Slide 1: Q4 and FY21 Financial Results
Q4 AND FY21 FINANCIAL RESULTS Investor Relations November 3, 2021
Slide 2: Forward Looking Statements
2 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 mat
Slide 3: Q4 and FY21 Highlights
Q4 AND FY21 HIGHLIGHTS JIM HEPPELMANN – PRESIDENT & CEO
Slide 4: Today's Agenda
4 TODAY’S AGENDA Jim Heppelmann Summary of Q4 and FY21 results Review of product line performance Kristian Talvitie Q4 and FY21 financial review Jim Heppelmann Accelerating our SaaS transition Kristian Talvitie Financial guidance Financial reporting structure going forward Question and answer sessio
Slide 5: Strong Q4 and FY21 Financial Results
5 STRONG Q4 AND FY21 FINANCIAL RESULTS Growth in every product line and geography Top Line Bottom Line ARR in Q4 and FY21 Cash Flow in FY21 $1.47 billion $369 million operating, $344 million free cash flow +16% growth1 +58% operating, +61% free cash flow growth At high end of guidance Exceeded guida
Slide 6: Strong Bookings Performance
6 STRONG BOOKINGS PERFORMANCE Strength across all product lines and geographies Top Line Bookings High teens growth, mid-teens organic, versus strong Q4 of fiscal 2020 Deferred ARR ~$20 million ahead of plan will benefit future periods
Slide 7: Good ARR Performance Across Product Lines
7 GOOD ARR PERFORMANCE ACROSS PRODUCT LINES Core Products Growth Products Focused Solutions Group +11% YoY +12% YoY CC1 +50% YoY +6% YoY +50% YoY CC1 +6% YoY CC1 FY'20 FY'21 FY'20 FY'21 FY'20 FY'21 ▪ Double-digit CAD ARR growth ▪ +17% organic ARR growth, +18% CC1 ▪ Strong performance of our Systems
Slide 8: Product Highlights – Core and Growth
8 PRODUCT HIGHLIGHTS – CORE AND GROWTH CAD PLM IoT AR ▪ PTC's products to be the primary ▪ Digital transformation remains a ▪ Industry leadership recognized by ▪ Healthy mix of expansions, cross- CAD and PLM solutions used by key driver. Gartner, Forrester, IDC, and ABI sell and net new logos the Vo
Slide 9: Product Highlights – Onshape and Arena
9 PRODUCT HIGHLIGHTS – ONSHAPE AND ARENA ONSHAPE ARENA ▪ Strong win rates against competitors coupled with solid ▪ Strong expansions drove larger deal sizes expansion rates ▪ Cloud native market leader, with particular strength in tech- ▪ Maturing functionality led to orders from larger companies in
Slide 10: Good ARR Performance Across Geographies
10 GOOD ARR PERFORMANCE ACROSS GEOGRAPHIES ▪ Americas ARR growth driven by double-digit growth in Core products and the acquisition of Arena +19% growth +12% growth ▪ Europe ARR growth driven +19% growth CC 1 +13% growth CC 1 by high-single digit growth in +16% growth Core products, low-40s growth i
Slide 11: Q4 and FY21 Financial Review
Q4 AND FY21 FINANCIAL REVIEW KRISTIAN TALVITIE– EVP & CFO
Slide 12: FY21 Results vs Prior Year and Guidance
12 FY21 RESULTS VS PRIOR YEAR AND GUIDANCE ARR Cash Flow ~55% 58% ARR growth of 16%, 16% CC1 61% 14 - 16% 16% $365 ~60% $369 FX was a $4 million headwind in FY21 $340 $344 $1,453 - $1,478 $1,475 $234 $214 Organic ARR growth of 11%, 12% CC1 $1,270 Strong operating and free cash flow performance, slig
Slide 13: FY21 Free Cash Flow Model
13 FY21 FREE CASH FLOW MODEL $M's FY21 Annual Run Rate (ARR) $ 1,468 $ 1,468 Acquisition adjustment (1) (13) (13) ARR less adjustment 1,455 1,455 GAAP Non-GAAP Perpetual revenue 33 33 Professional services revenue 158 158 Cash generation 1,646 1,646 Cost of revenue (371) (322) Operating expenses (1,
Slide 14: Balance Sheet and Share Repurchases
14 BALANCE SHEET AND SHARE REPURCHASES Strong balance sheet as of September 30, 2021 Cash and cash equivalents of $327 million Medium-term investments of $78 million, primarily related to our investment in Matterport Gross borrowings of $1.45 billion $1.0 billion of senior notes with an aggregate in
Slide 15: Accelerating Our SaaS Transition
ACCELERATING OUR SAAS TRANSITION JIM HEPPELMANN – PRESIDENT & CEO
Slide 16: Reorganizing to Drive SaaS Acceleration
16 REORGANIZING TO DRIVE SAAS ACCELERATION Reducing our FY22 spending run-rate by approximately: $60 million, compared to FY21 $90 million, compared to FY22 plans prior to the restructuring Re-investing approximately $45 million to accelerate transition to SaaS Increase capacity on Atlas Accelerate
Slide 17: Accelerating Our SaaS Transition
17 ACCELERATING OUR SAAS TRANSITION Customers want to move to SaaS, and are looking for PTC to continue to lead the transition to SaaS Opportunity to increase our SaaS investments to capture market demand Enhances our path towards targeted ARR growth and is expected to de-risk free cash flow growth
