Slide 1: Q1'21 Earnings Presentation
Q1’21 Investor Relations EARNINGS PRESENTATION January 27, 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: Q1'21 Highlights
Q1’21 HIGHLIGHTS JIM HEPPELMANN – PRESIDENT & CEO 3
Slide 4: Arena Solutions Acquisition Completed
ARENA SOLUTIONS ACQUISITION COMPLETED • Market leader in pure-SaaS CAD and PLM • SaaS business unit led by Mike DiTullio – Includes Arena, Onshape, and Vuforia teams – Represents ~20% of bookings and ARR of ~$100M • Jamie Pappas elevated to Global Head of Sales to backfill DiTullio 4
Slide 5: Delivering Shareholder Value
DELIVERING SHAREHOLDER VALUE • Strong Q1’21 bookings growth (>30%) driven by secular tailwinds. Market • Industrial Digital Transformation catalyzed by pandemic-driven operational challenges. Demand • Customers creating frictionless supply chains, connecting products and factories, bringing digital
Slide 6: Product Group ARR Performance
PRODUCT GROUP ARR PERFORMANCE Focused Solutions Group Core Product Group Growth Product Group ARR ARR ARR +17% YoY +12% YoY CC +29% YoY +2% YoY 0% YoY CC +26% YoY CC Q1'20 Q1'21 Q1'20 Q1'21 Q1'20 Q1'21 • Q1’21 ARR flat YoY (CC). • Q1’21 ARR growth of 12% YoY (CC) at the • Q1’21 ARR growth of 26% YoY
Slide 7: CAD Highlights
CAD HIGHLIGHTS • Momentum continues with ARR growth in the high-single digits (CC). • Strong bookings performance across all geos, including competitive wins. • Creo Ansys Simulation launched, building on strength of Creo Simulation Live (CSL). • Named the leader in ISG’s report for Manufacturing Vi
Slide 8: SharkNinja
SHARK NINJA The Challenge Re-evaluate software needs to address new growth and increased competition. The Solution Selected Creo and Ansys-powered CSL as the designated CAD technology for product development. Enhanced toolsets to allow for quicker innovation and product release cycles. Initiat
Slide 9: PLM Highlights
PLM HIGHLIGHTS • Mid-teens ARR growth (CC) continues to outpace market growth. • ARR exceeded expectations across geos, with strong bookings performance in Europe and Asia. • Broad-based strength across verticals led by Automotive, Electronic and High-Tech, A&D, and Med Device. • Competitive wins co
Slide 10: Airbus
Digital Thread Competitive Displacement AIRBUS The Challenge Create the commercial conditions for sustainable and meaningful growth. The Solution • Expanding the Windchill footprint to Airbus’s best-sellers products (Single Aisle). • IIoT instances across the group with new users in manufacturing. •
Slide 11: Terumo BCT
Digital Thread For FDA Compliance TERUMO BCT The Challenge • Implement an end-to-end digital thread (product development through quality assurance) for FDA compliance. • Replace paper-based system. The Solution • Global process alignment across 6 global locations leveraging Windchill Quality Managem
Slide 12: IoT Highlights
IOT HIGHLIGHTS • High-teens ARR growth (CC) driven by solid performance in Americas and Europe. • Solid bookings in Q1’21 with new logo acquisition showing signs of improvement. • Broad-based demand across verticals with notable expansions in process manufacturing. • Strong pipeline generation from
Slide 13: Griffin's Food Company
Smart Connected Operations GRIFFIN’S FOOD COMPANY The Challenge Accelerate production and improve the bottom line to address razor thin margins and steep competition. The Solution • Digitize production lines by connecting machinery to capture key performance data and display it in a unified view. •
Slide 14: AR Highlights
AR HIGHLIGHTS • ARR growth again well above market growth rate driven by strong bookings growth. • Over 50% of New ACV from expansions, including 3 deals >$500K – a record. • Gaining further traction outside of U.S. with Europe and APAC delivering strong growth. • Strong quarter for Vuforia Studio a
Slide 15: BID Group
Smart Connected Products / Augmented Reality BID GROUP The Challenge Leverage state-of-the-art technologies to pave the way for digital transformation in the wood processing industry and expand its competitive advantage. The Solution • Replace a DIY approach with best-in- class technologies: ThingWo
Slide 16: Royal Enfield
Augmented Reality for Training ROYAL ENFIELD The Challenge Train teams to service a motorcycle being launched in a COVID-19 world where travel and social distancing challenges exist. The Solution • Leveraged Vuforia Studio to change their live group training plans with virtual training within a mont
Slide 17: Onshape Highlights
ONSHAPE HIGHLIGHTS • ARR growth acceleration driven by strong bookings growth >150% YoY. • Healthy mix of new logo and expansion activity across broad range of verticals. • Reached one million education users - nine months ahead of schedule. • Strong pipeline coverage heading in Q2’21 with growing n
Slide 18: Charlottesville City Schools, VA
CAD SaaS: Technology for Good CHARLOTTESVILLE CITY SCHOOLS, VA The Challenge Maintain continuity of K12 curriculum and ensure equal access for diverse student population during the pandemic. The Solution • Onshape’s SaaS platform allows students to continue working collaboratively on engineering des
