Ptc Inc. · NASDAQ:PTC
Ptc — Investor Day (December 2021)
130 slides from Ptc's investor day presentation, Dec 15, 2021
Slide 1: Fiscal 2022 Investor Day
FISCAL 2022 INVESTOR DAY December 15, 2021
Slide 2: Agenda
2 10:05 – 11:00 12:15 – 12:40 PTC's Value Creation Strategy Velocity Jim Heppelmann, President and CEO Mike DiTullio, President, Velocity Jon Hirschtick, Founder and GM of Onshape Investor Day FY22 11:0 – 11:30 SaaS Acceleration 12:40 – 1:05 Catherine Kniker (CK), Chief Strategy Officer Value Creati
Slide 3: Forward Looking Statements
3 FORWARD LOOKING STATEMENTS This presentation includes forward looking statements regarding PTC’s future financial performance, strategic outlook and expectations, anticipated future operations and effects of strategic investments and initiatives, and products and markets and associated growth rate
Slide 4: Digital Transformation
4 DIGITAL TRANSFORMATION Companies will invest more than $1.5 trillion in Digital Transformation initiatives in 2021 70% Manufacturers make up 30% of that investment, of companies accelerated their use totaling $453 billion of digital to transform business processes since COVID
Slide 5: Strategy
ZZ, STRATEGY
Slide 6: PTC's Role in Digital Transformation
6 PTC’S ROLE IN DIGITAL TRANSFORMATION Our partners are critical to We serve discrete, process, hybrid our customer engagement and manufacturers, and service providers expanding our reach around the world Together with its partners, PTC enables industrial companies to improve growth and profitabilit
Slide 7: Strategy and Purpose
7 STRATEGY AND PURPOSE Our Strategy: Digital Transforms Physical Our Purpose: Power to Create
Slide 8: Unique Portfolio Brings Strategy to Life
8 UNIQUE PORTFOLIO BRINGS STRATEGY TO LIFE DIGITAL Defines PHYSICAL DIGITAL Manages PHYSICAL DIGITAL Connects PHYSICAL DIGITAL Augments PHYSICAL CAD PLM DIGITAL THREAD IOT AR DIGITAL Models DIGITAL Catalogs DIGITAL Senses DIGITAL Recognizes Generates Configures Translates Guides Simulates Synchroniz
Slide 9: Two Executions of Strategy
9 TWO EXECUTIONS OF STRATEGY Digital Thread Velocity Products: Products: Creo CAD Onshape CAD Windchill PLM Arena PLM ThingWorx IOT Vuforia AR Focus: Focused Solution Group Agile product development (FSG) is key driver TROY RICHARDSON Land new logos that prefer MIKE DITULLIO Focus: cloud-native SaaS
Slide 10: Two Segments, Two Leaders
10 TWO SEGMENTS, TWO LEADERS Digital Thread Customers: Velocity Customers: Heavy re-use of mechanical IP through New way of working: Agile product platform strategies development Long life-cycle products Tech-centric products – live in the shadow of Moore’s Law Reuse strategy requires granular WIP C
Slide 11: Different Market Segments
11 DIFFERENT MARKET SEGMENTS Large Medium Small Agile Platform Product Strategies Development
Slide 12: Leadership Team
LEADERSHIP TEAM
Slide 13: Experienced Team
13 EXPERIENCED TEAM Average Tenure: 14+ Years! AARON VON STAATS KRISTIAN TALVITIE JILL LARSEN STEVE DERTIEN CATHERINE KNIKER JIM HEPPELMANN EVP & General EVP & Chief EVP & Chief People EVP & Chief EVP & Chief President & CEO Counsel Financial Officer Officer Technology Officer Strategy Officer 24 Ye
Slide 14: Performing While Transforming
14 SaaS PERFORMING WHILE TRANSFORMING SaaS Phase 3 “Core on Atlas” Phase 2 2022 “Velocity” AR 2020 Atlas: Bringing SaaS to Core business! Business Pivot Model 2016 Onshape/Arena: $70M+ ARR SaaS Transition market leader IOT 2014 – Vuforia: $2M to 30M+ ARR AR market leader SaaS 2019 Pivot 2% Growth1 C
Slide 15: The Business
THE BUSINESS
Slide 16: PTC FY21 Revenue Mix
16 PTC FY21 REVENUE MIX Professional Services Perpetual $158M Revenue $33M Revenue 10% Growth 1% Growth 2% 9% Mix Mix of $1.649B of $1.807B Software Software Recurring PTC Revenue Revenue $1.649B Revenue $1.616B Revenue 25% Growth 26% Growth 91% 98%
Slide 17: FY21 Recurring Software Mix
17 FY21 RECURRING SOFTWARE MIX SaaS Multi-tenant $86M ARR FSG SaaS 266% growth $190M ARR Single-tenant (42% organic growth) AR 7% growth $122M ARR $31M ARR 30% growth 6% 22% growth 13% 8% IOT 2% $162M ARR 16% Growth 11% Mix of $1.468B Mix of $1.468B Switching Software Delivery Software ARR to ARR AR
Slide 18: SaaS Opportunity
