Slide 1: Q2'21 Earnings Presentation
Q2’21 Investor Relations EARNINGS PRESENTATION April 28, 2021
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: Q2'21 Highlights
Q2’21 HIGHLIGHTS JIM HEPPELMANN – PRESIDENT & CEO 3
Slide 4: Delivering Shareholder Value
DELIVERING SHAREHOLDER VALUE • Solid Q2’21 bookings growth in the mid - 30% driven by secular tailwinds. Organic bookings grew in the mid - 20%. Market • Industrial Digital Transformation catalyzed by pandemic-driven operational challenges. Demand • Customers creating frictionless supply chains, con
Slide 5: Understanding Active and Total ARR
UNDERSTANDING ACTIVE AND TOTAL ARR • Active ARR refers to the annualized run rate of the book of recurring contracts that are currently Deferred active and is aligned with cash generation on a ARR TTM basis. 10% - 12% Total • We expect organic Active ARR growth of 10% to 12% for FY’21. Active ARR •
Slide 6: Digital Transformation of the Industrial World
DIGITAL TRANSFORMATION OF THE INDUSTRIAL WORLD DIGITAL TRANSFORMS PHYSICAL CAD PLM IIoT AR SaaS Digital Defines Physical Digital Catalogs Physical Digital Connects Physical Digital Recognizes Physical Digital Economizes Physical Digital Unleashes Physical Digital Manages Physical Digital Translates
Slide 7: Product Group ARR Performance
PRODUCT GROUP ARR PERFORMANCE Focused Solutions Group Core Product Group Growth Product Group ARR ARR ARR +13% YoY +10% YoY CC +64% YoY +1% YoY +61% YoY CC (1%) YoY CC Q2'20 Q2'21 Q2'20 Q2'21 Q2'20 Q2'21 • Q2’21 ARR declined 1% YoY (CC). • Q2’21 ARR growth of 10% YoY (CC) in line with • Q2’21 ARR gr
Slide 8: CAD Highlights
CAD HIGHLIGHTS • Continued momentum with ARR growth in the high-single digits (CC), continuing to outpace market. • Solid performance across all geos. • Creo 8.0 announced today. • New logo growth reflects competitive displacements and enables cross selling to other PTC products.
Slide 9: Speed Consulting
Creo Advanced Simulation & Analysis SPEED CONSULTING Challenge Speed needed to quickly design a hypersonic missile to help a leader in aerospace win a “At the end of the day, we want to do contract bidding competition. something remarkable and productive for our clients, and I know Creo can deliver
Slide 10: PLM Highlights
PLM HIGHLIGHTS • Mid-teens ARR growth (CC) and as reported continues to outpace market growth and solid across all geos, especially APAC. • Competitive displacements and new customer wins in the quarter. • Top verticals include Medical Device, Industrials and FA&D.
Slide 11: Kimberly Clark
Digital Thread Competitive Displacement KIMBERLY CLARK The Challenge • Reduce cost of goods produced by eliminating inefficient processes in disparate systems. The Solution • Windchill as the digital backbone of product development data. • Processes simplified and digitalized using PLM. • Windchill
Slide 12: IoT Highlights
IOT HIGHLIGHTS • 20% ARR growth (CC), with strength in all geos. • Bookings grew ~50% YoY. • New logos growing at rapid rate. • Strong performance across all geos. • Strong pipeline generation continuing from Q1’21. • Continuing to see modest improvement in churn.
Slide 13: STRAMA-MPS
Smart Connected Products STRAMA-MPS Challenge Amidst its IoT deployment, Strama MPS responded to an urgent community request to redirect priorities and make protective medical masks. “What we were able to do was to use the technology we had already developed to scale dynamic Solution capabilities an
Slide 14: AR Highlights
AR HIGHLIGHTS • ARR growth across all geos, with strong performance in the Americas, along with Europe and APAC. • Strong growth in the channel. • Significant expansions at enterprise customers across industries. • Pipeline generation experiencing strong growth. • Increasing inclusion of Vuforia Eng
Slide 15: Rockwell Automation
Augmented Reality for Service ROCKWELL AUTOMATION Challenge To prevent a production shutdown and costly delays, Rockwell Automation needed to install a new machine onsite with one of their customers. But with a travel ban in place, they could not send a full team of product experts onsite to complet
Slide 16: Onshape Highlights
ONSHAPE HIGHLIGHTS • ARR growth of >40% YoY with bookings on track to grow more than 100% for FY’21. • Healthy mix of new logo and expansion activity. • Cross-sell opportunities with PTC portfolio increasing. • Strong Education sign-ups and usage continues with enterprise renewals starting. • Strong
Slide 17: Loop Medical
CAD SaaS Collaboration LOOP MEDICAL Challenge To launch the development of a new medical device, Loop Medical was searching for a CAD and data management platform that would run on a Mac without additional virtualization software. “Onshape’s workflow is smooth, and it’s much easier to share our work
