and Vuforia and with the new partnership we secured with Rockwell Automation during this past quarter. Through this partnership, which addresses the major secular trend of IT and OT convergence, PTC and Rockwell will align our respective factory automation technologies, and both companies will sell a combined software suite into our respective markets. This will significantly increase PTC’s credibility and our go-to-market capacity in smart, connected operations. On top of that, Rockwell Automation will invest $1 billion in PTC, and Blake Moret, the company’s chairman and CEO, will join our board of directors.

Though it’s only been a month, and we’re still really just getting started. We see ample evidence that this partnership will really move the needle for us. In Q3, we closed new and expansion SCO deals in both discrete and process manufacturing. Some examples of new wins include, for example: in high tech, a win at Hitachi; in semiconductors, a win at Micron Technology; and in automotive, a win at a leading Scandinavian automotive OEM.

In the SCP or smart, connected product market, we closed a number of meaningful expansions and new engagements. NCR signed a major expansion for the next generation of IoT offerings for the retail and hospitality industry. With their massive point-of-sale presence, NCR represents a major channel into retail for our IoT business, mirroring in some ways what Rockwell Automation brings to us in industrial automation. In the medical device space, we landed a nice deal with Medtronic.

And lastly, within SCP, we expanded our OEM relationship with telecom equipment giant, Ericsson, who’s embedding ThingWorx and Vuforia Studio into their IoT Accelerator platform. Ericsson too represents a major go-to-market channel into their customers, which are the global telecom providers. In augmented reality, as I’m sure many of you witnessed at LiveWorx, PTC has some incredible technology that addresses a variety of use cases across the industrial landscape. Our AR business is reported within the IoT number, but if we drill more specifically into AR, we achieved record AR bookings in the quarter, almost triple the year-ago quarter and up almost 50% sequentially.

While it’s still early in this market, Vuforia has been put into production at an accelerating pace, and we now have over 10,000 enterprises who have purchased or are test driving this technology for service and maintenance instructions, factory operator instructions and virtual product demonstrations. We have a very strong leadership position in AR. Interest levels are sky high, and we’re seeing commercial adoption accelerate. I’m confident that we’re seeing another S-curve forming, and it will become increasingly material to PTC’s growth rate over time.

On the partnership front, we were pleased to see continued momentum with our strategic partnership with Microsoft. We closed ten new joint deals in the quarter. And as mentioned at LiveWorx, there are more than 100 active joint opportunities in the pipeline globally. One great example of our collaboration was a Q3 win at Elekta, which is a medical diagnostics company.

We will implement ThingWorx and Azure IoT to connect thousands of customer assets, providing visibility in the product performance and maximize uptimes for clinicians across the globe. And beyond the collaboration with our ThingWorx IoT platform, we continue to deepen our partnership around Microsoft Dynamics for connected field service. And of course, there’s a lot of exciting collaboration happening with Microsoft’s HoloLens and Azure teams on the AR and VR front, or what Microsoft calls MR for mixed reality. We’re very excited to begin ramping our strategic partnership with Rockwell Automation.

As you can imagine, a host of activities have kicked off around sales and services enablement, account targeting, branding and product integration planning among many other work streams. We look forward to providing you updates on our progress with Rockwell over the coming quarters. To summarize on IoT and AR, Q3 was another strong indicator that adoption of these technologies is accelerating across a wide range of vertical markets, geographies and use cases. Our growing ecosystem of partners further strengthens PTC’s leadership position in these exciting growth markets.

So let me turn now to our solutions business. Year to date, double-digit CAD bookings growth has well outpaced market growth rates, and our outlook for the balance of the year remains strong. CAD continues to benefit from our go-to-market optimization initiatives, evidenced now by ten consecutive quarters of double-digit bookings growth coming out of our reseller channel, as well as a very strong product offering. On the CAD product front, Creo 5.0, which was released back in March, has some breakthrough new capabilities for additive manufacturing, sometimes called 3D printing, that we highlighted at LiveWorx such as fully integrated topology optimization.

This is a major competitive advantage in the market today because no other CAD tool can optimize geometry within the CAD environment. Others do optimization by exporting the data out of CAD and into a stand-alone software that runs outside the CAD tool, but then the data that’s created can’t easily be returned to the CAD environment, which effectively creates a broken tool chain problem. We don’t have that problem with Creo. Now complementing our internal product development in CAD, we announced an exciting new strategic partnership with ANSYS at LiveWorx.

We will be embedding ANSYS’ breakthrough real-time simulation called Discovery Live inside Creo to create the first fully integrated CAD and real-time simulation solution. This announcement and demonstration was one of the biggest highlights of LiveWorx, and this amazing technology combination will extend Creo’s competitive market position for years to come. We’re planning an initial launch of Creo with embedded Discovery Live simulation later this year. And over time, we plan to integrate the full breadth of ANSYS simulation suite into Creo.

So stay tuned for more details on the ANSYS relationship over the coming quarters as well. Turning to PLM. Following a sequential decline in Q2 due to the timing of large deals, the PLM team delivered a solid Q3 with year-over-year growth in the low double digits. Year to date, PLM bookings are tracking just ahead of market growth rates, and the Q4 pipeline is very solid.

We continue to expect this business to deliver full-year growth at or above the market. Let me turn now to our second top-level initiative to drive shareholder value, which is our transition to a subscription model. We delivered subscription ACV within our guidance range despite FX headwinds. But due to a very strong Q3 performance in Asia-Pac, where we still sell perpetual licenses, perpetual revenue was higher than forecasted.