SaaS OPPORTUNITY
Slide 19: SaaS Represents Value Hike, Not Price Hike
19 SaaS REPRESENTS VALUE HIKE, NOT PRICE HIKE Solution Stack On-Premise SaaS Customer Pays PTC $1 Customer Pays PTC $2 Category Customer PTC Customer PTC Provides Provides Provides Provides Application Software (e.g., $1 to $1 to PLM) PTC PTC Software Infrastructure Stack Servers Storage
Slide 20: Journey to SaaS
20 JOURNEY TO SaaS SaaS Conversion SaaS Upgrade $2 of ARR Higher Margins Multi-Tenant SaaS Atlas Core PLM, IOT Phase 3: Lift & Shift Phase 3: Lift & Shift Multi-Tenant SaaS $0 ARR in FY21 Starts in FY22 Velocity Single-Tenant SaaS Onshape, Arena, Vuforia FY22 NetIdeas Lower Margins PLM, FSG, IOT Saa
Slide 21: The Business Model Matters a Lot
21 THE BUSINESS MODEL MATTERS A LOT! Business Model Transitions SaaS + Subscription Model #1 – Hypothetical 3000 ARR CAGR = 14.1% (Y9-Y12) Perpetual Software 420 bps Company: Subscription Model 2500 ARR CAGR = 9.9% (Y9-Y12) Operates in 7% growth 280 bps market Perpetual Model 2000 #3 Revenue CAGR =
Slide 22: Business Model Data for Reference
22 BUSINESS MODEL DATA FOR REFERENCE Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Y12 Perpetual Model License 300 321 343 368 393 421 450 482 515 552 590 631 Services 200 214 229 245 262 281 300 321 344 368 393 421 Maintenance 500 539 581 625 673 723 777 835 896 962 1031 1106 Total Revenue 1000 1074 1153 1238
Slide 23: SaaS Is a Long-Term Growth Driver
23 SaaS IS A LONG-TERM GROWTH DRIVER Majority of ARR Multi-Tenant SaaS Single-Tenant SaaS 14% of ARR On-Premise Subscription >$200M FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30
Slide 24: The Market
W744 THE MARKET
Slide 25: Market Has Evolved
25 MARKET HAS EVOLVED Core* Outlook Updated View of Same November 2019 (Creo & Windchill) Core Market Market slowed during pandemic 15.0% PTC performance remained 10.0% strong 5.0% 0.0% Strong outgrowth now expected 2019A 2020A 2021A 2022E 2023E 2024E to continue Core Market Growth PTC Core Growth T
Slide 26: Winning in Great Markets – CAD
26 WINNING IN GREAT MARKETS – CAD “Beat the market” Drivers: Best-in-class products (Creo & Onshape) CAD Market 13% Business model advantage: recurring revenue model Majority of market is perpetual 0% 2018A 2019A 2020A 2021A 2022E 2023E 2024E 2025E Business model advantage: SaaS CAD Market Growth PT
Slide 27: Winning in Great Markets – PLM
27 WINNING IN GREAT MARKETS – PLM “Beat the market” Drivers: Best-in-class products (Windchill & Arena) PLM Market 20.0% Business model advantage: recurring revenue model Majority of market is perpetual 0.0% 2019A 2020A 2021A 2022E 2023E 2024E Business model advantage: SaaS Majority of market is on-
Slide 28: Sustainable Growth in Core
28 SUSTAINABLE GROWTH IN CORE Future Conversions 12% 5%
Slide 29: Winning in Great Markets – IOT
29 WINNING IN GREAT MARKETS – IOT “Meet the market” Drivers: Best-in-class products (ThingWorx & IOT Market Kepware) 35% Recurring revenue model with improving churn rates 0% 2018A 2019A 2020A 2021A 2022E 2023E 2024E 2025E Projected market recovery IOT Market Growth PTC IOT Growth Solution strategy
Slide 30: Winning in Great Markets – AR
30 WINNING IN GREAT MARKETS – AR “Meet the market” Drivers: Best-in-class maturing product (Vuforia) AR Market 140% Recurring revenue model with improving churn rates 0% Digital transformation a key driver Customer focus on “Digital Thread” 2018A 2019A 2020A 2021A 2022E 2023E 2024E 2025E AR Market G
Slide 31: The Future
“4 THE FUTURE
Slide 32: Growth Opportunity Is Expanding
32 GROWTH OPPORTUNITY IS EXPANDING Trailing FY22 Longer-term Product 3 Years Guidance Upside Drivers Upside Segment (ARR CAGR) (ARR) Opportunities Digital Thread FSG 4% 0% SLM Demand to 5% Core 11% 10 - 12% SaaS Sales & Conversions to 15% Growth 24% 20%+ IOT Market Recovery plus DPM to 30%+ Velocity
Slide 33: Margin Opportunity Is Expanding
33 MARGIN OPPORTUNITY IS EXPANDING Organizational optimization J-Curve businesses are scaling into produces near-term expansion profitability over the mid-term PTC Startups Organizational change in Customer Arena is profitable now Success reduces inefficiency while IOT is nearing profitability impro
Slide 34: On Track to Achieve Key Targets
