Slide 1: Q4'20 Investor Relations Prepared Remarks
Q4’20 Investor Relations PREPARED REMARKS October 28, 2020
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS This presentation includes forward looking statements regarding PTC’s future financial performance, strategic outlook and expectations, anticipated future operations, and products and markets. Because such statements deal with future events, actual results may differ mater
Slide 3: Fiscal 2020 Highlights
FISCAL 2020 HIGHLIGHTS JIM HEPPELMANN – PRESIDENT & CEO 3
Slide 4: News Alert: Strategic Alliance Extended
NEWS ALERT… • A key technology partner; also now one of PTC’s largest resellers. • Customer transactions in 45 countries. Extends and Expands • Landed >250 new accounts to date, ~70% new to PTC IoT and AR customers Strategic Alliance across discrete and process manufacturing. 4
Slide 5: News Alert: FY'21 Virtual Investor Day
NEWS ALERT… Please Join Us… FY’21 Virtual Investor Day December 15, 2020 • Strategy and Secular Growth Drivers • Broad Solutions Portfolio • Go-to-market Strategy investor@ptc.com December 15, 2020 • Attractive Financial Model 5
Slide 6: Delivering Shareholder Value
DELIVERING SHAREHOLDER VALUE • Robust pipeline heading into FY’21 • Industrial Digital Transformation catalyzed by pandemic-driven operational challenges Market • Enabling global team collaboration, remote asset management, and remote front-line Demand worker training • SaaS leader with solutions al
Slide 7: FY'20 Financial Highlights
FY’20 FINANCIAL HIGHLIGHTS ARR Cash Flow 11% - 12% 14% ~(19)% $1,235 - $1,255 $1,270 $285 (18)% ~(5)% ~$232 (3)% ~$210 $234 $221 $214 $1,116 • ARR growth of 14% YoY (11% CC) – at the midpoint of CC guidance. FY'19 FY'20 FY'20 Guidance FY'19 FY'20 FY'20 Guidance • Operating and Free Cash Flow above C
Slide 8: Product Group ARR Performance
PRODUCT GROUP ARR PERFORMANCE Focus Solutions Group Core Product Group Growth Product Group ARR ARR ARR 11% CC 10% CC 11% CC 5% CC 10% CC (4%) CC 32% CC 24% CC 28% CC FY'18 FY'19 FY'20 FY'18 FY'19 FY'20 FY'18 FY'19 FY'20 • FY’20 ARR growth was negatively impacted by • Q4’20 bookings growth in the lo
Slide 9: CAD Highlights
CAD HIGHLIGHTS • ARR growth in the high-single digits (CC) despite macro headwinds. • APAC led regional performance as economic activity recovered. • Upcoming CREO 7 release includes first Atlas-based offering and mainstream Creo Ansys Simulation. • Creo Simulation Live (CSL) gained further market t
Slide 10: NVIDIA Modernizing Design Processes
NVIDIA Modernizing Design Processes The Challenge • In a highly competitive market with frequent product releases, Nvidia faces a common product design challenge – manual handoffs between design engineers and analysts causing delayed design cycle times negatively impacting the time-to-market. The So
Slide 11: PLM Highlights
PLM HIGHLIGHTS • Strong ARR performance with mid-teens YoY growth – well outpacing the market. • Broad-based strength across Geos. • Medical Device and A&D market demand remains in high gear. • Attractive FY’21 pipeline driven by Digital Transformation, new logos and platform consolidation opportuni
Slide 12: TE Connectivity Enterprise Digital Transformation
Enterprise Digital Transformation TE CONNECTIVITY The Challenge • 20-year old unsupported, highly customized enterprise technical document delivery system. The Solution • ThingWorx Navigate, integrated with Windchill PLM and other enterprise systems, accessed by 20K users across purchasing, supply c
Slide 13: IoT Highlights
IOT HIGHLIGHTS • FY’20 ARR growth impacted by macro- related bookings pressure in Q2/Q3. • Q4 bookings doubled QoQ with improved close rates - signaling early recovery. • Strong Americas performance led by major Med Device wins and expansions. • Momentum heading into FY’21; new IoT Solutions create
Slide 14: Stanley Black & Decker Smart Connected Operations
Smart Connected Operations STANLEY BLACK & DECKER The Challenge • Driving improvements in Overall Equipment Effectiveness (OEE) and creating shop floor visibility across disconnected assets and production lines. The Solution • Purpose built ThingWorx applications to expose OEE on factory terminals s
Slide 15: Bridgestone Smart Connected Operations
BRIDGESTONE Smart Connected Operations The Challenge • In a highly competitive market, Bridgestone was looking for new and innovative solutions to drive operational efficiencies, improve throughput and improve quality – all at scale. The Solution • ThingWorx Smart Connected Operations + Thingworx An
Slide 16: AR Highlights
AR HIGHLIGHTS • FY’20 ARR exceeded market growth rate. • Q4 bookings up ~50% YoY; lands seven-figure deal and largest European deal. • 18 six-figure deals doubling previous record. • Chalk creating significant upsell opportunity. • Expert Capture gaining momentum due to COVID-19 operational challeng
Slide 17: Jabil Transform Front-Line Worker Training
Transform Front-Line Worker Training JABIL The Challenge • Transform the pace and effectiveness of front-line production training to improve quality, reduce scrap, and drive workforce efficiency, while lowering attrition. The Solution • Adopted the full suite of Vuforia AR technology including Chalk
Slide 18: Nordex Remote Knowledge Transfer