This resulted in a subscription mix a little below our guidance but still up 1,400 basis points from Q3 of 2017. Subscription adoption trends remain strong across the globe. And today, we announce that as of January 1, 2019, we’ll be ending perpetual licensing globally except for Kepware. We’re very pleased with the momentum around the subscription transition, and we have high confidence in our long-term subscription and recurring software revenue targets we provided to you in June.

Let me wrap up my comments by discussing our third top-level initiative to drive shareholder value, which is to further increase our operating margins. In Q3, our operating margin was above the high end of our guidance, due primarily to higher perpetual license mix, and was within our guidance range when accounting for mix even despite FX headwinds. We expect greater than 200 basis points of margin expansion in fiscal ’18, then to achieve rapidly accelerating margin expansion in fiscal ’19 and beyond, driven again by the compounding benefit of multiple years of our maturing subscription model. In closing, I’d like to reiterate our commitment to the exciting long-range plan for PTC that we shared a few weeks ago at LiveWorx.

We’ve made great progress over the past few years as evidenced by the performance of our core business; by our leadership position in the high-growth IoT and AR markets; by our business model transition to subscription; and our focus on disciplined cost and portfolio management. We’re firmly on track to transform PTC into one of the premier software companies in the world. With that, I’ll turn the call over to Andy, who’ll review the financial highlights with you.

Andy MillerChief Financial Officer

Thanks, Jim, and good afternoon, everyone. Please note that I’ll be discussing non-GAAP results and guidance. Q3 bookings of $113 million were near the high end of our guidance despite a $2 million FX headwind, representing year-over-year constant currency growth of 23%. I will remind you that Q3 ’17 presented a relatively easy compare due to Japan’s underperformance last year.

But overall, we are pleased with our bookings results. Year to date, bookings have grown 11% constant currency and 13% constant currency if you adjust for that $7 million megadeal that closed early in Q4 ’17 instead of Q1 ’18. Total revenue was at the high end of our guidance, and operating margin and EPS were above the high end of our guidance. Results in the quarter benefited from the higher-than-forecasted perpetual revenue.

Offsetting this upside, however, was an FX headwind of just over $3 million and $4 million lower-than-forecasted professional services revenue. Also note that adjusted for FX, recurring software revenue would have been at the high end of our guidance range. Total revenue of $315 million was up 8% year over year. Software revenue was up 10% despite a 1,400 basis point increase in our subscription mix.

Subscription revenue grew 69%, and total recurring software revenue grew 15%. Approximately 91% of our Q3 software revenue was recurring. Total deferred revenue, billed plus unbilled, increased year over year by $301 million or 33%. Billed deferred revenue was up 4% due to the timing of quarter end, which was June 30 this year versus July 1 last year.

Recurring billings on July 1 this year were about $39 million. So on an apples-to-apples basis, billed deferred would have increased 12%. ARR grew 15% year over year to almost $1 billion. Our support conversion program continues to progress well with 22 direct customers converting their support contracts to subscription at an ACV uplift of more than 50%.

And in our channel, the new program continues to gain traction with 92 conversions in the quarter. We believe that the conversion opportunity within our customer base is substantial and will play out over many years. Continuing through the PL. OPEX of $186 million was within our guidance range, and Q3 operating margin of 18% was 90 basis points above the high end of our guidance.

EPS of $0.36 was $0.02 above the high end of our guidance. We estimate that higher than forecasted perpetual revenue and the lower tax rate together drove a $0.06 benefit, offset by the negative impact from FX and lower services revenue, resulting in $0.02 of upside to the high end of our guidance. Moving to the balance sheet. Cash and investments of $321 million were down $34 million from Q2 ’18, and we completed the ASR program, repurchasing $100 million of stock.

Now turning to guidance. We are adjusting our guidance to reflect current FX rates. We expect bookings in the range of $451 million to $468 million, a reduction of $5 million at the midpoint due to the $7 million negative impact from currency. This represents growth of 8% to 12% year over year or 12% to 16% when adjusting for that $7 million megadeal that closed early.

We now expect the subscription mix of 77% for the full year, reflecting a higher expected proportion of overall bookings from APAC, where we still offer perpetual software until January 1, 2019. We expect to exit the year around 82% mix and to achieve our 85% target mix in FY ’19. As Jim mentioned in his prepared remarks, we are confident that this modest mix shift does not impact achieving the long-term targets we provided at LiveWorx. We expect fiscal ’18 total revenue of $1.248 billion to $1.253 billion, a decrease of $5 million at the midpoint from our previous guidance, driven primarily by FX headwinds of $11 million and a decrease in professional services revenue, both partially offset by higher perpetual license revenue.

We are raising total software revenue guidance by about $3 million at the midpoint to $1.08 billion to $1.084 billion, driven by higher perpetual revenue, partially offset by FX. This represents growth of 9% to 10% despite a subscription mix 800 basis points higher than last year. Fiscal ’18 recurring software revenue is expected to grow 14%, driven by approximately 68% growth in subscription revenue, and recurring software revenue is expected to exceed 90% of total software revenue for the year. We now expect operating margin of approximately 18% to 19%, an increase of 100 basis points above our previous guidance, with rapid acceleration beginning in fiscal ’19, as the compounding benefit of multiple years of our maturing subscription business model is realized.

With a tax rate of 8% to 9% for the full year, we expect EPS of $1.41 to $1.46, an increase at the midpoint of approximately $0.08 over our previous guidance, which is growth of 22%. We have provided an EPS bridge in the guidance section of our prepared remarks document to assist you in modeling the puts and takes from our prior guidance. We continue to expect fiscal ’18 free cash flow of $210 million to $220 million, year-over-year growth of 96% at the midpoint. Adjusted free cash flow is expected to be $214 million to $224 million, which excludes $4 million of cash payments related to our October 2015 restructuring.