34 ON TRACK TO ACHIEVE KEY TARGETS November 2019 November 2021 Investor Day Earnings Call Recession came sooner and “ was deeper than expected PTC performance remained …this means we would expect FCF in the strong $550 to $600 million range in fiscal 23, and we would expect $700 to $750 million Grow
Slide 35: Big Picture Summary
35 BIG PICTURE SUMMARY PTC is Positioned to Create Tremendous Shareholder Value Attractive Incredible Growth Margin Disciplined Proven Markets Products Drivers Drivers Execution Team CAD market Recognized Digital J-curve Added 1,000 Visionary projected to product Transformation businesses bps of gro
Slide 36: SaaS Success Indicators
36 What the market is telling us What our customers are telling us SaaS SUCCESS What the economics of SaaS tell us INDICATORS What steps PTC has already taken Atlas platform progress
Slide 37: Tipping Point
37 TIPPING POINT In 2022 the enterprise application market will be majority SaaS Global Enterprise Application Market Importance of Cloud & SaaS For Product SaaS vs. On-Premises and Service Innovation Efforts $B % of respondents, 1-5 scale, consolidated 500 481 450 8% 443 409 400 378 Not Important 6
Slide 38: SaaS Provides Real Benefits for Customers
38 SaaS PROVIDES REAL BENEFITS FOR CUSTOMERS Accelerated Availability Innovation and Mobility Flexible Lower Total Collaboration SaaS Cost of Ownership Better User Secure and Experience Scalable
Slide 39: Speed and Agility
39 SPEED AND AGILITY Cellcentric selected Windchill SaaS for fast implementation and integration with ERP.
Slide 40: Secure Collaboration
40 SECURE COLLABORATION The United States Navy selected Windchill SaaS to enhance collaboration with internal stakeholders and external suppliers. Certifications
Slide 41: Lower Total Cost of Ownership
41 LOWER TOTAL COST OF OWNERSHIP Bayer Radiology selected Windchill SaaS to replace a legacy PLM system that was limiting innovation with escalating IT support costs.
Slide 42: PTC Single Tenant SaaS Drives >2X ARR Uplift
42 PTC SINGLE TENANT SaaS DRIVES >2X WEIGHTED AVERAGE ARR UPLIFT $122M ~$64M ~$58M Subscription SaaS Total FY21 Single ARR Uplift* Tenant SaaS ARR * Total includes SaaS and hosting part numbers
Slide 43: PTC's Progress Toward SaaS
43 Onshape + Arena Acquisitions Atlas Platform Introduction Strength of PTC Cloud Business PTC’S PROGRESS Windchill Cloud Strategy TOWARD SaaS Windchill Lift + Shift Partner Strategy SaaS Acceleration Program
Slide 44: Onshape and Arena Acquisitions
44 ONSHAPE AND ARENA ACQUISITIONS
Slide 45: Atlas Platform
45 ATLAS PLATFORM TODAY FUTURE Unified SaaS Portfolio
Slide 46: 14% of FY21 ARR Is SaaS
46 14% OF FY21 ARR IS SaaS Windchill Core ThingWorx Vuforia Windchill FlexPLM Servigistics SaaS SaaS SaaS SaaS SaaS 11% 19% 38% 46% 53% On On 62% On 54% On 47% On 89% Premises 81% Premises Premises Premises Premises Certifications % FY21 Ending ARR @ FY22 CC FX
Slide 47: Windchill Core SaaS Business
47 WINDCHILL CORE SaaS BUSINESS 1 1% of Windchill Core business today is SaaS 3-Year CAGR for Windchill Core SaaS is nearly 36%
Slide 48: SaaS Acceleration Program
48 SaaS ACCELERATION PROGRAM Mission: Accelerate PTC’s SaaS value creation opportunity by driving SaaS-first practices (across people, Multi-Year processes, products, and systems) Transformation Program Program Overview: Cross-functional program mimicking approach used for GOAL: PTC’s successful Sub
Slide 49: Capturing Benefits of SaaS Today and Tomorrow
49 CAPTURING BENEFITS OF SaaS TODAY AND PLANNING FOR MORE BENEFITS TOMORROW TODAY FUTURE Unified SaaS Portfolio
Slide 50: PTC Atlas
SO Way unpenyiit otc’ atlas
Slide 51: SaaS Innovation Velocity
51 SaaS INNOVATION VELOCITY …have all pioneered an On-Prem to SaaS transition to accelerate time to user value
Slide 52: SaaS Innovation Velocity
52 SaaS INNOVATION VELOCITY Updates: Monthly 12-36 Months = 18 Months – 3+ Years Traditional Versions: 6 Months Product Customer User Value Development Adoption Delivered SaaS Security/Critical: Hours Every 2-3 Weeks Updates: 2 Weeks Versions: 3 Months
Slide 53: Windchill Scalability on Atlas