Slide 18: Arena Highlights
ARENA HIGHLIGHTS • ARR YoY growth in mid-teens. • Continue to see medical devices and high-tech manufacturing as top verticals. • Renewal rates remained high with declining churn. • Strong upselling and increasing penetration into current customers. • PTC integration going well and roadmap for cross
Slide 19: RefleXion
REFLEXION Exceed Highest Life Sciences Quality Standards Arena Challenge Adopt one product and quality platform to scale with team and product on path to medical device compliance and commercialization. Solution • Control product design and quality actions in Arena from day one—no paper processes. •
Slide 20: PTC SaaS Vision
PTC SAAS VISION 2020 2021 2022 2023 2024 2025 Unified SaaS Portfolio 20
Slide 21: Regional ARR Performance
REGIONAL ARR PERFORMANCE • Americas ARR (CC) growth driven by Arena, AR and solid Core performance. +14% growth • Europe ARR (CC) growth consistent +22% growth +8% growth CC with prior several quarters, with strength in AR and high-teens growth in IoT. +21% growth CC +19% growth • APAC (CC) delivere
Slide 22: Strategic Alliance Highlights
STRATEGIC ALLIANCE HIGHLIGHTS Key technology partner and Ansys technologies embedded global reseller in Creo PTC products on Microsoft Azure • Bookings grew >30% YoY. • One of the stronger quarters to • Sequential double digit ARR growth date in alliance. Strong YoY ARR combined with low churn. • De
Slide 23: Summary
SUMMARY • Strong execution in the quarter with 18% (15% CC) ARR growth, driven by Core and Growth businesses as well as Arena. • Bookings growth across all geos, consistent with improving PMI numbers and despite continued macroeconomic uncertainty. • Core businesses continue to outpace market growth
Slide 24: Financial Review
FINANCIAL REVIEW KRISTIAN TALVITIE – EVP AND CFO 24
Slide 25: Q2'21 Results vs Prior Guidance
Q2’21 RESULTS VS PRIOR GUIDANCE ARR Cash Flow ~55% ~60% • ARR growth of 18% (15% CC) ~$365 16 - 18% ~$340 – Organic ARR growth of 14% (11% CC) $1,470 - $1,500 18% – Fx changes since December 31, 2020 $1,393 negatively impacted Q2’21 ARR growth by ~200 bps. $1,179 $122 $116 $88 $82 • Strong operating
Slide 26: Other Operating Performance Highlights
OTHER OPERATING PERFORMANCE HIGHLIGHTS • Strong balance sheet as of March 31, 2021 – Cash and cash equivalents totaled $326 million. – Gross borrowings of $1.5 billion. • $1.0 billion of senior notes with an aggregate interest rate of 3.8%. • $520 million of revolving credit with an interest rate of
Slide 27: FY'21 Revised Guidance Assumptions
FY’21 REVISED GUIDANCE ASSUMPTIONS • Macroeconomic conditions related to the COVID-19 crisis improve in the second-half of FY’21. • Organic ARR growth of 10% to 12% on a constant currency basis and Arena contributes ~400 basis points of ARR growth. • Changes in foreign currency versus prior guidance
Slide 28: FY'21 Revised Guidance
FY’21 REVISED GUIDANCE ARR Cash Flow ~55% ~55% ~60% • Previous ARR guidance assumed: 14 - 16% ~60% ~$365 16 - 18% ~$365 ~$340 – 10% - 12% organic constant currency ~$340 $1,470 - $1,500 $1,445 - $1,470 growth – 400 bps from Arena $234 $1,270 $214 – 200 bps from Fx • Current ARR guidance assumes: FY'
Slide 29: FY'21 Guidance Summary Table
FY’21 GUIDANCE SUMMARY TABLE Previous In millions except per share amounts Revised Guidance Guidance YoY ARR $1,470 - $1,500 $1,445 - $1,470 14% - 16% Cash from Operations ~$365 ~55% Free Cash Flow (1) ~$340 ~60% Revenue (2) $1,690 - $1,730 $1,710 - $1,740 17% - 19% GAAP Operating Margin (2) 15% - 1
Slide 30: Appendix
APPENDIX 30
Slide 31: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Statements in this press release that are not historic facts, including statements about our future financial and growth expectations and targets, debt repayment and potential stock repurchases, are forward-looking statements that involve risks and uncertainties that could
Slide 32: Non-GAAP Financial and Operating Measures
NON-GAAP FINANCIAL AND OPERATING MEASURES PTC provides supplemental non-GAAP financial measures 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 operating performance because they provide a
Slide 33: Non-GAAP Financial and Operating Measures
NON-GAAP FINANCIAL AND OPERATING MEASURES Operating Measures ARR - To help investors understand and assess the performance of our business as an on-premise subscription company we provide an ARR (Annual Run Rate) operating measure. ARR represents the annualized value of our portfolio of active subsc