As with operating margin, we expect free cash flow to accelerate significantly in fiscal ’19 as the subscription model matures. Turning to Q4 guidance. We expect bookings in the range of $135 million to $152 million. Revenue is expected to be $318 million to $323 million.

Q4 operating expenses are expected to be $180 million to $183 million, resulting in an operating margin of 21% to 22% and EPS of $0.41 to $0.46. With that, I’ll turn the call over to the operator to begin the QA.

Questions and Answers:

Operator

Thank you. [Operator instructions] And our first question comes from Steve Koenig with Wedbush Securities.

Jim HeppelmannChief Executive Officer

Hello, Steve.

Andy MillerChief Financial Officer

Hi, Steve.

Steve KoenigWedbush Securities — Analyst

Hi, everyone. Thanks very much for taking my questions. Let’s see. If I have only one, I’m going to ask you guys, any sign of trade frictions impacting the global demand environment? You guys are in a pretty good position to see those kind of impacts, and anything kind of expectations around that coming up? And if I could just ask you, the IoT software revenue, recurring grew nicely.

The total software revenue decelerated a little bit from the nice Q2 performance. Just can you parse out a little bit what’s happening with perpetuals in IoT? Was there some swing there?

Andy MillerChief Financial Officer

Yes, let me answer that one. Basically, the subscription mix in IoT went up 1,700 basis points from a year ago. We had a large, almost $2 million, perpetual order a year ago, which helped with the revenue a year ago. So it’s all driven by subscription mix.

The recurring IoT software revenue grew 33%. I think we were 25% or 26% with the fact that we had a big perpetual revenue number a year ago.

Jim HeppelmannChief Executive Officer

Yes. And on the question about trade fiction, I mean we had, overall, a strong bookings quarter, and it was solid here in the U.S. So I ask myself the same question, but I don’t think we have any evidence right now of that. It’s something we should keep an eye on.

But I think as of this moment, we haven’t seen anything.

Operator

Thank you. Our next question comes from Saket Kalia with Barclays Capital.

Jim HeppelmannChief Executive Officer

Hello, Saket.

Saket KaliaBarclays Investment Bank — Analyst

Hey, Jim. Hey, Andy. Hey, guys. Thanks for taking my question here.

Maybe for you, Jim. Strong performance in APAC, where perpetual is, of course, more than normal. I think we saw that in this quarter’s mix. We’re also discontinuing perpetual worldwide starting January 1.

Can you just talk about culturally, where that region is in accepting subscription? And how well do you think the sales force is trained to perhaps sell that way in the region after January 1?

Jim HeppelmannChief Executive Officer

Well, I think the way we look at this, Saket, is if we were to go a little bit deeper into the different regions of APAC, Japan has been strongly on subscription for a long time. And really, the laggard has been China. But if you look at Q3 over a year ago, about one-third of our business was subscription. And if you look at this past Q3 in China, about two-thirds of our business was subscription.

So actually, the trend is quite positive. And I think at some level, what — if you ask, what do Chinese customers want? Well, they want to steal our software, mostly. That’s what we learned over the years. So I think to a certain extent, we look around and say, have other companies been successful with subscription models in China? And the answer is absolutely.

And so we’re not really worried about cultural and so forth. We think we’ve got a good business model. We’re two-thirds of the way there and made amazing progress in the last year. We just need to finish the job, and that’s what we plan to do.

Andy MillerChief Financial Officer

And Saket, the one thing I want to add is, you actually said, where norm is to buy perpetual. With two-thirds being subscription, the norm is actually subscription for us there now. So one is you got to frame it from that perspective. Simply the fact that we just — that we still offer perpetual, just a modest shift in mix of geos, a couple of large deals frankly is what drives the — that subscription mix number is highly sensitive, pretty much every $1 million is 1%.

Jim HeppelmannChief Executive Officer

Right. And we had a strong bookings quarter. Frankly, we had a strong bookings quarter in China, and a lot of the upside ended up being perpetual. So we’re not reading much into this.

And it actually doesn’t mean much because pretty soon, there won’t be a choice, and we’re pretty confident that customers will keep buying our software because that’s actually the trend.

Operator

Thank you. Our next question comes from Ken Talanian with Evercore ISI.

Jim HeppelmannChief Executive Officer

Hello, Ken.

Andy MillerChief Financial Officer

Hi, Ken.

Ken TalanianEvercore ISI — Analyst

Hello. Thanks for taking the question. Actually just a follow-up on Saket’s question. Do you attribute any of the strength in APAC to perpetual prebuying that might present a headwind next calendar year?

Andy MillerChief Financial Officer

Not yet, not yet. We think there’ll be a little bit in the fourth quarter, and we’ve got a program running for that. We have an assumption, and obviously, we have good experience in end-of-life-ing now in Americas and Western Europe. So it gives us a little bit more data to determine how much we think is going to happen in the fourth quarter.

But the bigger piece will be in the first quarter. The other thing I’d say is that the size of that business compared to Americas and Western Europe is so much smaller that even though you would think behaviorally they might drive perpetual buy, it’s just not that big of a business.

Jim HeppelmannChief Executive Officer

Yes. And keep in mind, we didn’t announce the end of perpetual sales until today.

Andy MillerChief Financial Officer

Until today, yes.