53 WINDCHILL SCALABILITY ON ATLAS On-Premises or Single Tenant Multi-Tenant on Atlas Unique servers and infrastructure Shared, elastic infrastructure and per tenant data isolation for all tenants
Slide 54: SaaS Environmental Sustainability
54 SaaS ENVIRONMENTAL SUSTAINABILITY More performance, greater utilization Less Infrastructure, cost effective Efficiency gains of over 50% Increasing profit margins with scale
Slide 55: SaaS Roadmap
55 SaaS ROADMAP Today Future Increased value over time Windchill & Navigate Cloud Windchill Digital Thread: Navigate & Creo View Generative Creo Provision & Deploy Creo Collaboration Creo ThingWorx Cloud Solution Central Digital Performance Management \
Slide 56: Key Takeaways
56 The Digital Thread business unit has a strong foundation and forward-driving momentum to deliver ARR growth Goals of accelerating growth in IOT and AR and delivering above-market growth rates in core CAD and PLM KEY Integrated operating model and TAKEAWAYS customer-focused GTM key to achieving ou
Slide 57: Digital Thread Purpose
57 DIGITAL THREAD PURPOSE Purpose: Accelerate PTC’s ARR growth and transition to SaaS through customer adoption of an integrated suite of digital transformation products Execute a go-to-market and Continue building the best customer engagement strategy products for digital that optimizes cross-sell
Slide 58: Leading Portfolio of Products
58 LEADING PORTFOLIO OF PRODUCTS Digital Thread , CAD PLM IOT AR Transforming the Industry
Slide 59: Digital Thread Business Unit Delivers Digital Transformation
59 DIGITAL THREAD BUSINESS UNIT DELIVERS DIGITAL TRANSFORMATION Digital Thread Characteristics: Heavy re-use of mechanical IP through platform strategies Long life-cycle products Reuse strategy requires granular WIP CAD data management and configuration- driven digital mockup Need deep engineering,
Slide 60: HIPLLEPHIN| Ltt
60 HIPLLEPHIN| Ltt
Slide 61: Strong Foundation for Continued Value Creation
61 STRONG FOUNDATION FOR CONTINUED VALUE CREATION Core Products Growth Products FSG >$1B ARR $199M ARR $190M ARR 11% 15% 24% 30% 4% 5% Trailing 3 Years Longer term upside Trailing 3 Years Longer term upside Trailing 3 Years Longer term upside (ARR CAGR) opportunities (ARR CAGR) opportunities (ARR CA
Slide 62: Recurring Customer Relationship Model
62 RECURRING CUSTOMER RELATIONSHIP MODEL PTC historically PTC effective FY22 Field Product Field Organization Organization Organization Product Development Organization Sales Customer Sales success Customer Product Product Sales development delivery success Renewal Cloud sales organizations Customer
Slide 63: Refined Customer Segmentation for Optimized Coverage
63 REFINED CUSTOMER SEGMENTATION FOR OPTIMIZED COVERAGE Today’s ARR Largest companies PTC does business with STRATEGIC Largest ARR commitments today Highest new ARR potential through product expansion and product cross-sell and up-sell ENTERPRISE ENTERPRISE MAINTAIN GROWTH Coverage from stra
Slide 64: Sales Operating Model Emphasizes Cross-Sell of Digital Thread
64 SALES OPERATING MODEL EMPHASIZES CROSS-SELL OF DIGITAL THREAD 3 Dimensions to Sales Operating Model Sales Operating Model Changes A Structure Account-based selling, emphasizing cross-sell of full digital thread portfolio Structure Resourcing B Resourcing Increased direct sales coverage of strateg
Slide 65: Product Strategy Pillars
65 PRODUCT STRATEGY Product Digital Thread SaaS PILLARS
Slide 66: Analysts Recognize PTC's Leadership
66 ANALYSTS RECOGNIZE PTC’S LEADERSHIP PLM IOT 2021 2020 2019 2019 2018 CAD AR FSG: SPM FSG: RETAIL 2020 2021 \ 2021 2020
Slide 67: Our Customer References Are Global Leaders
67 OUR CUSTOMER REFERENCES ARE GLOBAL LEADERS Engineering Excellence Manufacturing Efficiency Service Optimization SaaS
Slide 68: Repeatable IOT Solutions
68 REPEATABLE IOT SOLUTIONS Manufacturing Real-time Production Performance Monitoring Asset Monitoring and Utilization Connected Work Cell Predictive Analytics for Quality and Maintenance Service Remote Monitoring and Condition-based Service Eaton selected three key Connected Service Parts Managemen
Slide 69: DPM Customer Journey
69 DPM CUSTOMER JOURNEY Use and Adopt DPM Validate Financial Impact Plan For Impact at Scale Gain A Good Understanding Gain A Good Understanding of A Plan on How Your of How DPM Works In What Success at Scale with Organization Can Quickly Your Organization Built on DPM Looks Like for Your Experience