Slide 18: Reorganizing to Drive SaaS Acceleration
18 REORGANIZING TO DRIVE SAAS ACCELERATION PTC historically PTC effective FY22 Field Product Field Organization Organization Organization Product Sales Development Organization Sales Customer success Product Sales Customer Product success development delivery Renewal And sales Customer more success
Slide 19: Compelling Customer Value Proposition
19 COMPELLING CUSTOMER VALUE PROPOSITION Illustrative Customer TCO On-premise software $1 PTC software + $2-$3 additional costs = $3-$4 total cost of ownership ▪ On-premise servers ▪ Storage ▪ System administrators ▪ Software integrators SaaS ~$2 PTC SaaS + $0 additional costs = ~$2 total cost of ow
Slide 20: Transitioning Customers to SaaS
20 TRANSITIONING CUSTOMERS TO SAAS Primary focus for new PLM sales “Lift and shift” Large base of on-premise customer deployments Upgrade and de-customize, as necessary Starting now; expect first projects in back half of FY22 Initial focus on on-premise Windchill PLM deployments
Slide 21: New Business Units with Clear Focus
21 NEW BUSINESS UNITS WITH CLEAR FOCUS Digital Thread Velocity Troy Richardson, Mike DiTullio, President President Products: Products: Creo CAD Onshape CAD Windchill PLM Arena PLM Thingworx IoT Vuforia AR Focus: Agile product Focus: development is key driver Digital transformation is key driver Land
Slide 22: SaaS Acceleration Provides Strong Multi-Year Value Creation Potential
22 SAAS ACCELERATION PROVIDES STRONG MULTI- YEAR VALUE CREATION POTENTIAL Top Line Bottom Line ARR Free Cash Flow SaaS transition designed to drive Remain committed to mid-term double-digit long-term growth in free cash flow growth target of our core business ~25% to 30% SaaS acceleration increases
Slide 23: Financial Guidance and Reporting Structure
FINANCIAL GUIDANCE AND REPORTING STRUCTURE KRISTIAN TALVITIE– EVP & CFO
Slide 24: FY22 Guidance
24 FY22 GUIDANCE In millions, except per share FY22 YoY Mid-term FY21 amounts Guidance Growth Growth Guidance ARR $1,468 * $1,615 to $1,660 10% to 13% Mid-teens % Cash from Operations $369 ~$430 ~17% Free Cash Flow $344 ~$400 ~16% ~25% to 30% Revenue $1,807 $1,850 - $1,975 2% - 9% * FY21 ARR recast
Slide 25: FY22 Illustrative Free Cash Flow Model
25 FY22 ILLUSTRATIVE FREE CASH FLOW MODEL $M's FY21 FY22 YoY FY21-FY22 Annual Run Rate (ARR) $ 1,468 $ 1,468 $ 1,640 $ 1,640 $ 172 $ 172 Acquisition adjustment (1) (13) (13) - - 13 13 ARR less adjustment 1,455 1,455 1,640 1,640 185 185 GAAP Non-GAAP GAAP Non-GAAP GAAP Non-GAAP Perpetual revenue 33 3
Slide 26: New Reporting Structure for ARR and Revenue
26 NEW REPORTING STRUCTURE FOR ARR AND REVENUE Historically Going forward Core Digital Thread – Core Creo CAD Creo CAD Windchill PLM Windchill PLM Growth Digital Thread – Growth Thingworx IoT Thingworx IoT Vuforia AR Vuforia AR Onshape CAD Digital Thread – FSG Arena PLM Velocity FSG Onshape CAD Aren
Slide 27: Recast Historical Data
27 RECAST HISTORICAL DATA (in millions) FY'19 FY'20 FY'21 YoY YoY ARR by Product Line: Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Change Q1 Q2 Q3 Q4 Change Digital Thread - Core $760 $779 $798 $799 $830 $848 $869 $911 14% $967 $960 $986 $1,013 11% Digital Thread - Growth $107 $114 $125 $130 $138 $140 $146 $166 28% $17
Slide 28: FY22 Guidance Assumptions
28 FY22 GUIDANCE ASSUMPTIONS FY22 Current macro environment to remain consistent in H’ and begins to moderate in H’ . Churn improvement of approximately 100 basis points. Capital expenditures of approximately $30 million. At the mid-point of ARR guidance, we expect GAAP operating expenses to increas
Slide 29: Fiscal 2022 Investor Meeting
Save the Date FISCAL 2022 INVESTOR MEETING December 15, 2021 10am to 1pm Eastern Time
Slide 30: Appendix
APPENDIX
Slide 31: Forward-Looking Statements
31 FORWARD-LOOKING STATEMENTS Statements in this press release that are not historic facts, including statements about our future financial and growth expectations and targets, and potential stock repurchases, are forward-looking statements that involve risks and uncertainties that could cause actua
Slide 32: Operating Measures
32 OPERATING MEASURES ARR - To help investors understand and assess the performance of our business as a SaaS and on-premise subscription company we provide an ARR (Annual Run Rate) operating measure. ARR represents the annualized value of our portfolio of active subscription software, cloud, SaaS,
Slide 33: Non-GAAP Financial Measures
33 NON-GAAP FINANCIAL 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 view of our