Jim HeppelmannChief Executive Officer

So unless those customers were listening in on investor conversations like this, they would have no reason to really understand that’s coming. So I don’t think that was the factor. I think that just there were some deals where the customer had a strong preference, and our sales guys had a strong preference to close the deal, and that’s what happened.

Operator

Thank you. Our next question comes from Monika Garg with KeyBanc.

Monika GargKeyBanc — Analyst

Hi. Thanks for taking my question. I have a question on the bookings guidance range. Looking at Q4 bookings guidance range, it’s about $17 million, between low end $135 million, high end $152 million.

But if I look last year or last quarter, the range has been kind of more tighter, somewhere $8 million to $10 million. Is anything leading to larger range? And what needs to happen for bookings to come toward the higher end of the range? Thanks.

Andy MillerChief Financial Officer

So first off, you got to realize that the guide is about 40% higher than a typical quarter for us. So it makes sense it should be bigger. And frankly, when you look back historically at our performance in the fourth quarter, a quarter where there’s a lot more big deals, and there tends to be more variability. For example, last year, we ended $12 million, I think it was, above the high end of our guidance.

The year before, we ended at $21 million above the high end of our guidance. The year before, I don’t know the exact amount over the guidance, but I know we were well over, for example, the internal forecast. So we think it’s more appropriate for us to have a bigger guidance range in the fourth quarter, especially because big deals can be subject to timing, and a big deal can move the number, and there’s a lot more of it in our fourth quarter than in other quarters.

Operator

Thank you. Our next question comes from Jay Vleeschhouwer with Griffin Securities.

Jay VleeschhouwerGriffin Securities — Analyst

Thanks. Good evening. Hello?

Andy MillerChief Financial Officer

Hi, Jay. Yes, we’re here.

Jim HeppelmannChief Executive Officer

We’re waiting for your question.

Jay VleeschhouwerGriffin Securities — Analyst

Sorry. A question for you, Jim. You’ve assembled over the last year or so quite a good set of partnerships. And in history of the company, which I go back ways with you, it’s pretty unprecedented in terms of business and technology partnerships.

The question I have is, how are you managing that? That is to say, you have you, Matt, Andy, Barry, etc., at the top of the company, managing that and cultivating that. But how are you permeating these relationships more deeply in the company, both in terms of technology, business and the field? And so that’s kind of a broader corporate question. And just a shorter-term question for you, Andy. Your services revenue were below expectations, as you pointed out.

Is there anything going on in there in terms of the timing, mix or scope or number of engagements that we should be aware of? Or is it mostly currency?

Andy MillerChief Financial Officer

Actually, only a small amount of currency, primarily just timing of some of the big engagements. That’s really the driver. And we’re continuing — we continue to try to make sure we’re doing the most valuable part of engagement and have a really strong SI ecosystem. And so we continue to kind of partner with them and try to give them as much as we can because it makes them — helps them drive demand, frankly, to our platform.

Jim HeppelmannChief Executive Officer

I think if I could say, we want to forecast and guide as accurately as possible. That said, a decline in service revenue kind of washes off our back, it doesn’t mean that much to us because it’s not our strategy to grow that business. But going back to your first question, I do think we are doing something that is unprecedented with partnerships, sort of like what we’ve done with operating margins was unprecedented, and get back to double-digit growth rates was unprecedented for much of the time you tracked our company, Jay. But I think we looked and said, hey, we do want to be one of the best software companies in the world, and what are all the things we need to do? And yes, subscription and growth and profit, but ecosystem, whether it’s the SIs or the partnerships with Rockwell and ANSYS and Microsoft, and I might add NCR and Ericsson and so forth.

So we think the partnerships are very important. Now we have done a special thing already with Microsoft and Rockwell, and that is we’ve taken one of our long-term executives, Tony DiBona, and put a little organization together and said, Tony, you head that organization, and your job is to make these partnerships successful. So this is an executive who’s reporting to me, and his job is to make Microsoft and Rockwell successful. Now he’s a bit of an overlay function, so the revenue will still roll up through Matt and so forth.

But we want to make sure that we have people who are dedicated, and it is their day job to do the right amount of enablement and support and overlay sales support and so forth. So that’s what we’re doing in terms of managing these partnerships. We’ll probably do something like that with ANSYS, but it’s just a bit premature because we don’t have the product in the market yet. So that’s really, mostly at this point, an RD project.

But I do think we’re doing different and unprecedented things to try to make these partnerships work, and I’m pretty optimistic it’s going to work because Tony is a very talented executive when it comes to managing projects like this.

Andy MillerChief Financial Officer

The one thing I would add is in addition to Tony and his team, right now, there’s very specific and dedicated, for Rockwell, program management at both companies that are driving combined work streams around account targeting, sales enablement, product integration. There’s a whole set of work streams. And in fact today, there was — in fact, this week, there’s been a summit. There are 50 Rockwell folks here, including a number of senior execs, basically launching all of these work streams and launching the entire program.

So we can really accelerate the success we hope to have here.

Operator

Thank you. Our next question comes from Rob Oliver with Baird.

Jim HeppelmannChief Executive Officer

Hello, Rob.

Rob OliverBaird — Analyst

Hi, guys. Hi, how are you? Thanks for taking my question, guys. Jim, question for you. Obviously, there’s a lot of enthusiasm about the Rockwell partnership on the smart, connected operations side.

But on smart, connected products, two of the three reference customers that you listed were potential channels. And I just wanted to talk a little bit about kind of where we are in the evolution of SCP and then perhaps get a little bit more color on how you kind of view those potential channel relationships.