Slide 70: Repeatable AR Solutions
70 REPEATABLE AR SOLUTIONS Digital and AR Work Instruction and Assistance Remote Service AR Service Instructions and Technician Support AR-powered digital work AR Guided Customer Self-Service instructions enables accurate, up-to-date content that can be managed and audited. Life Sciences
Slide 71: Digital Transforms Physical Across the Industrial Enterprise
71 DIGITAL TRANSFORMS PHYSICAL ACROSS THE INDUSTRIAL ENTERPRISE Customer Operations Service Optimization Manufacturing Efficiency DIGITAL THREAD Engineering Excellence
Slide 72: Digital Thread at Volvo Group
72 DIGITAL THREAD AT VOLVO GROUP "Using a single PLM and CAD platform will serve as an important enabler in our digital technology transformation…By using this foundation, we see great opportunities to connect PTC’s IoT and AR solutions to our digital thread strategy." Lars Stenqvist Digital EVP and
Slide 73: Customer Experience
73 CUSTOMER EXPERIENCE Always on, up-to-date, frictionless expansion Integrated Open Up-to-Date Support Interoperability across Continuous updates Common billing, tech the digital thread & security patches support, telemetry
Slide 74: Windchill Scalability on Atlas
74 WINDCHILL SCALABILITY ON ATLAS On-Premises or Single Tenant Multi-Tenant on Atlas Unique servers and infrastructure Shared, elastic infrastructure and per tenant data isolation for all tenants
Slide 75: Product Strategy Pillars
75 PRODUCT STRATEGY Product Digital Thread SaaS PILLARS
Slide 76: Key Takeaways
76 The Digital Thread business unit has a strong foundation and forward-driving momentum to deliver ARR growth Goals of accelerating growth in IOT and AR and delivering above-market growth rates in core CAD and PLM KEY Integrated operating model and TAKEAWAYS customer-focused GTM key to achieving ou
Slide 77: Velocity Business Unit Serves Agile Companies
77 VELOCITY BUSINESS UNIT SERVES AGILE COMPANIES Velocity characteristics: New way of working: Agile product development Tech-centric products – live in the shadow of Moore’s Law Short product life cycles due to component obsolescence “Need for speed”: many “clean sheet” designs, always chasing new
Slide 78: Onshape & Arena: Leaders in the Velocity Market
78 ONSHAPE & ARENA: LEADERS IN THE “VELOCITY” MARKET Velocity characteristics: New way of working: Agile product development Tech-centric products – live in the shadow of Moore’s Law Short product life cycles due to component obsolescence “Need for speed”: many “clean sheet” designs, always chasing
Slide 79: Onshape Highlights
79 ONSHAPE HIGHLIGHTS Industry’s only cloud-native CAD and data management platform Named #1 in CAD industry growth: ~10x market Fastest evolving product in the industry. 16 major releases in FY21 Leveraging PTC technology portfolio NPS > 40 Emerging standard in EDU: >1M Users
Slide 80: Onshape Usage Growing ~10X CAD Market
80 7000 6000 2021 ONSHAPE USAGE 5000 2020 2019 GROWING ~10X 4000 CAD MARKET 3000 2018 2000 1000 0
Slide 81: Slide 81
Slide 82: Arena Highlights
82 ARENA HIGHLIGHTS Largest cloud-native PLM vendor Growing at ~3x PLM market growth rate Clear focus with superb product market fit Loyal customer base. NPS > 40 Low-risk growth opportunities
Slide 83: Slide 83
Slide 84: How We Accelerate Growth
84 HOW WE ACCELERATE GROWTH Enter New Verticals Move Up-Market Expand into New Geos Mid-term Today Capturing market share via New Logos
Slide 85: Our Machine Is Primed for Growth
85 OUR “MACHINE” IS PRIMED FOR GROWTH Velocity BU Machine Key Internal Success Measures: ARR growth NDR (Net Dollar Retention) Gross Retention Marketing New Logos & Expansion Bookings Customer Success # of New Logos (market penetration) Product NPS (Net Promotor Score) Sales Employee Engagement Scor
Slide 86: Capitalizing on Our Opportunity
86 CAPITALIZING ON OUR OPPORTUNITY PTC’s Velocity business unit is adding another growth opportunity for PTC. We’re well positioned to support our customers with cloud-native CAD and PLM. We are leading the market and are committed to maintaining this leadership position.