Remote Knowledge Transfer NORDEX The Challenge • Pandemic-related travel restrictions kept technical experts grounded – stalling the commissioning of new production facilities in India. The Solution • German-based engineering experts leverage Expert Capture to create recorded technical training inst
Slide 19: Onshape Highlights
ONSHAPE HIGHLIGHTS • FY’20 ARR growth of 32% YoY was modestly below plan due to Q2/Q3 macro disruption. • Record bookings quarter in Q4’20; >80% YoY. • ~70% new-logo bookings growth in Q4; >700 competitive displacements in FY’20. • GTM investments paying early dividends in Europe; PTC channel rampin
Slide 20: Rapid Onshape Educational Adoption
RAPID ONSHAPE EDUCATIONAL ADOPTION 360% Growth # of Signups During Annual “Back-to-School” Season 2017 2018 2019 2020 July August September 20
Slide 21: Regional ARR Performance
REGIONAL ARR PERFORMANCE • APAC led regional ARR growth reflecting the earlier and broader re-opening of those economies. • Americas ARR growth of 11% reflected strong ARR growth in our Growth Products Group, low +15% growth double-digit growth in Core Products, partially offset by FSG +11% growth +
Slide 22: Strategic Alliance Highlights
STRATEGIC ALLIANCE HIGHLIGHTS PTC products on Microsoft Ansys technologies Azure embedded in Creo • Strong quarter with >20% QoQ bookings • CSL delivers second-highest bookings quarter growth. to date. • Momentum growing in Europe • Broad demand across a wide variety of contributing 32% of Q4’20 boo
Slide 23: Summary
SUMMARY • Growing market demand from Digital Transformation, PLM, remote asset management and remote front-line worker training, with growing interest in SaaS. • Strong execution during pandemic with 14% (11% CC) ARR growth versus pre-COVID guidance of 12-15%. • Subscription transition complete with
Slide 24: Financial Review
FINANCIAL REVIEW KRISTIAN TALVITIE – EVP AND CFO 24
Slide 25: FY'20 Results vs Guidance - Details
FY’20 RESULTS VS GUIDANCE - DETAILS ARR Cash Flow 11% - 12% 14% ~(19)% $1,235 - $1,255 (18)% ~(5)% $1,270 $285 (3)% ~$232 • FY’20 ARR growth of 14% (11% CC) ~$210 $234 $221 $214 – New ACV grew 10% CC despite a YoY bookings decline in the high single-digits. $1,116 – Churn of 8.6% was slightly higher
Slide 26: Other Operating Performance Highlights
OTHER OPERATING PERFORMANCE HIGHLIGHTS • Strong balance sheet as of September 30, 2020 – Cash, cash equivalents, and marketable securities totaled $335 million – Gross borrowings totaled $1.02 billion, including $1.0 billion of senior notes and $18 million outstanding under our revolving credit faci
Slide 27: FY'21 Guidance Assumptions
FY’21 GUIDANCE ASSUMPTIONS • Macroeconomic conditions related to the COVID-19 crisis remain stable near-term with conditions improving in the second-half of FY’21. • Churn improvement of approximately 100 bps at the midpoint of guidance. • ARR growth includes a ~2% headwind from lower backlog exitin
Slide 28: FY'21 Guidance
FY’21 GUIDANCE ARR Cash Flow 9% - 12% ~55% ~60% ~$365 $1,385 - $1,420 ~$340 $1,270 $234 $214 FY'20 FY'21 Guidance FY'20 FY'21 Guidance Cash from Operations FCF Revenue Diluted EPS 3% -11% 6% - 10% $2.65 - $2.85 $1,550 - $1,600 $2.57 (9)% - 9% $1,458 $1.03 - $1.23 $1.12 FY'20 FY'21 Guidance FY'20 FY'
Slide 29: Guidance Summary Table
GUIDANCE SUMMARY TABLE In millions except per share amounts Guidance YoY ARR $1,385 - $1,420 9% - 12% Cash from Operations ~365 ~55% Free cash flow(1) ~$340 ~60% Revenue $1,550 - $1,600 6% - 10% GAAP Operating Margin 13% - 14% ~flat Non-GAAP Operating Margin 28% - 29% ~flat GAAP EPS $1.03 - $1.23 (9
Slide 30: Q&A
Q&A 30
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Slide 32: Non-GAAP Financial Measures and Reconciliations
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS PTC Inc. NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (UNAUDITED) (in thousands, except per share data) Three Months Ended Twelve Months Ended September 30, September 30, September 30, September 30, 2020 2019 2020 2019 GAAP revenue $ 390,981 $ 335,0
Slide 33: Non-GAAP Financial Measures and Reconciliations (Con't)
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (CON’T) PTC Inc. NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (UNAUDITED) (in thousands, except per share data) Three Months Ended Twelve Months Ended September 30, September 30, September 30, September 30, 2020 2019 2020 2019 GAAP diluted earnings
Slide 34: Non-GAAP Financial and Operating Measures
NON-GAAP FINANCIAL AND OPERATING MEASURES PTC provides non-GAAP supplemental financial information to its financial results. We use these non-GAAP financial measures, and we believe that they assist our investors, to make period-to-period comparisons of our operational performance because they provi
Slide 35: Non-GAAP Financial and Operating Measures
NON-GAAP FINANCIAL AND OPERATING MEASURES Free Cash Flow - PTC also provides information on “free cash flow” to enable investors to assess our ability to generate cash without incurring additional external financings and to evaluate our performance against our announced long-term goal of returning a
Slide 36: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Statements in this document that are not historic facts, including statements about our future financial and growth expectations and targets, are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those