Jim HeppelmannChief Executive Officer

Yes, actually, Rob, that’s a very insightful question because what happens is we actually do have trouble sometimes determining when is one of these logos is a customer and when is it a channel. Because in many cases, like if you take — if we take NCR for example, they want to put ThingWorx in their point-of-sales, let’s call them cash registers just to simplify things, and they want to deliver that product to the customer side and then monitor it. So at that point, they’re a customer. But now they say, we actually want to go into the store and offer a set of services and frankly, the ability to connect assets from vendors other than ourselves.

So now they start looking like a go-to-market partner, sort of like the equivalent of Rockwell doing that in factories, and NCR is doing it in stores. So I think many SCP customers end up actually not just using the technology but delivering services to their customer, for hire, based on the technology, and then they end up actually paying us a royalty for that. So it’s an interesting question. I mean, it’s a good problem to have.

I don’t care whether they’re customers or partners. As long as they’re successful, it’s going to be great either way. I think though that, for us, the breakthrough with SCP is really the partnership with Microsoft because the thing that’s always true in a smart, connected product use case is there’s products all over the world, and you want to collect data and bring it back to some central source. That source, by definition, is going to be a cloud, and it’s either going to be a private cloud or a public cloud.

If it’s a private cloud, we’ll just sell software. If it’s a public cloud, we don’t want to be competing with Microsoft, saying, OK, we have a cloud for you. No, we don’t want to have a cloud. We want to have a partner named Microsoft to have that infrastructure because we don’t want to be putting a proposal that — in front of the customer that Microsoft sees as competitive, because then we end up in an unhealthy and unnecessary competition.

So I think the partnership with Microsoft is really, really important, and I’m very pleased with the performance we had this past quarter. It feels like we wanted to see some good evidence that, that partnership was working, and in fact, we did. So it feels pretty good.

Andy MillerChief Financial Officer

The other thing is the 10 deals that we closed, they’re actually a little bit larger than a first deal that we typically close ourselves. So that’s actually interesting. Now ten is a small number, so I don’t want to call it a trend, but there’s definitely — they’re larger.

Operator

Thank you. Our next question comes from Sterling Auty with JPMorgan.

Jim HeppelmannChief Executive Officer

Hello, Sterling.

Sterling AutyJ.P. Morgan — Analyst

Hey. Thanks, guys. So want to drill on, on the commentary and the talk of the strength in the second half from Asia has been factored into the guidance. Based on the guidance for the second half, I guess it would imply that maybe another region is not as strong as what you originally had in the guide.

Kind of curious which region that might be if that’s the right read and kind of the factors for it.

Andy MillerChief Financial Officer

Well, you’re talking about a few million dollars on $450 million — $460 million midpoint. So when we — we have multiple paths to get to our final number. As we look at the most likely outcomes of those paths, it’s a little bit more weighted to APAC, where we actually have a little bit more perpetual revenue. I mean, we basically took our fourth quarter guide down by 3% as far as the mix.

So that’s just one or two deals flipping one way or another. We had to make a call. That’s the call we made. There’s no — bottom line is that the geos are — Americas is performing to our plan.

EMEA has had a nice recovery. APAC is a little stronger than we expected. Japan’s hitting the plan for the year, has a nice Q4 forecast. So there’s nothing to read into that.

Operator

Thank you. Our next question comes from Gabriela Borges with Goldman Sachs.

Gabriela BorgesGoldman Sachs — Analyst

Great. Good afternoon. Thanks for taking the question. Jim, maybe just on Discovery Live.

I’m curious maybe based on the feedback that you’ve gotten since the announcement and your understanding of the composition of PTC’s CAD base, do you have a sense for what percentage or what types of customers within the CAD base would be interested in buying through the Discovery Live partnership? And then one clarification for Andy if I could. I think you mentioned a couple of times that there’s large deals in the pipeline for PLM in 3Q and 4Q of this year. Just curious how the volume of large deals compares relative to last year and if there’s anything interesting happening there from a vertical standpoint.

Jim HeppelmannChief Executive Officer

OK, I’ll take the first question on Discovery Live. So just to simplify things for the benefit of everybody. Think of Discovery Live being like a spellchecker in a Word processing document. You used to write a lot text, and then you’d stop writing, and you’d spellcheck.

You’d find all the mistakes. You’d fixed them all and then go back to writing more new text. And now, like in Microsoft Word, that spellcheck is running all of the time. And as you’re typing or misspelling a word, it’s already showing you that doesn’t look like a word to me.

And if you make a capitalization mistake, it’s correcting it and so forth. So now take that kind of metaphor, if you will, and bring it over to CAD. We used to design, design, design. Stop designing, go simulate and find a whole bunch of problems.

Try to fix them all, and then go back to designing. And now as you design, it’s watching over your shoulder. And literally every change you make, it tells you what are the implications of that change. So — and that’s a long-winded answer to your question.

But what I want to say is, who wouldn’t want a spellchecker in Microsoft Word? Anybody on the phone call here that have no use for a spellchecker? So I think that everybody wants it. Every single user on Pro/E, especially the ones that are creating geometry, would benefit from this capability. Now we have to figure out. It’s kind of an amazing thing, and we don’t know how fast and how far the penetration will go.

But I will tell you, we should end up with a very high penetration of this technology into our CAD base. I would be surprised if that didn’t happen.

Andy MillerChief Financial Officer

And your second question. So in the third quarter, large deals were back in our normal range. So we had a lot more than we had, obviously, the quarter before. The pipeline had a lot more, and we closed a lot more.