Slide 87: Financial Strategy
87 FINANCIAL STRATEGY Align with market Drive sustainable top line Grow adjusted free demand ARR growth cash flow Capital allocation aligned Value creation through Operational with technology leadership transformation discipline
Slide 88: ARR and Adjusted FCF Are the Best Indicators of Performance
88 ARR AND ADJUSTED FCF ARE THE BEST INDICATORS OF PTC’S BUSINESS PERFORMANCE Top Line Bottom Line We believe that ARR is the best We believe that adjusted free indicator of PTC’s top-line cash flow is the best indicator performance of PTC’s bottom-line performance Free cash flow is net cash provide
Slide 89: Understanding PTC's Key Financial Metrics
UNDERSTANDING PTC’S KEY FINANCIAL METRICS
Slide 90: Why We Focus on ARR
90 WHY WE FOCUS ON ARR Every dollar of ARR generates a dollar of Revenue, so over the term of every subscription, cumulative ARR converges with cumulative recurring revenue ASC 606 impacts the timing of revenue recognition for on- $ premise subscriptions – and can cause significant revenue volatilit
Slide 91: Key Definitions
91 KEY DEFINITIONS Bookings ARR Bookings represents the ARR (Annual Run Rate) represents the annualized value of our annualized value, based portfolio of active subscription software, cloud, SaaS, and on the final month of the support contracts as of the end of the reporting period. contract, of new
Slide 92: 4 Examples of Deals with $1,000 Bookings
92 4 EXAMPLES OF DEALS WITH $1,000 BOOKINGS 1. On-prem subscription with 1 year term and 2 renewals 2. On-prem subscription with 3 year term 3. SaaS subscription with 3 year term 4. On-prem subscription ramp deal with 3 year term Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Total Deal #1 1 year term + 2 rene
Slide 93: 4 Examples of Deals with $1,000 Bookings
93 4 EXAMPLES OF DEALS WITH $1,000 BOOKINGS 1. On-prem subscription with 1 year term and 2 renewals 2. On-prem subscription with 3 year term 3. SaaS subscription with 3 year term 4. On-prem subscription ramp deal with 3 year term Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Total Deal #1 1 year term + 2 rene
Slide 94: 4 Examples of Deals with $1,000 Bookings
94 4 EXAMPLES OF DEALS WITH $1,000 BOOKINGS 1. On-prem subscription with 1 year term and 2 renewals 2. On-prem subscription with 3 year term 3. SaaS subscription with 3 year term 4. On-prem subscription ramp deal with 3 year term Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Total Deal #1 1 year term + 2 rene
Slide 95: 4 Examples of Deals with $1,000 Bookings
95 4 EXAMPLES OF DEALS WITH $1,000 BOOKINGS 1. On-prem subscription with 1 year term and 2 renewals 2. On-prem subscription with 3 year term 3. SaaS subscription with 3 year term 4. On-prem subscription ramp deal with 3 year term Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Total Deal #1 1 year term + 2 rene
Slide 96: 4 Examples of Deals with $1,000 Bookings
96 4 EXAMPLES OF DEALS WITH $1,000 BOOKINGS 1. On-prem subscription with 1 year term and 2 renewals 2. On-prem subscription with 3 year term 3. SaaS subscription with 3 year term 4. On-prem subscription ramp deal with 3 year term Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Total Deal #1 1 year term + 2 rene
Slide 97: Why We Focus on Adjusted Free Cash Flow
97 WHY WE FOCUS ON ADJUSTED FREE CASH FLOW Management focuses on adjusted free cash flow in order to understand how to evaluate resource allocation and the quality and sustainability of the Company’s underlying free cash flow. We believe it is also helpful for investors to understand management’s vi
Slide 98: Delivering on Our Financial Targets
DELIVERING ON OUR FINANCIAL TARGETS
Slide 99: FY20 Investor Day Outlook Revisited
99 FY20 INVESTOR DAY OUTLOOK REVISITED The outlook we provided in November 2019 remains intact The economic impact of the pandemic happened earlier and was deeper, compared to the recession scenario from FY20 Investor Day “Sooner and deeper” has an impact on a recurring business model given compound
Slide 100: We Delivered on Our FY21 Targets
100 WE DELIVERED ON OUR FY21 TARGETS… ARR Growth, Organic ARR Cash from Free Cash Organic Churn constant Growth, constant Guidance Operations Flow currency currency 100 bps ~$365M ~$340M improvement 14% - 16% 9% - 12% 130 Actual 16% 12% $369M $344M bps At high end At high end Exceeded Exceeded Excee
