I go away for a few days, and what happens? PTC starts earnings season off very early with a bit of bad news. It’s nothing fatal, and not even all that remarkable a shortfall but even so, the company’s shares fell as much as 23% on the news.

Basically, a large deal in Europe and, apparently, a number of small ones in North America failed to close as forecast. Combined, these shortfalls caused PTC to report revenue of $300 million for its fiscal second quarter, a miss of around 4% compared to its earlier forecast of $305 million to $320 million.

CEO Jim Heppelmann said that the company’s forecasting method wasn’t at fault in Europe but that an unnamed European customer (which would have been a “domino win” if PTC still uses that terminology) had selected PTC, completed contract negotiations, made an internal announcement and started implementation. But then issues within the customer disrupted closure of the transaction and it slipped out of FQ2. This deal would have contributed $10 million in license revenue in FQ2 and PTC will continue to pursue the deal in FQ3 but Mr. Heppelmann did say that the “the dynamics of the situation” [within the customer] put the deal at risk.

The shortfall in North America, on the other hand, does appear to be a PTC execution problem. Mr. Heppelmann said that he needs more time to dig into the underlying causes, but that the “fundamental problem was one where the forecast did not meet the actual” and not the result of a lack of demand.

Europe, excluding the large deal that did not close, and Asia appear to have performed well, as did MKS and the maintenance and services businesses. CFO Jeff Glidden said that the service business was “strong, up both year over year and sequentially, with margins increasing”. Maintenance was “solid” as renewals came in as planned.

Preliminary data suggests to Mr. Heppelmann that no one product class was more affected than any other, with the possible exception of ALM, which performed well. In other words, this wasn’t a PLM or CAD problem. There also aren’t, at this point, any clear trends by vertical.

Mr. Heppelmann acknowledged that the dependence on big deals puts the company’s performance on a quarter-by-quarter basis at risk, since these tend to be lumpy. In fact, Mr. Glidden said that over 60% of revenue comes in during the last month of every quarter; the close rate in last few weeks of March 2012 was lower than expected and caused the miss.

Mr. Heppelmann sees this as a “bump in the road — or better, a substantial pothole” and that the 2015 goals are still within reach even if the original targets for 2012 may not be met.

PTC will report fully on FQ2 on April 26.

PTC’s share price fell as much as 23% after the press release came out, likely because the company believes that it might take several quarters to figure out how its forecasting got so disconnected from actual performance and implement fixes; investors do not like that level of uncertainty. I could point out that sales forecasting is far from scientific; that PLM-as-enterprise-system deals can take years to make it through internal approval processes and that a million tiny things can scupper a deal at the last second; that businesses that rely on last-second closes are likely to miss (and that’s why subscriptions are so attractive) … But you know all of that. PTC was hit in FQ2 with a double-whammy, with misses in 2 regions, for very different reasons; a single miss could likely have been absorbed, but two at once was insurmountable. But to lose almost a quarter of the company’s value as a result of this announcement makes no sense.