We had good close rates in the quarter. And as we look at Q4, it looks like a Q4 pipeline with lots of large deals, including the average size is a little bit larger, frankly, in a fourth quarter typically than in other quarters. So it looks like a Q4 pipeline in a software company.

Operator

Thank you. Our next question comes from Matt Hedberg with RBC Capital Markets.

Jim HeppelmannChief Executive Officer

Hello, Matt.

Matt HedbergRBC Capital Markets — Analyst

Hey, guys. Thanks for taking the question. I wanted to circle back on Azure. At Analyst Day, I think, Jim, you may have mentioned that there are about 100 deals that you guys are working on.

I know you just said on a prior question that you are quite happy with the results. I’m wondering if you could give us a little bit of an update on what those deals look like. I’m curious, are most of these from customers within your base that are using added functionality? Or are these — is it a lot of net new? Just trying to get a better understanding for what that customer profile looks like.

Jim HeppelmannChief Executive Officer

Yes, give me a second. I actually have a list here, and I have to be careful. I probably can’t tell you the names, but let me try and see if I could characterize them. Hang on.

OK, I found the page. So let me first say, just looking at the list, it’s lots of different types of customers. Many of which are not our current customers and some are. I see a couple of medical device companies.

I see three or four, let’s just call them, diversified industrial companies. I see a few electronics companies. So — and frankly, half the names on the list I don’t know. So that doesn’t prove they’re not our customers, but they’re not significant customers where I would recognize their names.

So I do think it’s kind of just a mix here. We’re being successful working customers we may already know. But we’re also being successful pursuing new prospects that either — neither one of us knows them or maybe Microsoft knows them, and we just found them or perhaps Microsoft introduced them to us. So it’s kind of a — it’s a good combination, which I think is a good thing.

Operator

Thank you. Our next question comes from Matthew Broome with Cowen and Company.

Matthew BroomeCowen Company — Analyst

Thanks. How is demand for Navigate during the quarter?

Andy MillerChief Financial Officer

Strong quarter for Navigate. Strong quarter for PLM usually means a strong quarter for Navigate. But this is a strong quarter for Navigate, one of the highest ones actually historically.

Jim HeppelmannChief Executive Officer

I don’t think it was a record. But it was…

Andy MillerChief Financial Officer

Not a record, but it was very close.

Jim HeppelmannChief Executive Officer

Yes.

Operator

Thank you. Our next question comes from Gal Munda with Berenberg Capital Markets.

Jim HeppelmannChief Executive Officer

Hello, Gal.

Gal MundaBerenberg Capital Market — Analyst

Hey, guys. I just have a question on the PTC and Rockwell partnerships. So you guys said that there are some programs that have kicked off now. A lot of — already you had some time to maybe assess where you guys seeing the potential to go to market together.

And if you look at that, can you talk a bit about the customer overlap? If you’ve managed to kind of assess that bit, how much of the customers from your base overlap with them? And how much don’t, and maybe proportionately, then show what the opportunity is when they go out to market with the IoT offering as well?

Jim HeppelmannChief Executive Officer

OK, yes. That’s an interesting question. Let me first say that during the courting process, we actually did pursue some customers together, and we did do field integration of the products just to test the whole thesis with real, live customers. And those tests came back very positive.

So we actually do have some sales campaigns running. But let’s say we’re now trying to figure out how to make that much larger because Rockwell has roughly 35,000 major customers and several thousand people in their sales force. I think 1,000 of which carry a quota. So to us, that’s a massive channel to market.

But it takes work to train and enable such a channel. But to your question about the overlap-underlap, I’d say it’s about one-third overlap and two-thirds underlap. For example, Rockwell has quite strong presence in pharmaceutical. PTC does almost nothing in pharmaceutical.

Rockwell does a lot in chemicals, food and beverage. These are not typical — oil and gas, mining and material. These are — now we both do automotive. However, it turns out that Rockwell has incredible strength in North American automotive.

And for PTC, that’s a relative weak spot. So I think there’s kind of a mix. But I think definitely what will happen is Rockwell — well, Rockwell Automation to be precise, will bring PTC into a lot of new accounts. And we, in turn, will bring Rockwell Automation into a lot of new accounts.

So I think there’s the immediate selling of the combined suite. But then how could each of us leverage? Could Rockwell, once introduced into a PTC account, sell more industrial automation hardware, for example? Perhaps. Could PTC sell CAD and PLM and other products that we have in our suite? Perhaps. But I think we just kept it at the level of cross-selling our respective IT, OT convergence suite that by itself could be very, very interesting.

Operator

Thank you. Our next question comes from Shankar Subramanian with Bank of America Merrill Lynch.

Jim HeppelmannChief Executive Officer

Hello, Shankar.

Andy MillerChief Financial Officer

Hi.

Shankar SubramanianBank of America

Hi. Hi, guys. Thanks for taking the question. I have a question on the automotive side.

Could you add some color around the BMW deal? How is this progressing? And maybe as a follow-up, how is the conversation with the other auto OEMs? Do you see any large deals or partnerships coming up in the next three to six months?

Jim HeppelmannChief Executive Officer

Yes, well, first of all, the BMW deal, that’s a very large project, and therefore, we’re still relatively in the early phases, but it’s going very well. In fact, we had a contingent of BMW executives visit us in the last couple of weeks, and it was a very, very positive meeting. So I think things are going well on that project. Now in terms of how do we take that to other automotive companies, well, let me first say, the project we’re doing with BMW is a special project that BMW needs and is highly valuable.