Slide 101: Focused on Extending Our Track Record
101 …AND WE ARE FOCUSED ON EXTENDING OUR TRACK RECORD ARR* Cash Flow Core Growth FSG Velocity Cash From Operations FCF AFCF ~$450 ~$430 In millions In millions $391 ~$400 $1,615 - $1,660 $369 $344 $1,468 20%+ $1,258 ~0% $266 20%+ $234 $214 10% - 12% FY20 FY21 FY22 Guidance FY20 FY21 FY22 Guidance St
Slide 102: Guidance for FY22 and Mid-Term
102 GUIDANCE FOR FY22 AND MID-TERM FY22 YoY Mid-term In millions FY21 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% Adjusted Free Cash Flow $391 ~$450 ~15% Revenue $1,807 $1,850 to $
Slide 103: Guidance Assumptions for Q1 and FY22
103 GUIDANCE ASSUMPTIONS FOR Q1 AND FY22 ARR growth and linearity ARR of ~$1,500 million in Q1 FY22, 15% constant currency growth in Q1, including ~400 bps from Arena, which we acquired in Q2 FY21 Q2 to Q4, year-over-year organic constant currency growth rates consistent with our guidance (mid-point
Slide 104: Looking Ahead: Driving ARR to Mid-Teens %
104 LOOKING AHEAD: DRIVING ARR TO MID-TEENS % Multi-year opportunities to create value through transformation Digital Thread Digital Thread Digital Thread Velocity Core Growth FSG Digital transformation Digital Performance Stable and highly Investing in product Management (DPM) profitable businesses
Slide 105: Illustrative ARR Model with 11% ARR Growth
105 ILLUSTRATIVE ARR MODEL WITH 11% ARR GROWTH Modeling the 11% ARR growth scenario FY22 churn modeled in-line with guidance of 100bps YoY improvement; FY24 churn modeled at mid-term target of 6% The 11% ARR growth scenario is achievable with conservative assumptions for churn and new bookings * ARR
Slide 106: Illustrative Adjusted FCF Model with 11% ARR Growth
106 ILLUSTRATIVE ADJUSTED FCF MODEL WITH 11% ARR GROWTH Even in the 11% ARR growth scenario, we can deliver on our cash flow targets * ARR as reported ** Acquisition adjustment reduces cash collections of Arena, which was acquired in Q2 FY21
Slide 107: Illustrative Adjusted FCF Model with 11% ARR Growth
107 ILLUSTRATIVE ADJUSTED FCF MODEL WITH 11% ARR GROWTH Even in the 11% ARR growth scenario, we can deliver on our cash flow targets * ARR as reported ** Acquisition adjustment reduces cash collections of Arena, which was acquired in Q2 FY21
Slide 108: Illustrative Adjusted FCF Model with 11% ARR Growth
108 ILLUSTRATIVE ADJUSTED FCF MODEL WITH 11% ARR GROWTH Even in the 11% ARR growth scenario, we can deliver on our cash flow targets * ARR as reported ** Acquisition adjustment reduces cash collections of Arena, which was acquired in Q2 FY21
Slide 109: Illustrative Adjusted FCF Model with 11% ARR Growth
109 ILLUSTRATIVE ADJUSTED FCF MODEL WITH 11% ARR GROWTH Even in the 11% ARR growth scenario, we can deliver on our cash flow targets * ARR as reported ** Acquisition adjustment reduces cash collections of Arena, which was acquired in Q2 FY21
Slide 110: Illustrative Adjusted FCF Model with 11% ARR Growth
110 ILLUSTRATIVE ADJUSTED FCF MODEL WITH 11% ARR GROWTH Even in the 11% ARR growth scenario, we can deliver on our cash flow targets * ARR as reported ** Acquisition adjustment reduces cash collections of Arena, which was acquired in Q2 FY21
Slide 111: Illustrative Adjusted FCF Model with 11% ARR Growth
111 ILLUSTRATIVE ADJUSTED FCF MODEL WITH 11% ARR GROWTH Even in the 11% ARR growth scenario, we can deliver on our cash flow targets * ARR as reported ** Acquisition adjustment reduces cash collections of Arena, which was acquired in Q2 FY21
Slide 112: Illustrative Adjusted FCF Model with 11% ARR Growth
112 ILLUSTRATIVE ADJUSTED FCF MODEL WITH 11% ARR GROWTH Even in the 11% ARR growth scenario, we can deliver on our cash flow targets * ARR as reported ** Acquisition adjustment reduces cash collections of Arena, which was acquired in Q2 FY21
Slide 113: Illustrative Adjusted FCF Model with 11% ARR Growth
113 ILLUSTRATIVE ADJUSTED FCF MODEL WITH 11% ARR GROWTH Even in the 11% ARR growth scenario, we can deliver on our cash flow targets * ARR as reported ** Acquisition adjustment reduces cash collections of Arena, which was acquired in Q2 FY21
Slide 114: Illustrative Adjusted FCF Model with 11% ARR Growth
114 ILLUSTRATIVE ADJUSTED FCF MODEL WITH 11% ARR GROWTH Even in the 11% ARR growth scenario, we can deliver on our cash flow targets * ARR as reported ** Acquisition adjustment reduces cash collections of Arena, which was acquired in Q2 FY21