Slide 19: Stirling Ultracold
CAD SaaS STIRLING ULTRACOLD The Challenge Streamline communication among its mechanical designers, supply chain managers, manufacturing and quality assurance teams by eliminating the delays associated with exchanging CAD screenshots via email. The Solution Onshape’s cloud SaaS product development pl
Slide 20: Regional ARR Performance
REGIONAL ARR PERFORMANCE • Second consecutive quarter of double-digit ARR growth in the Americas reflecting broad-based strength across product groups, partially offset by FSG performance, which has exposure to several verticals acutely impacted by +17% growth COVID-19. +12% growth +8% growth CC +22
Slide 21: Strategic Alliance Highlights
STRATEGIC ALLIANCE HIGHLIGHTS Key technology partner and Ansys technologies embedded global reseller in Creo PTC products on Microsoft Azure • Third consecutive quarter of • >20 expansion deals with • Solid quarter with >20% bookings beating plan. transactions in 27 countries. growth YoY. • Exceeded
Slide 22: Strategic Alliance: Microsoft
STRATEGIC ALLIANCE: MICROSOFT The Challenge Colruyt Group needed an IoT platform to build a full digital transformation to optimize their shops (cold chain), food production, energy production, logistic tracking. The Solution • Microsoft received RFP from Colruyt for “smart assets”. Microsoft pulled
Slide 23: Summary
SUMMARY • Great start to fiscal 2021 as customers continue to embark on digital transformation initiatives, leveraging more of the full PTC product portfolio. • Strong execution in the quarter with 16% (12% CC) ARR growth, driven by Core and Growth businesses, and in our global channel. • Europe con
Slide 24: Financial Review
FINANCIAL REVIEW KRISTIAN TALVITIE – EVP AND CFO 24
Slide 25: Q1'21 Results vs Prior Guidance - Details
Q1’21 RESULTS VS PRIOR GUIDANCE - DETAILS ARR Cash Flow ~55% 11 - 14% ~60% • ARR growth of 16% (12% CC) 16% ~$365 $1,280 - $1,320 ~$340 – Strong Q4’20 and Q1’21 bookings resulted in $1,343 New ACV above expectations. – Churn also better than expectations. $1,158 – Fx accounted for ~400 bps of growth
Slide 26: Other Operating Performance Highlights
OTHER OPERATING PERFORMANCE HIGHLIGHTS • Strong balance sheet as of December 31, 2020 – Cash and cash equivalents totaled $399 million. – Gross borrowings of $1.0 billion of senior notes with an aggregate interest rate of 3.8%. • Arena acquisition financed with $600 million from revolving credit fac
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. • Organic ARR growth of 10% to 12% (CC), an increase of 100 bps at the low-end of guidance vs prior guidance. • Arena Solutions contribu
Slide 28: FY'21 Revised Guidance
FY’21 REVISED GUIDANCE ARR Cash Flow ~55% ~55% ~60% ~60% 16 - 18% ~$365 ~$365 ~$340 ~$340 9 - 12% $1,470 - $1,500 $1,385 - $1,420 $234 $214 $1,270 FY'20 FY'21 Previous FY'21 Revised Guidance Guidance FY'20 FY'21 Previous FY'21 Revised Guidance Guidance Cash from Operations FCF Revenue Diluted EPS 19
Slide 29: FY'21 Guidance Summary Table
FY’21 GUIDANCE SUMMARY TABLE In millions except per share amounts Previous Guidance Revised Guidance YoY Growth ARR $1,385 - $1,420 $1,470 - $1,500 16% - 18% Cash from Operations ~$365 ~$365 ~55% Free Cash Flow (1) ~$340 ~$340 ~60% Revenue (2) $1,550 - $1,600 $1,690 - $1,730 16% - 19% GAAP Operating
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 Measure 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 annual value of our portfolio of active renewable
Slide 34: Unaudited Consolidated Statements of Income
PTC Inc. UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) Three Months Ended December 31, December 28, 2020 2019 Revenue: Recurring revenue $ 384,957 $ 305,368 Perpetual license 8,463 8,998 Professional services 35,630 41,744 Total revenue (1) 429,050 356,110 Cost of
Slide 35: Supplemental Financial Data for Revenue and Stock-Based Compensation
PTC Inc. SUPPLEMENTAL FINANCIAL DATA FOR REVENUE AND STOCK-BASED COMPENSATION (in thousands, except per share data) Revenue by license, support and services is as follows: Three Months Ended December 31, December 28, 2020 2019 License revenue (1) $ 177,175 $ 123,430 Support and cloud services revenu
Slide 36: Non-GAAP Financial Measures and Reconciliations
PTC Inc. NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (UNAUDITED) (in thousands, except per share data) Three Months Ended December 31, December 28, 2020 2019 GAAP gross margin $ 342,220 $ 268,705 Stock-based compensation 4,434 3,043 Amortization of acquired intangible assets included in cost of
Slide 37: Unaudited Condensed Consolidated Statements of Cash Flows
PTC Inc. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Three Months Ended December 31, December 28, 2020 2019 Cash flows from operating activities: Net income $ 23,515 $ 35,455 Stock-based compensation 46,088 27,936 Depreciation and amortization 18,835 19,588 Amortization