And I’m not exactly sure every other customer would need it. It sits between an SAP order configurator and an SAP production management system. We’re helping BMW figure out if we’re going to build that car as configured that way in one of these 19 factories, a specific one, how would you build it? What would be the bill of material and so forth? So that’s a good project. Now that said, we have a lot of stuff going on in automotive business right now but particularly IoT and factories or what we call SCO.

I mentioned the Scandinavian project. I can tell you, BMW is interested. We’re doing some projects I previously talked about in earnings calls, at Toyota. There’s a number of suppliers.

There’s some North American automotive companies we’re talking to that Rockwell is helping us. So there’s lots of stuff happening in the automotive industry. I would characterize it right now that the biggest entry point into these accounts appears to be IoT in the factory.

Operator

Thank you. Our next question comes from Sterling Auty, JPMorgan.

Jim HeppelmannChief Executive Officer

Hello, Sterling.

Andy MillerChief Financial Officer

Welcome back.

Jim HeppelmannChief Executive Officer

Sterling? You might be on mute.

Sterling AutyJ.P. Morgan — Analyst

Yes, sorry about that. It’s on mute. I’m back. So just one follow-up question on the subscription mix commentary on 2019 that you’re on target to hit the 85% with elimination of perpetual on January 1.

If Kepware is the only perpetual that’s available for three out of the four quarters of fiscal ’19 and you’re still expecting 85% mix, does that kind of suggest that Kepware is north of 10% of the bookings? Or really is that 85% mix something that you can probably blow through in terms of subscription?

Andy MillerChief Financial Officer

No, Kepware is not anywhere near 10% of the bookings. So we are going to try to drive our subscription mix as high as we can. 85% is a good model for today, and we’ll update you as we see ourselves going above that.

Jim HeppelmannChief Executive Officer

Yes, maybe when we think about down-the-road guidance next year or something, we’ll look at what’s the right number. But that’s the number we’ve had out there, and I think at this point, just having announced today, we’re not ready to revisit that yet. We certainly hope we can — I don’t want to use the term blow through it, but let’s say surpass it.

Andy MillerChief Financial Officer

Yes.

Operator

Thank you. That concludes the question-and-answer session. I will turn the call back over to Mr. Heppelmann.

Jim HeppelmannChief Executive Officer

OK, great. Thank you, operator. Thanks to all of you who spent an hour in the phone with us here. I appreciate that.

I think if you step back and look at our Q3 results, it’s obvious once again that we’re making good, strong progress against our three strategic pillars of growth, subscription and margin expansion. I know and you know that, that will drive a lot of long-term shareholder value. So we feel good about the progress we’re making, and we hope that you do too. So thank you, and have a good evening.

Bye-bye.

Operator

[Operator signoff]

Duration: 54 minutes

Call Participants:

Tim FoxSenior Vice President of Investor Relations

Jim HeppelmannChief Executive Officer

Andy MillerChief Financial Officer

Steve KoenigWedbush Securities — Analyst

Saket KaliaBarclays Investment Bank — Analyst

Ken TalanianEvercore ISI — Analyst

Monika GargKeyBanc — Analyst

Jay VleeschhouwerGriffin Securities — Analyst

Rob OliverBaird — Analyst

Sterling AutyJ.P. Morgan — Analyst

Gabriela BorgesGoldman Sachs — Analyst

Matt HedbergRBC Capital Markets — Analyst

Matthew BroomeCowen Company — Analyst

Gal MundaBerenberg Capital Market — Analyst

Shankar SubramanianBank of America

More PTC analysis

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company’s SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

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Here’s a Good Reason to Spend Less on Your Wedding

Getting married is a major milestone, and a potentially expensive one at that. The average U.S. wedding now costs an almost absurd $33,391, and in major cities, like New York, that figure is close to $77,000. Yowza.

Of course, there are lots of good reasons not to spend a fortune on a one-day event. Most Americans are behind on savings, with 40% lacking the funds to cover a mere $400 emergency. But finances aside, here’s another compelling reason to keep your wedding budget to a minimum: It might help stave off divorce.

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According to research by economics professors Andrew Francis-Tan and Hugo M Mialon, having a less expensive wedding correlates to a stronger likelihood of having a marriage last. Specifically, couples whose weddings cost less than $1,000 are less likely to get divorced than those who spend more, while couples whose weddings cost over $20,000 are more likely to see their marriages dissolve.

Now this isn’t to say that having a cheaper wedding guarantees long-term happiness. Clearly, there are many factors that dictate whether a couple ultimately ends up getting divorced. Still, it’s only one of many good reasons to keep your wedding costs to a minimum.

A better use for that money

Tempting as it may be to spend a ton of money on your dream wedding, before you do so, think about what you might be sacrificing for a one-day affair. As mentioned above, most Americans don’t have a fully loaded emergency fund with six months’ worth of living expenses. If you’re one of them, then the $33,000 and change you might otherwise spend on a wedding could instead buy you peace of mind in the face of life’s unknowns.

Then there’s retirement to think about. Imagine that instead of spending $33,391 on a wedding, you spend one-third of that amount and invest the rest over a 30-year period. If your portfolio generates an average annual 7% return during that time, you’ll be sitting on $169,000 after three decades, which will go a long way during your golden years.

Another option? Use that money to pay off your student loans, assuming you’re still carrying them. Or, apply it to your existing credit card balance and break free from that debt.

Finally, you might consider spending less on a wedding and saving that money to buy your first home. Younger American adults these days are waiting longer than ever to buy property, and much of that trend boils down to not being financially prepared. So if you’re sitting on a chunk of wedding money, think about whether you’d rather have a big party or a place to call your own.