Slide 115: Illustrative Adjusted FCF Model with 11% ARR Growth
115 ILLUSTRATIVE ADJUSTED FCF MODEL WITH 11% ARR GROWTH Even in the 11% ARR growth scenario, we can deliver on our cash flow targets * ARR as reported ** Acquisition adjustment reduces cash collections of Arena, which was acquired in Q2 FY21
Slide 116: Capital Structure and Capital Allocation
CAPITAL STRUCTURE AND CAPITAL ALLOCATION
Slide 117: Clear Capital Allocation Priorities
117 CLEAR CAPITAL ALLOCATION PRIORITIES Organic Growth Enhance Growth Return Capital Investments through M&A to Shareholders Targeted GTM Targeted acquisitions Excess capital returned through repurchases Strategic R&D Deepen product portfolio $1B authorized through SaaS (e.g., Atlas)
Slide 118: Strong Capital Structure
118 STRONG CAPITAL STRUCTURE Cash and cash equivalents of $327 million as of Q4 FY21 Medium-term investments of $78 million as of Q4 FY21, primarily related to our investment in Matterport Gross borrowings of $1.45 billion as of Q4 FY21 $1.0 billion of senior notes with an aggregate interest rate of
Slide 119: Capital Return to Shareholders
119 CAPITAL RETURN TO SHAREHOLDERS Our stated FY22 target is to return approximately 25% of our adjusted free cash flow ($112.5M), as we continue to rapidly de-lever We have been in the market buying back shares in Q1, and expect to have repurchased $125M by the end of Q1 On a go-forward basis, assu
Slide 120: Environmental Social Governance
ENVIRONMENTAL SOCIAL GOVERNANCE
Slide 121: E S G
121 E S G As a software company, PTC’s In FY’20, we formalized our approach Supermajority of independent directors environmental impact is relatively to DEI and appointed our first Chief on Board and 100% independent Audit, small Diversity Officer Compensation, and Nominating Committees Boston headq
Slide 122: Wrap Up
WRAP UP
Slide 123: Value Creation Through Transformation
123 VALUE CREATION THROUGH TRANSFORMATION Attractive markets and strong product/market fit across our portfolio Proven team and extensive history of driving successful transformations SaaS acceleration, after successfully unlocking growth and value creation by transforming PTC from a perpetual to a
Slide 124: Forward-Looking Statements
1 FORWARD-LOOKING STATEMENTS Statements in this presentation that are not historic facts, including statements about our future financial performance, strategic outlook and expectations, anticipated future operations, effects of strategic investments and initiatives, products, markets and associated
Slide 125: Operating, Free Cash Flow and Adjusted Free Cash Flow Reconciliation
2 OPERATING, FREE CASH FLOW AND ADJUSTED FREE CASH FLOW RECONCILIATION PTC Operating, Free Cash Flow and Adjusted Free Cash Flow Reconciliation In millions except per share amounts FY'19 FY'20 FY'21 FY'22 Guidance Net cash provided by (used in) operating activities 285 234 369 430 Capital expenditur
Slide 126: PTC Inc. Unaudited Consolidated Statements of Income
PTC Inc. UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) Three Months Ended Twelve Months Ended September 30, September 30, September 30, September 30, 2021 2020 2021 2020 Revenue: Recurring revenue $ 429,350 $ 350,097 $ 1,616,328 $ 1,281,949 Perpetual license 10,36
Slide 127: 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 Twelve Months Ended September 30, September 30, September 30, September 30, 2021 2020 2021 2020 (1) License r
Slide 128: 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, 2021 2020 2021 2020 GAAP gross margin $ 380,908 $ 306,366 $ 1,436,057 $ 1,124,144 Stock-based comp
Slide 129: Unaudited Condensed Consolidated Balance Sheets
PTC Inc. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) September 30, September 30, 2021 2020 ASSETS Cash and cash equivalents $ 326,532 $ 275,458 Marketable securities - 59,099 Accounts receivable, net 541,072 415,221 Property and equipment, net 100,237 101,499 Goodwill and acquired
Slide 130: Unaudited Condensed Consolidated Statements of Cash Flows
PTC Inc. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Three Months Ended Twelve Months Ended September 30, September 30, September 30, September 30, 2021 2020 2021 2020 Cash flows from operating activities: Net income $ 292,943 $ 53,406 $ 476,923 $ 130,695 Stock-based com