Now none of this is meant to imply that you can’t splurge a little on your wedding. If you have the funds and want a formal affair, go for it. But you don’t need to go crazy, either. Rather than pay a premium for every little detail, decide which ones are most important to you and spend your money there. For example, if you’re a foodie, spring for a high-end caterer, but skip the flowers and ask a friend to take pictures rather than hire a photographer.

One more thing: If you are going to ignore this advice and spend a boatload of money on your wedding, be sure not to rack up debt in the process. An estimated 74% of couples who are planning to tie the knot by the end of the year anticipate taking on debt in the process, and that’s a mistake that can not only strain their finances but their marriages on a whole.

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The Motley Fool has a disclosure policy.

Paramount fires its top television executive over comments

Paramount says it has fired the head of its television division for making unspecified comments that drew complaints from employees.

Paramount Pictures CEO Jim Gianopulos wrote in a memo Thursday that Amy Powell had been fired for making comments that were “inconsistent with company values.” The memo did not elaborate on the nature of the statements or where they were made, beyond stating they were said in a “professional setting.”

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The memo said numerous employees complained about Powell’s behavior, and the decision to fire her was made in agreement with the company’s legal and human resources departments.

A message sent to Powell was not immediately returned. She joined Paramount in 2004 and became president of its television division five years ago.

Under her leadership, Paramount supplied shows including “13 Reasons Why” and “The Alienist” to cable and streaming outlets.

HP EliteBook 840 G5, First Take: A solid business-class laptop

HP’s EliteBook 800 Series G5 comes in 13.3-inch (830), 14-inch (840) and 15.6-inch (850) models. I was sent a 14-inch EliteBook 840 to evaluate. Whichever of the three sizes you opt for, you’ll get a solidly designed business laptop that, although it lacks bells and whistles, has plenty going on under the surface.

The EliteBook 840 starts at £1,078 (inc. VAT), which gives you an Intel Core i5-8250U processor with 8GB of RAM and 256GB of SSD storage. HP’s UK website has a variant with a Core i7-8550U, 8GB of RAM and a 512GB SSD for £1,306.80 (inc. VAT). HP sent me a spec that isn’t available off the page in the UK — Core i7-8550U, 16GB of RAM and a 512GB SSD — and has not confirmed this model’s price at the time of writing.

The 14-inch EliteBook 840 runs on 8th-generation Intel Core i5/i7 processors with up to 16GB of RAM and 512GB of SSD storage. The IPS screen comes in touch and non-touch versions, and LTE mobile broadband is available.


Images: HP Inc.

HP’s high-end EliteBooks major on functionality rather than styling. So here we have a very solid silver metal and plastic chassis with a little flex in the lid, but not enough to cause concern. The chassis build feels as though it should withstand knocks and bangs, although the lid might be prone to scratches if it travels without a protective sleeve.

The full HD (1,920 x 1,080 pixel) touch screen is responsive and delivers good image quality. It’s quite reflective though — something that’s particularly noticeable at lower brightness levels. Maximum brightness on the IPS screen, meanwhile, verges on the dazzling. The screen bezels are quite wide, and HP could improve this laptop’s appearance by shaving a few millimetres off all round. This no convertible device — indeed, the screen won’t even push back far enough to sit flush on a desk, but stops at about 140 degrees.

A high-quality screen should be complemented by decent speakers. Tested with some YouTube music streaming, we found the EliteBook 840’s Bang Olufsen audio subsystem to be above average. Volume goes up to impressive levels without distorting, and bass tones are pleasing. Well done HP (and BO).

The keyboard is nicely designed. Keys are well spaced, and bouncy, giving off a dull thunk rather than a more irritating click when pressed. There’s a blue pointing stick between the G, H and B keys which is comfortable to use alongside a pair of buttons that sit above the touchpad. The NFC point is under the touchpad, and there’s a fingerprint reader in the wrist rest.

Right to left: SIM card slot, headphone jack, USB 3.1, HDMI, Ethernet (RJ-45), docking port, Thunderbolt/USB-C, power. The opposite side has another USB 3.1 port (with charging) and s smart card reader.


Image: Sandra Vogel/ZDNet

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There are plenty of ports. A single USB-C Thunderbolt connector and two 2 USB 3.1 ports are joined by a full size HDMI connector and an Ethernet port, as well as a headset jack. There’s not quite enough depth for a full-size Ethernet port, but rather than provide a dongle, HP has used a spring mechanism to pop the underside of the port down when needed. This works well. There’s also a smart card reader on the left edge, and, on the right edge, a pop-in SIM card slot for LTE mobile broadband use. If all this isn’t enough, there’s a proprietary docking connector. HP also has the USB-C Thunderbolt Dock G2 (£105 inc. VAT) and the Elite 90W Thunderbolt 3 Dock (£272 inc. VAT).

All of this adds up to a laptop that copes well with mainstream workloads. I did experience quite a lot of fan noise, though — even when simply browsing a few web pages, writing a document and streaming a bit of music.

The other potential issue is battery life. My anecdotal experience suggests that a full day’s work should be possible if screen brightness goes no higher than around 60 percent. However, commuters might need to administer a power boost during the afternoon to keep the laptop running until they get home.

The EliteBook 840 weighs 1.61kg with a touch screen or 1.48kg without, so it’s no lightweight. It’s also on the bulky side at 32.6cm wide by 23.4cm deep by 1.79cm thick. Still, this is a well made laptop with some high-end components, including above-average speakers.

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